Since the dawn of human beings, different forms and types of "money" have been used as a medium to exchange goods and services. The evolution of the concept of money has been changed and evolved marginally. Humans have seen many stages of exchanging over time that ranges from cowrie shells to virtual currency.

Before diving deep down into the differences between fiat and cryptocurrencies, we first have to understand the meaning of these systems.

Traditional financial systems

It's also known as fiat currency. The word "Fiat" is a Latin word that translates to "a determination from/by an authorization or a government". In other words, every country has a government-recognized currency, which means any person who is currently residing in the country can use it to exchange goods and services. It is the most common type of currency and we use this currency in our daily lives. As a citizen of Pakistan, Pakistan rupees (PKR) are recognized all over Pakistan while for America, US Dollar (USD) is used as fiat currency.

Cryptocurrency

A cryptocurrency is a form of virtual asset or digital data that is entirely based on the concept of decentralization. The word "decentralization" is pretty much self-explanatory, it means these currencies are not in control of a single organization or a government. The word "crypto" translates to "hidden or secure". Its most common and famous examples are Bitcoin, ethereum, and dogecoin.

Let's check out some of the differences between these two types of currencies.

Cryptocurrency	Fiat System
It is a virtual currency	It is a physical currency
Decentralized currency	Government controlled currency
transaction are verified and secured	transactions are easily trackable
can only be stored in crypto wallets	can be stored physically or in a bank
Unlimited supply as it a virtual currency	Limited supply, excess of it can cause hyperinflation and loss of worth
No need for involvement of third-party	There might be a need for third-party involvement
Low stability of value	High stability of value
Easily accessible all over the world, just one click away	Might even take few days for the transactions to complete
Low transaction fees	transaction fees depend upon the distance in most cases

Pros of Cryptocurrency

• Ease in transactions without any intervention from a third party. Many of the time, while dealing with fiat currencies, we often have to rely on third parties to transact our money. They most probably will charge their fees. In cryptocurrency, transaction fees are far less than that of traditional systems.
• Transfer assets to another side of the world have never been easy before, you can send and receive money anywhere with just a few clicks and you can get it within a handful of minutes.
• The transfers are protected by different public and private keys. The owner must have those keys to do any type of operation with their assets.
• Even though the usage of these virtual currencies is entirely anonymous, there is complete transparency as every transaction can be viewed in the respective blockchains.
• Cryptocurrency provides many great opportunities for investments, if used correctly, it can massively help in one's financial situation.
• There are no restrictions of any type. One can do any operation with their assets.

Cons of cryptocurrency

• The absolute anonymity of cryptocurrencies makes them both useful and dangerous at the same time. It has been proven beneficial for those who are sensitive about their online privacy. On the other hand, many illegal transactions have been made through it.
• There is very little stability in the prices of these virtual currencies. The prices keep fluctuating in real-time based on the demand for coins. Due to this reason, many have suffered great losses.
• Since the currency is decentralized, you are on your own, a single wrong decision can either make your life or bring you to the ground.
• In cryptocurrency, the keys are all that matters in wallets, if you lose them, you can not in any way recover them. All the assets will be lost in a matter of time. Pretty scary, right?
• Cryptocurrencies are more prone to hacking. You can save yourself from hacking by simply following the proper security measures and protocols.

Question2

What are the objectives behind the creation of Bitcoin?

The first member in the league of cryptocurrency was Bitcoin. Twelve years have passed by, and no one is even near the price and worth of Bitcoin. The question that arises is, why Bitcoin became famous and holds that much worth in the modern, digital and advanced world? The answer to this question is quite simple, Bitcoin was introduced to this world as a way to eliminate all the traditional financial challenges and problems that one needed to face to transact their money.

Bitcoin aimed to eradicate all the involvements of intermediaries needed for the transaction of their assets. It came into existence in 2009 by the creator Satoshi Natamoko, whose identity hasn't been revealed to date, as a response to the "great financial crisis" world was going to face in 2008-2009.

• It was announced to eradicate the dependencies of the world on the Bank systems and all the rules, policies, procedures, and fees one had to follow to transfer their money.
• The one famous reason is that no involvement from any third parties is required. We do not have to rely on Banks to do the work when it is possible to do the same thing with just a few clicks from a mobile phone.
• I can not stress enough about the level of security it provides to its users and the level of transparency it offers in the transaction. Advanced cryptographic methods are used to secure the transaction, unlike traditional bank systems where there can be a breach.
• One of the main reasons that it's created is to provide a decentralized currency. No one has any type of authority over your assets. No one has the right to enquire you about your assets whereas, in traditional financial systems, Banks can check every action you've ever done in your account.

Question3

What are the differences between Wallets and Exchanges? Which is better in your opinion?

When you buy or hold a digital currency, it's not a physical currency, so you can not store it in your pocket or your bag, right? So how will you reserve these assets? That's where exchanges and wallets come in handy. Before going deep again, we have to first understand what these mean and what they do.

Cryptocurrency exchanges

Exchanges are platforms that enable and assist you in the trading of one currency for other different currencies. They even permit you to convert digital currencies into fiat currency and vice versa. Exchanges can be said as the heart of the Cryptocurrency world as it is the place where you can trade, invest and earn from financial strategies. They can be said as the mediator that helps you to invest and exchange between different currencies. There are two types of exchange, one is a centralized exchange, and the other is decentralized. Both have their fair share of benefits and risks.
Example of Centralized exchange: Binance
Example of Decentralized exchange: Pancake Swap

Cryptocurrency Wallet

Exchanges offer wallets as one of their features but they are way less secured and are more prone to hacking and are not preferred to use as a place to secure your assets. There are different software that can be used as a wallet. They provide security by giving you different public and private keys, you can not access your wallet if you do have those keys. There are also two types of wallets, one is called cold wallets (offline wallets) and the others are hot wallets (online wallets). Both also have their fair share of risks and advantages.
Example of hot wallet: Trust Wallet
Example of cold wallet: Paper wallet

Now that we have some basic knowledge about wallets and exchanges, let's check out some of the differences between them.

Crypto wallets	Crypto Exchanges
Only you have control over your assets. No outsider can access them.	Your assets can be accessed by the exchanges.
Wallets are more secured	Exchanges are not considered that much secure for your assets.
Your keys can not be recovered	Your keys can be recovered
Used for securing purposes.	Used for trading purposes.
You have to first transfer your wallet assets to exchange then you can trade it.	You can trade instantaneously.

To answer the question that, what did I prefer most from the two of them? My answer would be that we need both of them to trade, invest, secure, and store seamlessly. Exchanges are very important for trading purpose but is a poor choice for storing assets. Wallets are the best and secure way to store assets but then you can't invest without exchange software. The best method is to only store the assets in the exchanges which you are currently using to trade meanwhile keep the rest of your assets in a secure and trusted wallet.

Question4

Create an account on Binance and show screenshots of the process

Here are all the steps I performed to create my account on Binance.

• Downloaded and opened the Binance app
  

  
  
  

• Clicked Register, and entered my email and password (Images taken from a different mobile as screenshot wasn't allowed by the app due to security purposes)
  

  
  
  

• Solve the puzzle by sliding the arrow
  

  
  
  

• Since I used my email, I received a verification email, after putting the key, you'll see this screen
  

  
  
  

• Congratz to myself! Account created.