What is Cryptocurrency and the difference between Fiat

Cryptocurrency was created in 2008 and launched in 2009. All cryptocurrency is stored in a digital wallet. It is an over two trillion dollar industry. Cryptocurrencies run on a ledger called the blockchain, which stores information electronically in digital format. The blockchain is the technology that enables the existence of cryptocurrency among other things.

‍

Cryptocurrency is a digital currency in which all transactions are done online. They are completely virtual. There is no tangible coin that you will ever see or touch. They operate completely independent of any central authority or individual. Typically our money supply, our central banking is governed by banks, governments, institutions, which are all centralized meaning, one central authority or one specific company is either in management of your funds or nation in control of the laws and legislation. Cryptocurrency, however, gives the completely different opportunity for people to operate in the economy which is called decentralized meaning it is not controlled by one person, it is not controlled by one nation, state or city. It is all just controlled by either its blockchain or the actual people.

‍

What’s very interesting with cryptocurrency is that supply of money is regulated by software and the agreement of users of their system. Right now there is many different cryptocurrencies all around the world serving different purposes, different utility with different products. With cryptocurrency you are able to send a transaction across the world and no bank has to approve it, no government has to approve it, nobody has to sign off on your personal money transfer to make a transaction. It allows direct transactions between individuals without a “middle man”, such as a bank or large corporation. Cryptocurrencies are either mined or tracked through decentralized networks of computers around the world and this process also creates cryptocurrencies. 

‍

Cryptocurrencies and fiat money share some similarities and differences:

‍

Cryptocurrency:

• Can be used for payments
• Cryptocurrency can be purchased on exchanges and can be held long-term, traded for other assets, or exchanged and purchased for goods and services.
• It is decentralized meaning it is not controlled by anyone but the block chain and the people.
• Bitcoin has a fixed supply of 21,000,000 units.
• Transactions using cryptocurrency happen via blockchain with no need for an additional link, which gives the system’s users more freedom.
• Cryptocurrency is less stable than fiat currency.

Fiat currency:

• Can be used for payments
• It is issued and controlled by central banks and governments.
• Fiat money is subject to inflation and banks are able to print more of it at any time.
• Transactions using fiat currency happen within the traditional banking system meaning an intermediary is required for most transactions.
• Fiat currency is far more stable than cryptocurrency.

‍