Since Bitcoin was launched back in 2009, it’s always been touted as the future replacement of the traditional fiat currency. But, is it really true?
And, if so, how will Cryptocurrency fare against fiat currency? Will it be able to subdue all the issues we’re having with the traditional financial ecosystem?
Let’s find out.
Cryptocurrency is a type of virtual or digital asset that utilises cryptography to ensure that a transaction procedure is going securely. Also, the whole process is decentralised. Hence, you won’t have to worry about it being controlled by a financial institution or the government.
Because of being created in a blockchain-based ecosystem, Cryptocurrency is usually traded or transacted through a decentralised app, like BitAlpha.
Apart from it being highly secure, the app also comes with an integrated hard wallet. Thus, if you’re yet to buy a cold wallet, you can keep all of your Crypto there for the time being.
Fiat money, as we’ve explained before, is a type of currency that the government considers to be legal tender. Unlike the former, fiat is much more centralised and, hence, is controlled by a financial institution or the government of the country.
The most common example of fiat currency is the US dollar, of course. Apart from these, the Japanese Yen, Great Britain Pound, and Euro fall under the same category as well.
Unlike Cryptocurrency, fiat money is used more often in an international trading process. You may have also seen it being the no. 1 choice for most central banks out there.
In this section, we’ll talk about some points that an ideal financial system needs to have. And, then, we’ll compare the same between Cryptocurrency and fiat money to find the best option.
Let’s begin, then.
Although it can be used throughout the world, fiat money isn’t globalised, per say. Let’s take GBP as an example here. As of now, one GBP is priced at 1.18 Euro. However, if we convert it to Indian Rupee, one GBP will have the value of 94.99 INR.
However, the same issue cannot be seen in the case of Cryptocurrency. For instance, 1 BTC is currently priced at GBP 19,085. And, the value will be the same no matter which country you are trading it from. Hence, the sense of globalisation is more prominent in this aspect.
When it comes to fiat currency, there’s no way you can maintain your anonymity. Whenever a certain amount of money gets transferred from your account, the bank will be notified about it. And, they can also see where or who you are sending the money to.
Nonetheless, you can maintain your anonymity when trading Bitcoin. You can simply hide all your information if you don’t want to disclose it. Almost every trading platform out there has this feature integrated in their system. So, you can use it as you please.
The security level of the traditional banking sector is quite questionable to be honest. There’s already been quite a few major robberies that have happened in this segment. And, the usage of the cloud server isn’t efficient enough to block a well-planned hacking procedure.
As a decentralised ecosystem, blockchain doesn’t have to deal with the same security issues as the traditional banking sector. Therefore, you don’t have to worry too much about the cash being stolen, as long as you have your private keys well-in-place.
When judging from a general viewpoint, Cryptocurrency does seem to have an ace or two in their pocket, unlike the traditional fiat money.
However, the downside of the same is that it’s highly volatile. Therefore, you can’t truly trust it, no matter what or how much you prepare for the calamity. Also, as the whole segment is unregulated, you might get affected by a scam or two every once in a while.
However, if Cryptocurrency can get over these issues, we’re pretty sure that it’ll become the new face of the financial sector. And, we can’t wait for the day to arrive!