Crypto vs. Fiat vs. Credit
Contents
- 1Crypto vs. Fiat vs. Credit
- 2Cryptocurrencies or Fiat money, comparison
- 3Why Cryptocurrencies Will Replace Fiat Currencies
- 4Cryptocurrency adoption is on the rise, albeit with ups and downs
- 5More and More Providers Accept Cryptocurrencies
- 6The Blockchain or chain of blocks is safe and protected
- 7Bitcoin wallets are private and private
- 8When will crypto replace fiat currencies?
There are many people who are of the opinion that at some point, cryptocurrencies will replace fiat currency. The tide of cryptocurrencies may seem like it has stalled, but the truth is that we are still only at the beginning. The astronomical rise of Bitcoin and Ethereum throughout 2017 towards the skewed markets of early 2018, and as the markets plunged, so did general public opinion.
But that doesn’t change the underlying technology or future prospects for cryptocurrencies as a whole. In fact, cryptocurrencies will sooner rather than later be ready to take control of fiat currency. Here’s why.
Cryptocurrencies or Fiat money, comparison
Fiat money, or Fiat currency, is the currency that a government has declared legal tender. The cryptocurrency is not legal tender and is not backed by a government.
Fiat means, “let it be done.” Cryptocurrency implies, “a decentralized and digital medium of exchange governed by cryptography.” Both are currencies, but there are some notable differences:
- Fiat or fiat currency is “legal tender” backed by a “central government.” It can take the form of physical Euros, for example, National Bank notes on paper, or it can be represented electronically, for example, with bank credit. The government controls the supply and the user can pay his taxes with it.
- Cryptocurrency is not “legal tender” and is not backed by a central government or a bank. it is decentralized and global. Its form is more like bank credit without the bank, in the sense that it is digitally represented, but not backed by a bank or a government. An algorithm controls the supply and the user cannot pay his taxes with it, instead the user has to pay user taxes on it.
Other ways to compare them is as follows:
Fungible : Each monetary unit must be exactly the same and interchangeable. One Euro is one Euro, and one cent is one cent. The same applies to Bitcoin, Ethereum, and all other cryptocurrencies.
Long-lasting : Gold would be meaningless if it dissolved in rain or melted at room temperature. Even paper money is durable to some extent, as many countries use or introduce polymer banknotes. Cryptocurrencies are fully digital, with data stored on a decentralized network. Aside from losing access to your digital wallet, cryptocurrencies are extremely durable.
Scarce : The currency is scarce; rather, it has a limited supply. After the 2008 global financial crisis, we saw that governments could create more foreign exchange whenever they wanted, but the problem remains. Cryptocurrency, on the other hand, has limitations that differ from one currency to another. There are only 21 million Bitcoins in total, for example, while other cryptocurrencies can have an infinite supply.
Divisible : Coins must be broken down into smaller units. Euros in cents. Bitcoins in satoshis. Theoretically, Bitcoin can be divided into infinitely smaller units, depending on the value of a single bitcoin coin.
Commerce : The main purpose of the currency is to facilitate the exchange of goods and services. Some cryptocurrencies lag behind fiat here because transactions take too long to verify. However, you can use cryptocurrencies to buy a wide range of goods and services, just as you can with life currency.
Cryptocurrencies check all the boxes when comparing all the different functions and aspects of fiat currency.
Why Cryptocurrencies Will Replace Fiat Currencies
Decentralized and fairer financial systems
Elite financiers, bankers, business moguls – an elite who directly controls the currencies the rest of us depend on. Normal people like you and me cannot influence the market, and even when thousands of people join together, nothing really changes.
A fundamental part of that control refers to the supply. When supply increases, money decreases in value, and vice versa. Those in charge can benefit from these sudden changes in financial markets. Decentralization takes global financial control from the elite and returns it to the masses.
It is important to note that the cryptocurrencies most likely to thrive as fiat currency replacements are in limited supply. Also, cryptocurrencies that are not directly tied to any government will not suddenly devalue due to the actions of a control group. That does not mean that cryptocurrencies cannot be devalued by other means.
Ultimately, decentralization means less manipulation. Not completely eradicated, but definitely reduced to a much lower level of influence. Cryptocurrencies are not subject to inflation, interest rates, cross-border exchange rates, business taxes, etc.
Cryptocurrency adoption is on the rise, albeit with ups and downs
It is impossible to find figures that accurately show how many cryptocurrency users there are. Some people use multiple wallets, across multiple platforms, for a variety of currencies. Also, many users and crypto exchanges use new wallets for every incoming and outgoing transaction, causing the figures to artificially swell.
However, there are some charts that follow the steady growth of cryptocurrency markets around the world.
First, check out Statista’s chart on “Number of Blockchain Wallet Users Worldwide from Q1 2015 to Q2 2018.” It shows a steady increase in the number of Blockchain wallet users , reaching over 25 million users in Q2 2018.
For more perspective, here is a graph showing the daily number of active Bitcoin addresses during the same period. The graph is understandably peaking (1.13 million active addresses) at the same time as Bitcoin prices, but it also reflects the overall growth of Blockchain portfolio accounts:
Chris McCann, founder of the CryptoWeekly newsletter, has made some really cool charts illustrating the crypto market and user growth in this blog post .
The two most prominent advantages are that the cryptocurrency market seems to coincide with that of the Internet in its beginnings: the year 1994, to be more specific. Added to that are the similarities between the growth of crypto assets between 2014 and 2017 and the growth of new websites between 1991 and 1995.
So how many people have cryptocurrencies? The truth is that nobody knows. The highest estimates put the figure at 50 million users globally, while the lower limits remain around 10 million, which, in our opinion, is too low considering the other evidence available to us. .
More and more providers accept cryptocurrencies
There are an interesting and growing number of online retailers accepting cryptocurrencies alongside fiat currency. Notable examples include the following:
- Microsoft
- Overstock
- Newegg
- Expedia
- DISH Network
- Etsy (individual sellers)
- Intuit
- Private Internet Access
- Pure VPN
Amazon does not yet accept cryptocurrencies, but you can use Purse to locate people who are willing to use their Amazon gift cards in exchange for their cryptocurrency. You can even get an interesting discount on their items this way.
The Blockchain or chain of blocks is safe and protected
Who does not know someone who has had a problem making a transfer, be it from abroad or to an acquaintance or friend. Sometimes the payment is lost in the banking system for almost a time. Neither bank can find the transfer until it “showed up” again. During that time, it was as if money had never existed.
You have to trust the banking system because it is dominant, but banks often lose accounts, payments, transfers and much more. Furthermore, as we see all too often, despite all their audits and security regulations, banks are still susceptible to massive attacks.
On the other hand, no one has hacked the Bitcoin blockchain, at least since the early days, when there was a value overflow hack that created 180 billion Bitcoins, but the developers started a movement to counter the attack.
The lack of a blockchain has even become something of a reward, as the first person to hack into the blockchain to execute Bitcoin transactions through any address will become an instant billionaire, assuming Bitcoin retains some of it. of its value after such an attack. Ultimately, until quantum computers can break a blockchain’s encryption, it remains safe from hacks.
Bitcoin wallets are private and private
Your Bitcoin belongs to you. You keep it in a wallet and keep it offline, it would be ideal. Other cryptocurrency users cannot force you to ditch it, nor can Bitcoin or other blockchain developers force you to do so from your wallet. Unfortunately, the opposite is true with fiat currency, especially when it is kept “safe” in a bank account.
Similarly, creating and monitoring bank accounts is tedious, requires paperwork, and exposes your financial situation to other people. You can have as many cryptocurrency wallets as you want, each with different configurations, containing different cryptocurrencies, and best of all, each of them is instantly accessible from anywhere in the world.
When will crypto replace fiat currencies?
Nobody knows. Probably not in the near future. Until it does, cryptocurrency will exist alongside fiat currency as an alternative payment method for an ever-expanding range of goods and services. Financial institutions and governments are already exploring cryptocurrency and blockchain applications, and it’s no surprise why. Since although they are in command of the currencies of normal use, no one would want to stay behind the news and less when it is something that can revolutionize the international economy. No government wants to be left behind.
