Club5050-Cryptocurrency Vs Fiat Currency

Hi everyone.

It is quite obvious that most people still don’t know the difference between cryptocurrency and our normal fiat currencies. This post will be certainly explaining the fundamental difference between cryptocurrency and our normal conventional financial system.

There are a couple of differences that distinguish these two from each other and it will be well explained as we move forward.

I will then again explain why the decentralized nature is needed in the cryptocurrency blockchain, which factors affects the value of cryptocurrency and how the development of cryptocurrency is going viral.

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Differences Between Cryptocurrency And Fiat Currency

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Before going straight to looking at the main differences between cryptocurrency and fiat currency I think it will be very necessary to understand what these two terms are before looking at their differences.

Fiat Currency is a type of currency either paper or coin that is declared by the government and is not pegged with the price of any commodity. Fiat currency gains its value from the public’s trust in the government. Examples of fiat currencies are U.S dollar, Ghana cedis, Pounds Sterling etc.

Cryptocurrency is a digital blockchain asset which is decentralized in nature. Cryptocurrency allow peer to peer transactions between individuals without the involvement of any third party like a bank. Examples of cryptocurrencies are Bitcoin, Ethereum, Dogecoin, Tether etc.

Now let’s take a look at some of the major differences between cryptocurrencies and fiat currencies.

Cryptocurrency	Fiat Currency
In cryptocurrency, transactions are computerized and the identification of the sender and receiver of currency remains hidden	In fiat currency the sender and receiver of the currency transactions can easily be tracked and identified
Cryptocurrency is a digital currency which operates as a medium of exchange where clients can gain digital coins based on their choice	Fiat currency is a currency which is supervised and managed by the government and bank
Cryptocurrencies are intangible due to its virtual form or electronic form	Fiat currencies are tangible as they are in the form of paper or coins
Cryptocurrency enables the transfer funds only digitally	Fiat currency enables payment or transfer of funds both digitally and physically.
The supply of cryptocurrencies is limited in the crypto market	The supply of fiat currencies is unlimited as banks keep printing paper notes and coins.

The Need Of Decentralized System

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For me, there are numerous reasons why a decentralized system is needed in many organizations or financial sectors. Since we see cryptocurrencies to be the revolutionaries of fiat currencies they need to upgrade in certain aspects of their operations and management. The decentralized nature of cryptocurrencies has succeeded in getting the attention of so many people around the world.

And below are some of the reasons why a decentralized system is needed in cryptocurrencies.

Absence Of Central Body: In decentralized system there is no need for a central body to manage the affairs of the system and shows clients on how to use their assets within the system. Unlike some organizations were there is a central body to manage the system, in the cryptocurrency blockchain there is no central body and clients are free and have the freedom of managing their own assets.

The System Works 24/7: In decentralized system there is no closing or opening time for working. Unlike our normal conventional financial system where banks have the time they operate, clients are in charge of their own accounts in decentralized system and are entitled to carry out transactions at anytime and anywhere without any interference.

Transparency: Transparency in cryptocurrencies makes it easy for the system to keep records of transactions which makes it difficult to change or cheat the system. Transparency makes records of transactions available to everyone at any point in time.

In this modern world where transactions are computerized and fiat currencies are used less than they were used before, some people may still have problems with the differences between fiat and cryptocurrency.

However, both currencies have similarities in them like being legal tenders for the exchange of good and services, having their values being determined by factors of demand and supply and they all serving as a medium of exchange.

Although, this post is all about how these currencies differ from each other which makes it easy for people to differentiate between the two currencies. With all that i have been able to mention, I will say cryptocurrency have a more promising future due to its decentralized nature and how it has been used in this modern world.

Thank You All!!