Before the 1970’s, cash was a dominant form of money, but this is something that is becoming increasingly not the case as the decades go on. Today most of us tend to refer to electronic transactions, particularly influenced by the development of online shopping and the influence that all things digital are having on the day to day running of our lives. At this present moment, more and more of us are progressing towards becoming a cashless society- which is precisely where Bitcoin comes into play. Bitcoin is a cryptocurrency that was introduced in 2009 and is becoming an increasingly popular form of currency when it comes to online transactions.
Find out more about the significant differences between Bitcoin and fiat currencies in our infographic, designed to offer you a comprehensive insight into what the potential benefits and drawbacks of Bitcoin (and other cryptocurrencies) really are in comparison to our well known fiat currencies. Bitcoin has certainly come a long way from first coming onto the scene, but how will the world react to its subtle yet increasingly evident infiltration into our lives and methods of spending?
Round 1
In order to get a better feel for what each type of currency, be it cryptocurrency or fiat, and what it really stands for, it is vital that you look at how it is defined. We have explored the way that both cryptocurrencies and fiat currencies operate, circulate, are created, issued and how their value is determined. For example, while cryptocurrencies exist in a solely digital arena, fiat currency is more tangible and physical. Alongside this, cryptocurrencies have a limited supply, whereas fiat money is unlimited with the government producing more coins and paper money when necessary. While Bitcoin and other cryptocurrencies are created by computers, fiat currencies are issued out by the government. Interestingly, the value of cryptocurrency is not determined by the markets or government regulations in the way that fiat currencies are. One of the other reasons why Bitcoin is also making waves and capturing the attention of the world is due to the fact that it is not controlled by anyone or by any government, whereas fiat currencies are (although this is something that is under debate to change).
Round 2 – What is it?
In the same way that fiat currency operates in several different types of currency, cryptocurrency has also seen several other types being introduced over the last decade. While Bitcoin was introduced in 2009, it did not take long for several others to join the cryptocurrency trend. From the Litecoin and Ripple to the Dogecoin, there are now numerous ways in which people can introduce cryptocurrency into their online spending. Fiat currency, on the other hand, has far deeper roots, with the Great British Pound dating back to as early as 775 AD and is believed to be the world’s oldest currency still to be in use!
Round 3- Comparative history
When you compare fiat currency with its crypto counterpart, what is most significant in terms of differences is the fact that has been in existence for centuries as opposed to being something that has been around for less than a decade in the way that Bitcoin has. This has allowed us to become far more familiar with fiat forms of currency and is perhaps why it can be harder for people to accept or begin to integrate it into our lives. The challenge that Bitcoin faces in terms of catching up with the popularity of fiat currency is in it also becoming something that is more widely accepted. While you can pay for pretty much everything with fiat money, this is still not entirely true for cryptocurrency.
Round 4- Traits of each type of money
Assessing the traits of each currency allows us to gain a greater insight into the specific capabilities of both. Here we have challenged both fiat currency and Bitcoin when it comes to things such as interchangeability, security, how programmable and durable etc. each forms of currency are. While in some areas Bitcoin is leading the way when it comes to offering up positive traits, in others it is not as favourable, with the same applying to fiat currency also. The key to choosing the best form of currency for your personal needs should be based on what trait we mention is of the greatest importance to you.
Round 5 – How they work
Perhaps one of the most significant differences between fiat and cryptocurrencies is the fact that they operate in different ways and transactions take place in contrasting ways. With Bitcoin, the transfer of money occurs quickly and entirely without the need for third person interaction. With an online fiat money exchange, a sum of e-money is translated into an equal amount of e-value through the use of a mobile wallet. While both fiat and cryptocurrencies allow you to purchase the things you want and need, they go about this process in different ways. Depending on the type of purchase you want to make, you will find that one form of currency is better than the other- although this may not always be an issue in years to come. With the value of Bitcoin rising to a record level high, there is talk that it could soon take over the way that we spend money in the near future.
Round 6 – Why Bitcoin is better than fiat
While the long term potential of Bitcoin is yet to be established, it has to be said that the cryptocurrency is predicted to go far when it comes to revolutionising the way that we perform transactions online. While at the moment the main market in which Bitcoin has been integrated has been that of Bitcoin gambling and online casinos, this is by no means all that it should be limited to. In comparison to fiat currencies, Bitcoin allows individuals to take the power back from banks and the establishment as it is not regulated and has the potential to rebuild free market capitals. As well as this, Bitcoin is not affected by inflation, is far quicker to move and harder to lose than fiat currencies. All of these factors are what leads certain people to believe that cryptocurrency is soon going to take over from fiat based currencies and completely transform the way that we view and use our money.
