You know, in the past six months, the hot topic in the world of finance has been, which is a better currency. As if we compare bitcoin and fiat currency, one of them both is a better currency to use. Well, the fiat currency has been there in circulation for the longest time now; hence people believe this currency more than anything else. But there is some difference between the two, which makes the bitcoin more appropriate than fiat currency right now. I will discuss some of the important things about both of them here; I hope it helps you make a better understanding of both.
Similarities Between Bitcoin and Fiat Currency
Here I will first list down the similarities between both of them, and then, later on, I will discuss the difference.
Both can be stored, and both of them can be used as a mode of payment.
Both are widely dependent on consumer trust so that it can be used as a mode of payment.
The fiat currency gets its value from any precious metal, salt, or maybe even shells for that matter. Since the government declares it legal, it can be used as a fiat currency. This is what makes the fiat currency stand out and more trustworthy than bitcoin only.
Cryptocurrencies are the digital paperless money that was invented in 2009; since then, there has been no regulation and no government involved. Many people have literally taken advantage of the decentralized currency and have used it to invest. Gradually cryptocurrencies started to become as powerful as fiat currency, which means using it, you can buy anything you want to.
Cryptocurrency Vs. Fiat Currency – Detailed Study
As we know, both cryptocurrency and the fiat currency are two types of currency; hence some basic qualities are actually the same. Let us take the basic similarity, which is that both the currencies are used to exchange with a value, which means both of them can be used to buy or sell anything.
Cryptocurrency has some extra powers which the fiat currency will not be able to offer right now. Cryptocurrency can be accepted and sent to anyone at any point in time to any place on earth without any indulgence of the government of any country or any state. This factor of the bitcoin makes it the most special kind of currency, which is why a huge population has legally or illegally has accepted bitcoin.
Bitcoin has not yet become capable of equating debt, which means that if you take debt someone or from any bank or anything, then bitcoin can not be used to pay it back. In the case of repaying the debts, one has to use the fiat currency, which is brought out by the government, and only it will equate the value. Bitcoin has not government-set price, and the price or the value of the bitcoin can rise and fall at any point in time.
But this does not mean that bitcoin can not be used for clearing debts at all; in most cases, it is not used, but if both the parties agree to exchange bitcoins, then the receiver can actually get the debt clear using the bitcoin. But it depends on the lender to lender; many might not be willing to take payment in bitcoin. It is completely up to the acceptance of the lender and the borrower.
Moreover, the storage of both the currency is a matter of concern; in the case of bitcoin, it can be stored in a hardware wallet, but when we talk of fiat currency, it has to be stored in some vault with proper key and security.
I have been using both the currencies for various purposes, and I feel that bitcoin is far better than fiat currency, but again it is up to your choice and your comfort. You can easily download the bitcoineras and try to use both the currency for various purposes, and I am sure you will like it.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes