As the world is moving apace, the medium of transaction seemed to alter. With the rapid change in transactional technology, a new medium of exchange has attracted almost everyone globally. Many big names have adopted the change and are seeming to trail accordingly. Yes, we are talking about cryptocurrency. Cryptocurrency exchanges seem to play a vital role in proving their potential.
We are going to discuss the distinctions that are major in Fiat Currency and Cryptocurrency. This blog is dedicated to ratiocinate the differences and wisely choose the smart investing option.
What is a Cryptocurrency?
Cryptocurrency is digitally encrypted, a decentralised currency that is not linked to or regulated by any government or central bank. It works on a distributed ledger framework called Blockchain Technology. A blockchain is a distributed ledger that is uninterruptedly managed by a network of computers and maintains an exact copy of the database. Later, its records are updated using pure mathematics.
Cryptocurrencies do not need any intermediator to buy or sell them as they are not barred by the government. To buy and sell digital currencies, all you need is an account on any cryptocurrency exchange platform. In general, such exchanges allow you to hold these digital currencies in the digital wallet, so you can later use them for personal spending or trading.
As there is no intermediator, the transaction that occurs becomes a peer-to-peer transaction. Therefore, it eludes the fear of getting extra-charged for any international or in-state spending during the online payment.
What is a Fiat Currency?
Fiat currency is physical money or bank credit that we spend in exchange for goods or services. The government has full control over its distribution, and you always need an intermediator to execute the transaction. Fiat currency in India includes paper currency, coins, bills, banknotes, etc., to spend in exchange for trade.
Fiat money is legal in all countries. Some of the globally popular fiat currencies are the Rupees, Pounds, Dollar and Euro. You can either make digital or physical payments, and transfers of funds are possible.
Major Differences Between a Fiat Currency and Cryptocurrency
Some of the vital distinctions that set them uniquely apart from each other are:
- Medium of Exchange: Fiat currency and cryptocurrency have different mediums of exchange but can use both for trade. For trading using fiat currency, you must need an account with a bank, but for trading using cryptocurrency, you need an account on a cryptocurrency exchange.
- Safety: When it comes to safety, we need to look around for numerous aspects, such as fraud, the security they are providing and many more.
- Supply: Fiat currency has an unlimited supply, whereas cryptocurrency has a limited supply.
- Tracking: The transactions that occurred via fiat currency is traceable. Therefore, the transactions occurring via fiat money can be easily monitored and recognised by the issuer and recipient.
Although society is on the verge to become an advanced economy, a small percentage of people are registered on cryptocurrency exchange globally. One of the reasons can be its highly volatile nature, but people need to understand that cryptocurrency holds the future. Cryptocurrency in India is on the trail of innovation, and Flitpay is the best example of it. As a contributor within the evolving digital economy, our efforts are to make you understand distinctions between fiat currency and cryptocurrency and drive you towards the road of better investments that answers the effectiveness in the future.
