Key Differences Between Cryptocurrencies & Fiat Money
Have you wondered about the main differences between crypto and cash? Are you finally ready to learn more and possibly commit to investing?
Cryptocurrencies were the best investment last decade by far, and despite the challenges the world faces from the COVID-19 pandemic, it shows every sign of remaining an exciting, lucrative way to make profits this year and beyond.
The last thing you want to do is make the wrong choices that will stall your investments. Cryptocurrency is easy to buy and sell, but you need to have access to the right advice and information.
Let’s take a look at how crypto differs from cash, the opportunities with Bitcoin and cryptocurrencies in general, and how the future should play out.
What are cryptocurrencies?
There are many different cryptocurrencies now available (over 1,600 – and growing), with the most famous amongst them being Bitcoin, Ethereum, Ripple, and Litecoin.
The mysterious Satoshi Nakamoto created Bitcoin, and other cryptocurrencies have since developed as side products of his creation. Initially, the privacy and lack of government control provided of cryptocurrencies were attractive to many, followed by people making outstanding profits by investing in digital coins.
What are the advantages crypto has over cash?
The growing popularity of electronic money and transfers could mean that cryptocurrencies are on track to become a mainstream currency of the future. They have considerable advantages over regular fiat currencies. For example, not being controlled by a legal authority, such as a central bank, running on a blockchain that cannot be manipulated, the speed and low-cost of transfers, and the ability for users to remain private. All of these are attractive offers for those used to cash and banks.
Of course, fiat cash is still considered the go-to safe choice when it comes to trading currencies, but Bitcoin and other cryptocurrencies are now becoming increasingly easy to use. 2020 has also shown us the lack of stability of major currencies during a catastrophe, and the world is now heading into a cataclysmic recession.
An example of the impact of such a recession is the predictions for the US dollar in the coming months, which make for horrific reading. Crypto has also been volatile throughout its history, but digital currencies always seem to recover quicker than cash.
Can cryptocurrency replace cash?
The power of crypto over cash becomes clear when we consider the fact that there are over 18,000 Bitcoin holders with over a million dollars worth of Bitcoin in their accounts. The amount of millionaires created by Bitcoin is staggering. Even the best fiat currency traders fail to make the vast profits that Bitcoin investors have.
We will have to see if the uproar from John Bolton’s sensational revelations about President Trump’s plans to “go after” Bitcoin will affect the markets. The bet here is that it will serve to entrench the loyalty of crypto enthusiasts further.
The Democrats have been trying to get a digital dollar put into the COVID-19 stimulus packages. While cryptocurrencies haven’t made it to the final bill, it seems to be a near certainty that this will happen eventually – especially if Joe Biden wins in November.
Such changes will only enhance the reputation of cryptocurrency and make it more mainstream. If the rumored E-krona in Sweden, the digital Euro in Italy, and the digital Yuan from China all come into play, it’s only a matter of time before we have no use for cash at all.
So will cryptocurrency ever replace cash? We have seen that it has some inherent advantages, such as speed and low-cost of transfer, massive profits to be gained for investors, and more. It will be interesting to see how the future of cryptocurrency plays out over the coming years, but the indications for cryptocurrencies, in general, remain positive.
How is cryptocurrency different from traditional money?
Perhaps the most significant difference between cash and digital currencies is the opportunities it presents. Ease, the ability to quickly transfer large sums worldwide, and privacy give cryptocurrency some major advantages over physical money.
We can all see the opportunities presented by cryptocurrencies. If you had invested $100 in Bitcoin in 2009, that same sum would have been worth $9.200,000 at the end of 2019. Where else could you have made that kind of profit from fiat currencies?
Perhaps the future of Bitcoin will provide such lucrative opportunities once again, but for now, Crypto and fiat currencies will have to co-exist. The war wages on and the scale of the market uproar caused by this year’s pandemic will have a dramatic effect on the future of cryptocurrencies. It might well be that Bitcoin and other cryptocurrencies become the safest choice for investment during the coming years.
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