Over the past decade, it has been made clear that we have given governments, banks and credit institutions far too much power. Such a thing can never be healthy for the economy, and the 2008 financial crisis was a tipping point. As a result, many people have lost faith and trust in these governmental and corporate institutions. In this post, I would like to explore the differences between fiat and cryptocurrencies.
Fiat vs Cryptocurrencies
Trustless peer-to-peer system
Majority of cryptocurrencies are a peer-to-peer electronic payment system. Payments can be made between two parties arise without the need for a financial institution. With other words: cryptocurrencies makes it possible to do digital transactions without a "trusted "middleman. Where usually the banks verify the legitimacy of the transactions, they are now done by the users/network itself.
If you want to transfer money between different banks, it takes a day. On the weekend this takes even longer, and for international transfers, it can take more than a week. With cryptocurrencies, it is sent immediately, and the location of the recipient does not matter. It's as easy as sending an email. It is said that cryptocurrencies for banks are the same as what email was to the post offices.
Digital and non-physical
Cryptocurrencies you keep in a digital wallet and fiat in a physical wallet.
To prevent fiat from being spent twice, our current payment system is centralized (from one central point, it is checked that the fiat is not twice is issued). With cryptocurrencies, this control is done by the users themselves by through the blockchain. Every user has a copy of this blockchain. You can use this best compared to a vast cash book where all transactions from the past are recorded.
Supply and demand
Fiat is based on the economy of the country concerned. Cryptocurrencies are based on supply and demand. At the moment, the price is what the other person is willing to pay for it.
The world is starting to see more and more how significant cryptocurrencies impact is and will be. It is becoming a conversational topic again amongst friends, in the workplace and at family gatherings.
Thank you for reading and hope you have a good rest of the day!
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