Fiat and crypto currencies are sometimes thought to be similar in nature and scope, but in reality, there are significant differences between the two. As a start, cryptocurrencies such as Bitcoin and Ethereum only exist in digital ledgers, whereas fiat currency can be held and used anywhere.
Fiat currency, such as the US Dollar or the GB Pound is issued on instructions by the government of a nation and regulated by a central authority, such as the Central Bank. Whilst original currency was meant as a portable form of commodity, usually gold, this fact has decreased over time. Today, most fiat currencies are based on the credit of the economy.
These currencies get their value from a supply and demand tug of war market. Exports, economic downturns, and uncertainty all lead to this value changing constantly. Fiat currency has existed for over a millennium, and it is seen as a stable and reliable facilitator of local and international trade.
Generally, fiat currencies experience minor changes in their value over extended periods of time. Apart from instances of hyperinflation, where the currency becomes virtually worthless, people have confidence that the fiat currency they own in their wallets will have the same value today as it will have tomorrow.
The same cannot be said for cryptocurrencies, which have a reputation for being extremely volatile. 1 Bitcoin today can easily be worth twice as much or half as much in a week or month. In fact, the crypto community uses the term HODL, which means holding and storing crypto because of the belief that it will be worth significantly more in the future.
Traditional money transfers often require one or more institutions which facilitate the transfer at a cost. Banks, payment providers, and correspondent institutions all take a cut of fiat money transfers. As a result, transfers are often slow and expensive.
Cryptocurrency changed all that. In fact, this was one of the reasons behind the development of the technology; to allow point to point transfers in a secure, fast and low-cost way. Cryptocurrency wallets are used to store currency and through the sharing of confidential keys, cryptocurrencies can be quickly transferred.
Furthermore, through convenient exchanges including CEX and Coinmama, you can instantly buy, sell or trade fiat and cryptocurrencies from your computer or mobile phone.
Both fiat and cryptocurrencies are available in digital format, and can today be used to pay for products and services. Card and mobile payments have revolutionsed the way markets carry out purchases, by offering convenience and practicality.
However, whilst fiat currency has been and continues to be used for the majority of all global payments, cryptocurrencies have not yet gained enough momentum to follow suit. Items sold in any digital currency, such as Ripple or DASH have their price constantly changing, and this is something consumers stay away from.
LocalBitcoins is a cryptocurrency exchange with a difference. Based in Helsinki, Finland, the startup provides a platform for peer-to-peer Bitcoin trading. Registered users can use LocalBitcoins to advertise, buy, and sell Bitcoins, without having to use a conventional CEX exchange. With LocalBitcoins, it is the individual sellers who set the conditions. For this, and several […]
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It is difficult to think of any industry where criminals do not operate in, especially one related to currency. Always on the lookout for the next vulnerable spot, pirate hackers are groups or individuals which specifically target crypto users and exchanges to try and steal their digital funds. They do this by hijacking user data […]
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Cryptocurrency exchanges oversee the trading and sometimes the valuing of cryptocurrencies, and form an integral part of the industry. There are various types of exchanges, with some being centralised and others decentralised, but their role is almost always the same. The difference lies in the way that transactions are carried out. What is the Exact […]
Cryptocurrency exchanges play a fundamental role in the digital currency ecosystem. They provide the main transition point between fiat and virtual currencies whilst also managing the prices of individual tokens and coins. However, no matter their importance, the work made by cryptocurrency exchanges is often overlooked or misunderstood. This guide should help you better understand […]
Cryptocurrency mining is, in simple terms, a way to use computers to create new digital coins. These coins can be stored safely in crypto wallets, spent in exchange of goods, or exchanged for fiat or other currencies. In the case of the latter, an account with an exchange, such as CEX or Indacoin, is required. […]
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