Although cryptocurrency has been turned into an investment driver with time, the initial cryptocurrency was intended to be a medium of exchange and a digital currency for anyone wanting a viable alternative to the mainstream fiat currencies.
Even now, the objective of cryptocurrency developers is to strive to create innovative and sustainable coin frameworks that aim to keep up with the significant unpredictability that we find in the cryptocurrency marketplace.
Fiat Currency & Its Major Characteristics
When we talk about fiat money, we talk about the fiat currency that each state has for its domestic economic activities. Fiat currency is often characterized as the currency chosen by each state to structure its economy such as the Japanese yen or the British pound sterling.
The currency is controlled and distributed by the government through its central bank. This fiat currency is usually partially backed up by an underlying asset, such as gold.Apart from that, the value is determined by legislative procedures including monetary policies and the trust shown in the currency by its government and citizens.
However, during phases of rampant inflation, trust in this medium of exchange is reduced, and this leads to decreased spending power. Alternative methods of exchange, such as Bitcoin, have been developed to circumvent these issues.
Investing in Bitcoin
If you’re already tempted to invest in Bitcoin, it can be an excellent choice as a store of value, especially over fiat currencies. To exchange your existing fiat money for Bitcoin easily, we recommend NeuronEx.
With this leading peer-to-peer cryptocurrency exchange platform, you can trade your Bitcoin with ease from anywhere in the world. To facilitate the exchange of your fiat currencies, NeuronEx has introduced the Neuron dCard, which is an innovative financial tool for the users, as it is decentralized and in your control only.
Fiat Currency vs. Bitcoin
Fiat money in its paper-based form has long been the predominant means of any financial exchange in the global economy. The approaches consumers use to invest their money continue to change rapidly, and because of this, we have experienced a transformation of the worldwide economic structure with the emergence of cryptocurrency and other virtual assets.
These days there is a wide selection of coins to choose from, and Bitcoin is still at the forefront with regards to valuation, trading volume, and significance in economics and software development. The amount of digital currencies is projected to increase with time, which implies a gradual rise in consumer acceptance.
Since Bitcoin has a number of remarkable functions, a lot of cryptocurrency traders, owners, and buyers believe it to be more valuable than paper money. However, Bitcoin is no backed up by any underlying asset, similar to fiat currencies. Its value is derived from market speculation, and it also relies heavily on the faith of its users to become a viable medium of exchange.
The key difference between the two is that Bitcoin is based on blockchain technology, which is a method of verifying financial transactions that ensures the security and transparency of cryptocurrencies. It does this by making users active participants in the verification process, as it requires them to generate two unique serial numbers to verify the transaction’s status.
The reward for doing so is the cryptocurrency itself, in this case, Bitcoin. This system of verification is what makes Bitcoin different from regular fiat currencies, which are not based on any such underlying technology.
Another major difference is that cryptocurrencies are not subject to regulations from any single government or centralized body, and this gives it greater flexibility in their functions when compared to fiat currencies.
Now let’s take a closer look at seven advantages Bitcoin has over traditional fiat currencies.
Advantages of Bitcoin over Fiat Currency
There are a number of advantages of adopting Bitcoin, the dominant cryptocurrency, over standard fiat money. This includes a decentralized framework, user privacy and security, and speedy and inexpensive transactions, amongst others.
Bitcoin is known for its unique characteristic of having a decentralized structure, which means that it does not require a central regulatory body to administer its transactions.
Unlike standard fiat money that is circulated and controlled by the central bank of the country, Bitcoin utilizes nodes to validate any transaction that reaches the network. These checked transactions are stored in a public directory that functions in the same manner as bank documents.
Although this directory is open to see for all members of the network, the sensitive and classified details of each user is kept secret. This prohibits theft and other potential infringements from happening on the platform.
Privacy and protection of identity for users
In contrast to fiat currency transactions that include having to disclose your personal information, Bitcoin transactions are kept confidential.
Even the person you communicate with may not know your personal details, and this ensures security for both parties. With identity security on the bitcoin network, there is an increasing amount of users who choose to transact using this cryptocurrency.
Another noteworthy advantage of this framework is that it allows users to trace any transaction conducted within the framework. Transaction data and records can be tracked and classified by wallet addresses.
Simple to use and accessible
At first, the words bitcoin, blockchain, and cryptocurrencies may sound intimidating. However, counter to what many people say about this innovative technology, bitcoin is reliable and simple to use, especially for transfers in day-to-day financial transactions.
Bitcoin uses virtual wallets where sums are processed, tracked, restocked and expended. Bitcoin wallets can be activated on phones and laptops, making them convenient and simple to use.
With Bitcoin, transfers can be made instantly from everywhere. You won’t be required to visit a bank or other financial establishments to transfer funds, as bitcoin transfers would only involve a few quick steps on your computer with no office hours or occasions to look out for.
Increased speed of transactions
Exchanges of fiat currencies differ based on the area, volume and ways of payment you want to use. These variables typically decide how long the deal will take to finish.
With Bitcoin, users just need to enter their mobile wallets and fill in the elements required to carry out the trade. Bitcoin transmission is available round the clock in virtually every area of the globe.
Bitcoin transactions can be done in no time flat, which is a great advantage over the lengthy process involved in fiat currencies.
Low processing fees
Apart from having a fast processing capability, Bitcoin transfers are often considered to have low costs relative to other fiat money.
When a fiat currency utilizes third parties or middlemen, extra fees are received for the handling of the payment. Wire transfers typically base the percentage of the price paid on the origin, currency, sum and intent of the transaction.
Bitcoin wallets eliminate the use of brokers as they can make direct transactions to banks, banking institutions, and even people who own digital currency. Due to this, Bitcoin can provide remittances at a more competitive rate.
A lucrative business investment opportunity
Bitcoin is considered to be an extremely volatile currency. This attribute is also what makes it really appealing to market owners and business professionals in the financial and tech industries.
Because its valuation can easily reach intense highs and lows, it is seen by many as a strong market investing opportunity. Besides this, a number of cryptocurrency experts and followers see Bitcoin as an excellent store of wealth and asset that will appreciate with time.
Bitcoin is limited
The last advantage Bitcoin and other cryptocurrencies have over fiat money is that they are limited in supply. The availability of any fiat currency will shift at the discretion of the authority that issues it.
There are no restrictions over the quantity of physical bills in circulation, and fiat money is highly susceptible to inflation because of this. This is in stark contrast to the way Bitcoin works.
There are a fixed number of 21 million Bitcoin in the world, and this fixed number will appreciate in value as demand grows. With time, it is getting more challenging for miners to generate cryptocurrency units until the maximum level is reached.
The limited supply of cryptocurrencies renders them potentially deflationary. Because of these constraints, they are more like gold and other valuable commodities compared to the fiat money that financial institutions can theoretically produce unlimited amounts.
Now that we have outlined the main advantages of Bitcoin and how they compare with traditional fiat currency, it is time for you to decide which one you want to adopt for your financial needs.
While there are many benefits to adopting cryptocurrency, it is not yet prevalent enough to where you can exclusively use the system to make all your financial transactions.
Our current system of fiat money will remain for the near future, but the possibilities and advantages of Bitcoin and its underlying blockchain technology are too good to ignore forever.
It is expected that individuals will slowly start to shift towards digital currencies as we expand on the world of online storefronts and eCommerce. As it stands, Bitcoin and its counterparts can easily take over the financial payment system we currently have.
This is because of the minimal transaction costs, instantaneous payment ability, and no centralized body to answer to. The global and interconnected world we are now living in demands more flexible and versatile systems than the one we currently have, and cryptocurrency looks to be the answer.
If you want to get started on your journey towards investing in Bitcoin or other cryptocurrencies, head on over to NeuronEx. The peer-to-peer platform will provide you with everything you need to trade digital currencies and safeguard your wealth for the coming digital age. Good luck with your investments!