There is no denying that cryptocurrency usage has increased exponentially since it first appeared on the scene back in 2009.
If we look at some of the statistics for 2021, we can clearly see that the rise of crypto hasn’t stopped a beat — miners have managed to unearth a staggering 18 million coins so far this year, and Bitcoin has accounted for $6 billion in daily online transactions, being surpassed only by Visa ($30.3 billion) and Mastercard ($16.2 billion).
In Japan, for example, there are steps being taken to take advantage of the popularity of digital currencies. Several banks are reported to collaborate on developing a cryptocurrency to match the value of the Japanese Yen. Given that 70% of all transactions in Japan take place in cash, this would be a significant step towards the simplification of financial transactions in the country.
So, what stands at the basis of this global adoption of cryptocurrency? It all comes down to the inherent strengths of crypto. There are significant benefits of using crypto instead of your traditional fiat currencies. Let’s have a look and see what these are.
What Is Cryptocurrency and How Is It Different From Fiat Currencies?
As currencies go, crypto is a fairly new concept. As the name suggests this type of currency is secured through the use of cryptography. This electronic form of encryption has the added perk of making the currency difficult to counterfeit or double spend.
All trade done with crypto is entered in an online ledger which is available to the public. This makes the whole system transparent and self-governed. According to the latest estimates, there are approximately 10,000 different cryptocurrencies on the market.
The key differences between a cryptocurrency and its fiat counterpart come from crypto’s virtual nature. As mentioned before, all transactions done with crypto are put down in an online ledger with public access. This makes the whole system decentralized as it does not need a central authority to govern or step in.
Another difference is that no intermediary, such as a bank, is needed to validate a transaction based on crypto coins. This is due to the use of blockchain technology through which all trading activities are permanently recorded. This way the security of each exchange is enhanced.
Now that we’ve explained what cryptocurrency is and how it differs from fiat money, let’s discuss why crypto is better than fiat currencies.
The Key Benefits of Cryptocurrency
There are several advantages to using crypto instead of fiat currencies. Let’s discuss each one of them in turn.
Its division allows for small transactions
Transactions using cryptocurrency are acceptable even to their 100th million part. It actually means that transactions are equivalent to 0.00000001. This number is more commonly known as Santoshi, named so as a tribute to the creator of Bitcoin. This innate capability means that you can make the smallest of transactions with ease.
Such transactions are not possible at all times when it comes to fiat currencies. Essentially, this makes crypto the most equitable mode of transaction available today.
No interference from a central authority
With fiat money, you have the reserve bank or government of a respective country that has the final say when it comes to the sale, purchase, and storage of that particular fiat currency. Your choices in this regard are somewhat limited.
With crypto, governments cannot implement any kind of regulation or place any kind of limitations on the purchase and sale of cryptocurrencies. Any crypto coin owner has the unlimited capacity to purchase, sell, and store their currency as they see fit. This gives owners greater flexibility in managing their finances.
Enhanced security
Transactions made with a cryptocurrency are secured by the infamous blockchain technology. This digital ledger is virtually impregnable when it comes to hacks. The underlying system behind a blockchain is incredibly complex. A hacker would need to perform multiple attacks on several devices at once to stand a chance of breaking through the system. This is why cryptocurrencies are so well-known for being secure and trustworthy.
Will Cryptocurrency Replace Fiat Money?
Considering that the traditional financial system has been around for at least a century, it would be a bold claim to say that crypto will replace fiat money completely. A more likely scenario would be for crypto to augment the digital use of fiat currencies thus making great strides towards a cashless society.
This transition would be possible thanks to the already popular concept behind the mobile crypto wallet. As the purchase of smartphones shows no signs of stopping, the potential of a fully compatible crypto and credit card mobile wallet is bound to be fulfilled.
No matter the outcome, it is clear that the use of cryptocurrency is here to stay. Why not contact us today and let’s see how we can help you take the first steps into the world of crypto.