The question that most people are keen to ask is if Ethereum will flip Bitcoin or not. The answer they are searching for is which coin will hold the number #1 position in the crypto space in a few years time. It has resulted in two cults who are having opposing points of view, and at times, won't even inhibit themselves from throwing mud at each other publicly!
The Bitcoin Maxis, as they are popularly called, believe in only Bitcoin Supremacy, while the Eth Clan believes that no other Smart Contract come up even close to Eth, and that Bitcoin is old and technologically inferior.
These fights inside the crypto space have actually camouflaged the bigger question : Which is Superior; Cryptocurrency or Fiat ?
Cryptocurrencies and fiat currencies have many similarities, but they are beyond the scope of this article. In this edition, we'll see the major differences between them.
Let us dive in :
1) Production and Supply
Fiat currencies like Dollar are not pegged to anything. Gold standard is a thing of the past. So dollar can be printed as much as we want decided by the authorities keeping factors like inflation in mind. In short, it just takes an incapable government to screw up a country. Venezuela and Zimbabwe are great examples of such a hyperinflation scenario.
Such a scenario is very rare for cryptocurrencies. Bitcoin has a maximum supply, and hyperinflation is out of question. Ethereum does not have a maximum supply, but it is already on its path to become deflationary after the London Hard Fork!
Production/mining is different for each cryptocurrency, but it is not as bad as printing money from thin air!
2) Use Case
Fiat has one Use Case: Pay for goods!
It has a value because the government says so. It has no intrinsic value. Remember, it immediately becomes just a piece of paper or plastic if the country decided to remove it as a legal tender. (Remember the demonetization in India?)
Cryptocurrency use case is soooo big that each crypto has its own sets of uses. And there are more than 11,000 cryptos and tokens according to Coinmarketcap. The technology behind the cryptocurrency, the Blockchain technology, can indeed change our world for better. I've already written an article based on that: The link is here if you haven't read it already!
Fiat currencies have a boundary, mostly limited to countries, or sometimes continents, e.g., Euro (€). Crypto knows no boundaries. The world is one Family. Crypto can be transferred to your sister living in opposite room, or it can be sent to your online friend on the opposite pole. It makes no difference!
It also reminds us once again that boundaries are just a man made construct of our imagination!
4) Middle Men
The Authority for printing money lies with the Central Banks. They provide money to other banks, from where we get our money. All out transactions except the cash transactions go through this medium. So basically it means that when banks collapse, our money goes down with it
There is no middle men in crypto. It is peer-to-peer. You have to pay only for the Gas fees, which are less compared to the charges that companies like Western Union charges. Also, as the technology improves, they are only going to get cheaper and faster!
Why should someone see and monitor how much money we are sending, and to whom? Okay, I agree there are issues like criminal activities and terrorism, but who will track the transaction if it is via direct cash?
Each and every transaction in crypto space is there for everyone to see. It is completely transparent. The identity of the sender or receiver may not be known, but if the security of the country is at risk, they can easily be tracked if the address in the wallet/exchange has a KYC, which I believe will soon be mandatory for all wallets and exchanges! Exception include coins like Monero (XMR). So, to be honest, considering security issues, I feel XMR might get sidelined soon.
Crypto can be sent and received anywhere anytime without the need for any central agency's approval. Nobody can ban it, nobody can prevent it. You can get a loan whenever you want. Trying going to a bank asking for loan on a Bank Holiday, Oh wait, the banks won't be open!
I have only put pen to paper the thoughts from the top of my mind, but it has already become clear that the Behemoth against which Fiats are fighting now is not something Fiat can handle. The competition is not even Close, and we definitely have a clear winner!
Thanks for reading till the end!
Hope you found the article interesting