Bitcoin, along with the thousands of cryptocurrency, is getting popular due to their offers and the stability they bring into the financial system. Most parts of the world have already experienced the benefit of using cryptocurrency.
The majority of the global population still relies on the traditional fiat currency issued by the government. However, cryptocurrencies are used on a large scale in the trade market. Remittance is also the field where the use of the crypto is on the rise.
Cryptocurrency VS Fiat currency
Fiat currency that we commonly know to us are in the form of paper money or the money that is being issued by the government, has always been the primary means element used for monetization. However, this legal tender is not backed by rare elements like gold and other precious commodities, but instead, it is backed by the government. And the value of the fiat currency depends on the economic stability of the nation.
The fiat currency comes with a physical form and is regulated among the people. As the government itself backs up the fiat currency, people trust its credibility and use it for financial transactions.
The way people need to improve, the financial system is also looking to enhance the transactional methods. In search of new transactional methods, people have come across a new currency called cryptocurrency.
As we speak, there are more than 5000 cryptocurrency presents in the world. And out of the Bitcoin stands at the top. The said number of crypto coins might increase in the near future.
Now that you know what fiat currency and cryptocurrencies are. Let see how fiat currency feels short in front of bitcoin and other cryptocurrencies.
Disadvantages of fiat currency
If we compare fiat currency and cryptocurrency, we will easily see that fiat currency holds the lead in most aspects. It is to be expected that the currency has survived thousands of years of regulation. However, new generations are looking for a more digital solution for the financial transaction. And this was fiat currency fell short of their expectation.
Here are the things where Fiat currency needs improvement to keep cryptocurrency at the bay of becoming the mainstream currency.
1. It holds value in its respective country
The value of the fiat currency is limited within the international borders. That means the value of the fiat currency is valid in the respective country. You will not be able to use the currency of one country into the other countries. This feature of the fiat currency had made the people go for the currencies that are not bound by the international borders.
2. Possibility of being damaged or theft
With paper money, there is also a chance to be torn apart with little extra force. There are natural elements as well that can directly catalyze to lose your fiat currency.
3. Issue off over issuing
The serious problem of the fiat currency is that it can be issued without any issue. And if the government is not careful with the over issuing the fiat currency, it can result in inflation.
4. Inflation
Over issuing of the paper can lead to inflation. Inflation can be an evil thing in the fiat currency system. It can give rise to the following:
- Steep price rises: This can affect the people at the lower level of the financial ecosystem.
- Affect exports and imports: Steep rise in the price of the things that directly affect the export and import.
- It can decrease your fiat currency valuer on the international platform: The global platform’s exchange rate will be lowered. That means you will be needed to pay more home money to buy foreign products.
Conclusion
If the government can think carefully and then issue paper money, there will be no problem whatsoever. If all of the issues that we have just mentioned above can be corrected, somehow, there will be no loopholes in the fiat currency’s uses. Due to this issue, most of the young generation are using platforms like https://1g-profitsystem.com/ for cryptocurrency transactions.