Are you new to the world of cryptocurrency? Are you skeptical about the industry, wondering if it’s going to stand the test of time?
Consider this. Ethereum is the second most valuable cryptocurrency (out of thousands that are available). Its market cap hit $523 billion in December 2021, making it one of the 15 most valuable assets on the planet.
In six years, it has become more valuable than every bank on the planet, including JP Morgan. It’s clear that crypto is here to stay. The question remains, though. Fiat currency vs. cryptocurrency, what are the differences, what are the benefits of each, and which one is going to be the primary currency of the future?
Keep reading our fiat and cryptocurrency guide below to understand the fundamental differences between crypto and fiat currency now.
Cryptocurrency Explained; Built for the Internet
Fiat currency has been around for centuries. It was created for society before the internet existed. It’s a physical currency, originally intended to represent other assets, like gold, and traded hand to hand.
Today, the banking system has taken this legacy system of finance and tried to put it online. The result isn’t very efficient.
The key to understanding cryptocurrency is knowing that it exists specifically for the internet. The internet powers our entire modern society.
Crypto is a virtual currency, that lives on the internet, which you can store in a cryptocurrency wallet. It is going to become the money of the future since fiat is outdated and inefficient.
What Is Fiat Currency?
Fiat currency is centralized. That means that a small group of people control it. The US government, along with their buddies at the central banks, have complete power to print US dollars at will, deflating its value daily.
This means that people who work for fiat are constantly losing money and purchasing power, thanks to Uncle Sam.
And because most people use fiat currency in the form of a debit or credit card, central banks can see every transaction you make. They know where you spend money and can censor transactions or freeze your accounts if they don’t like what they see.
The banks are in control of your money, not you.
Fiat Currency vs. Cryptocurrency
Cryptocurrency is the solution. Crypto is decentralized. No authority, person, or group can devalue it, manipulate it, or make it go away. The only way to ban cryptocurrency would be to ban the internet.
Crypto is also a peer-to-peer currency. That means you can send crypto to anyone in the world, directly, in a fast, cheap manner. To send fiat internationally means sending money through multiple banks and clearinghouses. It can take days, and many fees, to send fiat around the world.
Fiat currency also decreases in value over time, since central banks are money-printing machines. There is an unlimited amount of US dollars, making them virtually worthless.
But cryptocurrencies like bitcoin have a finite supply. There will never be more than 21 million. With an increasing demand for a limited supply, the value will continue to rise, providing a safe place to store your wealth.
Cryptocurrency Is the Solution
There is much to be said about the fiat currency vs. cryptocurrency debate. To summarize, fiat currency is a legacy system, designed centuries ago. It’s not efficient in today’s society.
Cryptocurrency seeks to solve all of the inefficiencies that exist in our current financial system. The sooner you learn about and adopt it, the better off you’re going to be.
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