The cryptocurrency market is growing and evolving rapidly, offering people more opportunities for sending money, investing, and making passive income. However, one question that keeps coming up when cryptos are mentioned is, “which is the better option between fiat and cryptocurrencies?”
In this article, we take a closer look at fiat and crypto coins to determine the main differences. Keep reading to make the big decision whether to go crypto or stick with fiat currencies.
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A Brief about Fiat Currencies: Pros and Cons
Fiat currencies are the traditional notes and coins as we know them today. The money is printed or minted by central banks and strictly controlled by respective governments. Fiat money is the most accepted form of payment for products or services. Every store you see out there is likely to accept cash or bank transfers for the services you bought.
Some people often consider credit cards and debit cards to be different from fiat money. While this is true, these are channels designed to help you carry fiat cash in different forms. For example, a debit card is a representation of the money that you have in your account. However, a credit card represents fiat money credited to your account for use. As you use the card, the cash balance in your account decreases.
The main advantage of using fiat currencies is wide acceptability. Again, the money can be easily converted to the legal tender of the country of interest. For example, you can easily convert Singapore Dollars to Hong Kong Dollars. However, using fiat currencies comes with a number of challenges:
- Sending money, especially abroad, can be expensive and take a lot of time.
- Using banks or traditional financial institutions to send or save money means there is no secrecy.
- Your money can easily be frozen through a court order when stored in a bank.
- Banks limit where you can send or use the money. If your country has blacklisted a specific country, it will be impossible to send money there.
A Closer Look at Cryptocurrencies: Pros and Cons
As you can see, fiat currencies are produced and strictly regulated by central banks and financial institutions. The main issue with this model is that it is so profit-driven and not inclusive. For example, so many people across the globe have remained unbanked because the financial companies are focused on areas that can help them optimize returns. These are some of the ills that cryptos came to cure. So, let’s take a closer look.
How Do Cryptos Work?
A cryptocurrency is a form of digital money, which only resides in their respective blockchain networks. This means that they are not printed the way it happens with fiat notes and coins. When you purchase crypto coins, what you receive are not notes and coins but a string of codes that show the number of coins you have.
The most notable attribute about crypto coins is that they are decentralized. Instead of using centralized authorities, such as credit card companies and banks, they use nodes (a network of computers spread in their networks) to confirm transactions. This means that when you initiate a transaction, it is taken over by the nodes that confirm provided information is correct and add the information to the blockchain. Note that once the information is added to the blockchain, it is immutable.
Unique Benefits of Using Cryptocurrencies with hi.com
As we indicated earlier, the design of cryptocurrencies was aimed at helping to address the challenges of the traditional financial system. The most notable benefit of using cryptos is that it makes sending funds across the globe easy and fast. As far as both the sender and recipient are in the same blockchain network, sending coins only takes a few seconds. Other benefits that come from using cryptocurrencies include:
- Sending funds is easy because blockchain technologies are not based on the principles of profit optimization.
- They guarantee optimal privacy and confidentiality when making transactions.
- Unlike banknotes and coins stored in a bank, crypto coins can help to protect your assets because they are free from government seizure.
- You can use the coins to make passive returns through activities such as staking. To enjoy even more, make sure to work with professionals, such as hi.com.
The main disadvantage of using cryptos is that they can be pretty volatile. The price can be high at one moment and plunge with a huge margin in the next couple of days. The good thing about the volatility, though, is that you can take advantage of it to rake huge returns, whether trading them in the exchanges or through staking.
This post has demonstrated that the world is racing towards being a crypto economy because of the associated benefits. Both fiat money and cryptocurrencies come with unique benefits. Although crypto coins come with impressive benefits, you cannot shift away from fiats completely as of now. Therefore, you should consider holding both. Your employer or most clients are using fiat: so, make sure to have a system that accepts them. Then, buy some cryptos and use them to stay ahead of others. Visit hi.com to learn more about cryptos. They are your one-stop platform for helping you easily send, save, earn, and convert cryptos.