Fiat currency vs. Crypto currency

The world is progressing to a cashless society and the payment methods are changing into a digital economy. Now only some percentage of the global money is being expressed as physical currency forms. But the majority of money is getting electronically exchanged via
online payment applications, or debits cards. If you are interested in bitcoin trading, visit dogecoin millionaire software

We often come across words like Bitcoins or cryptocurrencies as their news is creating a buzzin the world of finance. The new currency form secured by cryptography is known as cryptocurrency. Due to this electronic encryption cryptocurrency cannot be counterfeited.

With cryptocurrency’s rise there has been a debate on fiat money’s future, which has government backing such as the Indian Rupee or the US Dollar. Even after gaining widespread acceptance, cryptocurrency has not yet reached the position of replacing fiat currency that is still the preferred way to exchange value worldwide. A lot of people consider cryptocurrency as the way for fast wealth creation due to its volatility.

Today society is about to become an advanced economy but only few people are aware of how fiat currencies vary from cryptocurrencies. In order to know how crypto performs in connection with fiat currency, it is vital to become aware of the operation of both and how
different they are from one another.

What is cryptocurrency?

● Unlike traditional currencies, cryptocurrency is a decentralized currency that is digitally encrypted.
● It is not regulated by or linked to any central bank or government.
● It depends on the blockchain technology that is a distributed ledger system.
● Blockchain is managed by a computer network that will maintain the same copy of every database and update all records by consensus depending on solid mathematics.
● Bitcoin, Litcoin, and Etherium are some of the well-known cryptocurrencies.
● No intermediator is needed for buying or selling them.
● Peer-to-peer free and open-source devices networks handle them.
● Cryptocurrency was developed originally for providing alternative payment modes for online transactions.
● But they are not yet used by customers or companies and are not much reliable for use as payment methods.

What is fiat currency?

● It may be in physical money form or electronically represented such as by bank credit.
● Government controls the supply.
● It can be used for paying your taxes.
● This currency includes bank notes, paper currency, bills, coins and so on that includes a store of value.
● It is used for trade in order to buy services and goods.

● When fiat currency was introduced, central banks’ role in the economy increased because they regulate currency printing.
● The monetary value is decided by the consumer demand’s powers and supply.
● Few significant global fit currencies are the US dollar, pound, the Yen, the Rupees
and the Euro.

Here are some of the difference between fiat currency and crypto currency:

Tracking:

● The transactions of fiat currency can be monitored easily.
● It can also be recognized well by both the issuer and the recipient.
● This is not the same in the case of cryptocurrency transactions.

Store of value:

● Most of the fiat currencies are trustworthy. But some are subject to little currency inflation or inefficient monetary policy.

Exchange medium:

● Fiat currency is known to be a traditional or tangible exchange medium.
● But cryptocurrency is a popular digital exchange medium

Safety:

● In comparison with cryptocurrency, fiat currency is much safer.
● This is because the government backs them.
● Also money transfer can be easily tracked.
● In cryptocurrency, transactions may anonymously take place.

Supply:

● The supply of fiat money is limitless. So the central banks do not have any limit to the
amount of money that can be printed.
● But many cryptocurrencies come with a supply limit. It ensures that some limited
number of cryptocurrencies can be accessed.

Legitimateness:

● Fiat currency’s supply is regulated by the government.
● The policies that actually influence fiat currency’s value are also issued by the
government.
● Whereas cryptocurrency is a digital asset that functions as a trading medium.

Conclusion

Money along with systems will constantly evolve. From cryptocurrency to cowrie shells, the technology or form may be changing. However the usage and needs with respect to exchange, accounting and value will stay the same. Fiat currency still remains the ruling money form, crypto and blockchain technology which underpins them will be properly representing the following step in money evolution.