Cryptocurrency vs Fiat money – Which is better?
World evolution changes the way people spend their money. Nowadays many people prefer to do digital transactions through credit or debit cards and the world gradually moves toward a cashless economy. That is the reason some experts believe cryptocurrency is the future of all currencies and fiat money will be replaced completely, while some others disagree. Such thoughts can be seen in many cryptocurrency blogs.
Cryptocurrencies such as Bitcoin, Litecoin, or Ethereum are internet-based, digital or, virtual assets that are a medium exchange between two parties. They are based on the crypto-algorithm and use cryptography technology to conduct financial transactions.
Read Also: The concept of cryptocurrencies
Fiat currency is a legal tender, printed in paper form, issued by the government and regulated by central authorities. The U.S. dollar is fiat money, as are euro, pound and, many other world currencies.
As there is a big debate on cryptocurrency vs fiat money let’s consider some differences between them
- Cryptocurrencies are not regulated by a bank or any central authority, while fiat money does. They are limited entries in a database such as a blockchain, that no one can change or control. Due to the lack of government backing, it is difficult to use cryptocurrency everywhere we need, for example for tax-paying purposes.
- A transaction fee is another differentiating factor between fiat money and cryptocurrency. It is much lower for cryptocurrency.
- Cryptocurrencies are quite difficult for everyone to understand, the lack of knowledge of how to use them makes many people use fiat money instead.
- Once you did transaction by cryptocurrency it is impossible to reverse, even if it was by mistake or there was a double sending. That is a big headache.
- Volatility is a big disadvantage of cryptocurrency, while fiat money is more stable compared with.
- Fiat money has both physical and digital form, cryptocurrencies operate only online as virtual coins.
- Cryptocurrencies deal with a wide range of coins; fiat is limited to only a few.
- The exchange of cryptocurrency is purely digital; fiat money can be exchanged not only digitally but also physically. People can transact and exchange fiat money physically.
- Users do not have to share their identity to do transactions with cryptocurrency, they send directly using a private or public key. With fiat money, they have to.
- Transactions are faster for crypto because there is no need for banks or government.
- Fiat money has an unlimited supply, but cryptocurrency has a limit. That is why some experts claim that the limit of cryptocurrency will make inflation impossible.
- With fiat money, it is impossible to tell the amount of money in circulation at any time, but with cryptocurrency it is possible.
- Cryptocurrencies can be stored only in digital wallets, but the versatility of fiat money lets them be stored in various forms.
The debate on fiat money vs cryptocurrency continues around the world. While cryptocurrency has many advantages over fiat money, still they are not enough to make them replace the current financial system and payment methods. Although the future of cryptocurrency remains vague and unpredictable, it is a matter of time that the crypto market will develop and will have a great role in the world’s cashless economy.
Still, the big question remains unanswered – Will it replace the current system completely or the banking system will have its role?
