Things you need to know about traditional monies vs. cryptocurrencies in 2022.

This article compares two types of currencies used globally. Cryptocurrency (decentralized and backed by The Blockchain), and the Fiat currency (governed by central banks). Here, we highlight the pros and Cons of both currencies and the policies surrounding them.

Bitcoin is the “king of Cryptocurrency,” an undisputed and not a self-acclaimed title. Bitcoin holders are responsible for a large part of the general cryptocurrency trades that happen daily. Besides being the first decentralized cryptocurrency, it is also the most widely accepted as it even has governments in some countries supporting it. Cryptocurrency is the fastest growing technology in modern times and showed a 97% confidence rating in the user index for 2021.

Fiat currencies, on the other hand, are the monies we use in our various countries. They are backed and issued by the government and are not linked to physical commodities. Fiat currencies are centralized, and the government closely monitors them. However, in inflation or hyperinflation, the currency loses value, and holders are lost.

Let’s look at the Pros of both currencies

Starting with cryptocurrencies, you can perform cryptocurrency transactions with much ease. No long queues, no paperwork, and hardly any third parties are involved in transactions. Transactions involving cryptocurrencies can be done from any point using internet-enabled devices. In some communities, some ATMs give fiat currencies to people who have debit cards connected to their bitcoin wallet.

Cryptocurrency transactions occur quickly, either during online trading or as purchasing power. The fees attached to each trade is often negligible, and when it is not, it doesn’t compare to fees attached to doing exchanges or trading on designated platforms. Cross-border payments using cryptocurrencies occur in real-time and can be beneficial for building trust for business partners in different parts of the globe.

Another factor that gives cryptocurrencies an edge is their fast growth. It has a low barrier to entry and, over the years, has proven to be one of the fastest-growing markets. Anyone with access to a smartphone connected to the internet has the option of trading a cryptocurrency. It brings enormous returns as a coin you bought today could increase by over 150% of the original price. An advantageous risk if you ask me.

Cryptocurrency transactions offer security and privacy. While all transactions can ultimately leave a trail and ID, with cryptocurrencies, if you do not know the address of a person, you wouldn’t know where to look. Cryptocurrencies are built with blockchain technology which is one of the most secure technologies currently. The ledgers of each network are considered immutable, challenging to penetrate, and safe.

Cryptocurrencies are flexible. They do not have their worth attached to any commodity or clime. They can be spontaneous, and you can have assets in multiple coins and spend them when you can. The crypto trading markets are available for trading all year round. Aside from factors that are unique to each trader, like network and light outages, there is no general factor affecting trade.

But there have got to be reasons why the ruling houses of some countries have out rightly banned crypto. Speculation of fear? Now everyday talk on social media highlights the possibilities of the government being skeptical of cryptocurrencies because of its perceived ability to render the fiat obsolete, as a result of this taking control of wealth out of the hands of the government. But before we conclude on this, let us look at expert opinions.

• Possible tax evasions- Since the government does not have the range for regulating the crypto market, monitoring tax, and exerting control over the income of people, there is bound to be incidences of tax evasions
• Data Loss- loss of keys by the crypto owners using private keys stored o in a single storage unit is the risk of losing them and hence losing an essential part of data.
• Market manipulation- with crypto, a single Twitter thread by an influential player can cause significant fluctuation in the market.
• Black market activity- the lack of proper paper trials makes it easy for fraudsters and criminals to carry out actions using the crypto market.

Fiat currencies can’t be that bad.

Yes, they are not. The most significant advantage Fiat currencies have over cryptocurrencies is stability. Fiat is backed entirely by the government, and in most cases, they show how well the government is faring economically, so no, the government doesn’t let it drop as bad as some crypto coins do after their first boom. The government, in some cases, offers asset protection as insurance against the currencies.

Fiat is easy to spend; nobody has the option of rejecting fiat. It is the legal tender in each location. Whether in digital form or its physical form. Fiat currency can easily be exchanged with another fiat currency in another country for the stated market value without learning any technicalities. There is no fear of money becoming obsolete or less trendy as most people fear most cryptocurrencies. It is not a buzz that would die down anytime.

For regulation, decisions are reached quickly as these decisions are made from a central point. The government also provides laws that protect fiat currencies against fraud and theft. On occasions of theft or fraud, cases can be reported, and a straightforward course of action would be taken to recover lost funds. This full backing of the government makes Fiat currency a safer option to store wealth. Safe, however, doesn’t mean best….

Let’s draw some parallel lines.

Now even tho both currencies seem to operate very differently, they have a few similarities between them

• They are both money, they have purchasing power and can be transferred from one person to another
• They both have value and can be used to store wealth
• Both currencies can have digital versions

We’ve had a run-through of the advantages they both have over each other and the major points for me are these. Cryptocurrencies are here to stay, you can amass a lot of wealth by learning to trade it. It makes doing transactions easier and fosters trust because of its very transparent nature. Fiat currency however is the legal tender and is backed by the government’s “word and credit”. In the discussion of which is the better currency, I would say both are here to stay and have relevance in certain areas. How you choose to interact with both markets is entirely up to you.

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