Fiat money is the means of payment related to the national currency, such as the US dollar, the Pound, or the Euro. It is considered legal money by a government, but its value is not justified by natural resources, such as gold. Fiat money are acceptable. An obvious feature of money is that everyone must accept it as payment, taking into account the inherent or perceived value of the object. Acceptance of cryptocurrencies remains low, however some of the world’s largest companies accept Bitcoin payments, including Microsoft, PayPal, Goldman Sachs, and more.
Cryptocurrency is a decentralised digital currency, which can be used for goods, services and transportation of investment goods. The first cryptocurrency was Bitcoin and it was first released on the market in January 2009. Cryptocurrencies offer you the opportunity to become your own bank and to have the unique control of your money and your property. They give you the ability to transfer value directly, anywhere, at no cost, as well as do more “complex” things through blockchain, such as smart contracts that allow you to create contracts, sell and buy anything with absolute safety and speed.
Cryptocurrencies can be considered as a variety of digital currencies and is an asset used as a medium of exchange. Many encryption currencies use their blockchain as decentralised system. The result is that no supervisory authority controls the transactions. No information is changed or interrupted during the transaction by third parties, as the purpose of cryptography is to make secure communication creating and analysing algorithms and protocols. Even if cryptocurrencies are a type of digital currency, there are some differences in relation to structure, anonymity and transparency.
Currency is aggregate, which means that a group of people and computer regulates transactions. On the other hand, cryptocurrencies are decentralised and the majority of the community enacts the regulations on transactions, etc. When it comes to anonymity, the digital currencies require user identification in the form of documents that issued by public authorities. In terms of buying, investing and more cryptocurrency procedures, no user identification is required.
Both inflation and deflation in traditional currencies and countries have a negative impact on both the country’s economy and its citizens. It has been observed that when a country’s economy is volatile or its currency loses its value, citizens turn to cryptocurrencies.
In general, digital currencies are the inevitable evolution of money. Now, all the major Central Banks in the world are discussing and designing their own digital currency and want to abolish cash in the coming years, with some countries already starting. Although Central Bank Digital Currencies (CBDCs) are not much different than the existing digital money, it is important that governments build new and improved systems on blockchain technology and it will be a great opportunity for people to get to know and learn about technology and see the benefits that cryptocurrencies offer.
Cryptocurrency ATMs continue to grow in the thousands around the world, as well as cryptocurrency payment services, as anyone can now pay with their cryptocurrencies or directly through applications and wallets from mobile.
One thing is for sure: the future is digital and the new global economy has already begun to be built on new technologies. This decade will be crucial to finally seeing a better, more efficient and transparent system.