If you’re someone who hasn’t begun to invest or otherwise use cryptocurrency and are only familiar with fiat currencies, then you may wonder why you should consider trading in these coins.
Fiat currencies are printed by a central government back and then loaned to the nation’s government with interest and have numerous advantages. However, with the advent of blockchain and the ongoing proliferation and evolution of cryptocurrencies, these forms of currency may soon be outdated.
One reason for this is that cryptocurrencies are designed to give power to a large pool of users instead of one central banking authority. But with bitcoin and altcoins such as ethereum and so on, entire economies can operate in a decentralized manner that does not require a bank to issue or validate currency. Instead, transactions are confirmed by the community and remain secure without risk of the system being hacked.
Cryptocurrency also is not subject to the same degree of inflation as the United States’ dollar. Inflation means that the quantity of a currency in circulation is continuing to increase, which is not tied to the price of goods or services. In America, the value of the dollar has dropped every year since World War ll because of inflation.
In contrast, a cryptocurrency such as bitcoin is a deflationary currency. There are a set number of these coins in circulation and that number is capped. This means that the value of bitcoin will increase based on the concept of supply and demand. As more people become part of this economy the value of bitcoin increases, which is unlike other forms of currency.
Another consideration of cryptocurrencies is that large amounts of them can be move far more quickly and with less worry than fiat currency. This is thanks to the secure nature of the blockchain, which makes it possible to request and confirm transfers from your smartphone or other device without having to spend time jumping through hoops with your bank.
Finally, although the volatility of bitcoin has made some investors wary, there are many other cryptocurrencies available and the technology isn’t going anywhere. In fact, these currencies are becoming increasingly entwined with all sorts of markets, and all that remains is for widespread adoption to bring cryptocurrencies to everyone and disrupt the global fiat monopoly.
