When we talk about fiat money, we are talking about the Fiat money that each country has for its internal trade, this money is regulated and issued by each country through its respective Central Bank. It does not have a backup in another value such as gold or silver itself, but its backup is based only on the law.
Fiat money is also defined, as that money established by each government to focus its economy, towards a certain medium of commercial exchange, for example, the Euro or the Dollar. Therefore, it does not have its own value but is derived from the trust that users can give it.
It’s for this reason that, in periods of hyperinflation, confidence in this type of currency decreases, which is why its users tend to look for other means, such as cryptocurrencies. Below are some advantages of cryptocurrencies (specifically Bitcoin) versus Fiat money.
Low storage and transfer cost
Bitcoin has no storage cost compared to traditional banking services. In relation to transfers, Bitcoin starts as a good alternative with reference to Fiat money, however, as its price has been increasing, so have transfer costs, although this increase is still cheaper than the cost of fiat money transfers.
Its division allows small transactions
Bitcoin accepts up to 100 millionth parts, which is equivalent to a unit being 0.00000001, this number is called Satoshi (honoring its creator), this means that it accepts small transfers, which is not always possible with the fiat money.
While fiat money does not go beyond borders (as it is regulated by each country), Bitcoin allows its movement around the world, without restrictions or additional requirements with total independence, which allows it to be used anywhere. part of the world. Bitcoin has no government or traditional banking regulations, so it has no geographic or political barriers that prevent its global circulation.
No government confiscations
Bitcoin is decentralized, it is not possible for governments to regulate its purchase or sale, that is, any user is free to send, buy or sell, receive or store Bitcoin, it is only required to have an internet connection and have an account created in a wallet.
Your transactions are made in short periods of time, in a very short time, we can send and dispose of the money anywhere in the world since the confirmation time of the transactions in a few minutes.
Impossibility to falsify
As Bitcoin was conceived and designed, it is quite difficult for another fake Bitcoin to be built or for “double payments” to be made without the network detecting this anomaly. Unlike fiat money, it can “easily” be counterfeited (especially when it comes to cash).
High level of security
Something that has characterized Bitcoin since its birth is its level of security, which also has a “cryptographic backup” that prevents it from being falsified, and which, in turn, allows it to be stored in many locations simultaneously. Currently the technology on which the Bitcoin protocol is based is far superior to that used by traditional banks in their credit cards. In Bitcoin, all transactions that are made are “recorded” in a registry, which will be freely accessible to anyone who wants to verify them.
What do you think about this topic? Do you know of other advantages of Bitcoin over fiat money?
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Image by Aleksi Raisa via unsplash.com under a creative commons license.