The answer is a little more complicated than a yes or no.
In the last five years, cryptocurrency has become increasingly more mainstream. It’s grown from being a niche area to a topic that’s regularly mentioned in the headlines. For the most part, this attention is warranted. Crypto holds incredible potential to change the way we live and work since it has so many other viable use cases in addition to it being a medium of exchange. For example, some experts claim that smart contracts will mean the end of paper contracts altogether.
With all this hype surrounding crypto, it begs an obvious question: Will cryptocurrency become the currency of the future? In this article, we’ll be assessing the advantages of cryptocurrency to see if it’s better than fiat currency. But first, let’s do a quick recap.
What is cryptocurrency?
Cryptocurrency refers to a digital or virtual currency that has been secured by cryptography, making it impossible to counterfeit or double-spend. These currencies, also known as tokens, work using a technology called blockchain. Blockchain is a decentralised technology spread across many computers.
Like regular currency, there are many different “versions” of it. Many will be familiar with Bitcoin, the oldest and most popular cryptocurrency. Other notable mentions include Ethereum, Stellar and Litecoin.
Now that we’ve established what crypto is, let’s look at all the reasons it’s better than fiat currency.
Advantages of crypto:
- No government interference. Unlike regular currency, also known as fiat currency, crypto isn’t controlled or regulated by a central authority. This brings several advantages, the first being that you won’t have to worry about the value of your money being reduced to governmental policies causing inflation. Secondly, you don’t have to deal with limitations like not being able to process your payments after office hours. After all, the cryptocurrency market is available 24 hours a day, seven days a week.
- No banking fees. Cryptocurrency doesn’t have the conventional deposit and withdrawal fees fiat currency does. This also means there are no minimum balance fees, no overdraft charges….you get the picture. You will run into transactional fees for international payments, but you’ll find that these are much lower than what you’d get from bank transfers. These lowered transaction rates are due to crypto not requiring government involvement or any intermediaries. Did we mention that once your crypto is transferred over, there’s no more waiting periods or authorisation requirements like with fiat currencies?
- Greater anonymity. Typical transactions involving fiat currencies require both parties to know a large amount of personal information about each other. Conversely, with cryptocurrency, only a blockchain address is required. Since a user can have more than one blockchain address at once…anonymity is taken to another level entirely.
- More secure. Cryptocurrencies exist in the digital world, so they can’t be pickpocketed from a person. Stealing cryptocurrency would require physical access to a user’s computer, which eliminates the possibility of cyber-attacks entirely.
The verdict: Despite all these advantages, cryptocurrency will not be replacing money anytime soon.
- Money is far less volatile. The stories of Bitcoin depreciating by thousands aren’t for show. New cryptocurrencies pop up every other week and with Elon Musk’s tweet’s, trends are difficult to predict.
- Money is still widely accepted as a store of value – there aren’t a lot of places you can exchange cryptocurrencies for real goods and services.
- Lastly, people still don’t trust crypto yet. Most people have heard of crypto and are familiar with the basic concept of using it as a mode of payment – but they’re not ready to put their “real” money into it yet, let alone use it as their sole means of payment.
So, should you still invest in crypto?
Absolutely. While it is unlikely that it’ll replace fiat currency in the foreseeable future, cryptocurrency has proven highly profitable even after the influx of new investors from the crypto craze. That being said, you need to do your research before putting money into it. It’s not for beginners, and it definitely requires a certain level of expertise in the field. (P.S. We wrote a comprehensive guide for beginners looking to get into crypto…so maybe give that a read.)
We hope you’ve enjoyed reading this article! For more related articles, visit ukiss.io/press.