What is the difference between fiat currencies and cryptocurrencies?
What is the difference between fiat currencies and cryptocurrencies?
The most important features that are different, IMHO, are two:
1. The decentralization feature of cryptocurrencies.
2. The ability to connect real business to the currency.
Fiat currencies are issued by states and usually their state bank. Those currencies are managed by the state. This means that the state can change its' currency upon its decision. For example here in Israel the government has changed its' currency from Israel Lira to Israel Shekel.
When a decentralized currency is issued it does not belong to anyone, thus, no one can change it. People can stop using it, but, it still exists in the virtual world.
The second thing, means that cryptocurrencies can be backed by businesses. Let me give two examples:
1. The Envion.org, EVN token – which pays dividend to token owners.
2. The ICO-AID.com, AID1 token – which set several tokens as its assets.
Fiat currencies and several cryptocurrencies are psychological instruments. Several cryptocurrencies are now, backed with real businesses and this is a great move forward.
When you invest in cryptocurrencies, try to add this as part of your thinking – does this cryptocurrency is connected to a real business, or is it just a psychological tool?
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Upvote or resteem my post if you like it. Check out my previous posts on my crypto blog
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- Bitcoin accerchiato dalle autorità di regolamentazione: chi vincerà?
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