Although cryptocurrency is gaining a massive acceptance, it is still not yet in a position where it can replace fiat currency – which still remains to be the most preferred method of exchanging value all over the world.
However, there are still people who look at cryptocurrency as a way for quick wealth creation due to its volatile nature. Which is why we believe that there is a need for people to first understand the similarities and differences between the two to figure out which one is the best choice for their needs. But first, let us understand what the terms fiat money and crypto currency mean.
It is the currency that is declared by the government to be a legal tender and unlike cryptocurrency, fiat money tends to be very controlled and centralized by government bodies. A common example of fiat currency that is used today is the US dollar.
It is a virtual or digital currency that makes use of cryptography to secure its transactions. It is also decentralized, which means that it is not subject to government or financial institution control. An example of a well-known crypto currency is Bitcoin.
How is Cryptocurrency Different From Fiat Money?
Unlike fiat money, cryptocurrency is not backed by governments nor is it regulated by central authorities. Hence, it makes virtual currency less credible as compared to real ones – such as digital money or hard in bank accounts. Additionally, cryptocurrency is more volatile in comparison to fiat money. The volatility is driven from the speculative nature of the trade where a lot of investors tend to be focused on wealth creation through booking profits.
Moreover, crypto coins do not require an intermediary in order to validate a transaction, like a bank in case of fiat money. Crypto transactions are verified through the use of blockchain technology due to all trading activities being recorded permanently – thus, improving exchange security.
How Are They Similar?
Their main similarity revolves around their forms which immensely derive their value from the wide acceptance that they have all over the globe. Increased acceptance means more credibility and they are also divisible. Just like fiat money, crypto coins tend to be used to buy things or pay for services. They can also be given as gifts that can be used as a store of value.
Considering that more people and businesses are beginning to move towards the virtual realm, it has now become more important than ever before to think about which currency you want to be moving forward with.
For example, consider some of the popular growing cryptocurrencies of our time – Lapoyoma, a decentralized P2P blockchain payment network that enables users to use virtual money to pay for all kinds of goods and services.
It was founded in 2012 by Dilip Mooparakath, serving as a financial platform designed to offer tokens for the people’s everyday convenience store, grocery stores, and gas station purchase needs, excluding the mediation of third parties.
Moreover, Lapoyoma serves to help out small business owners with 0% financing for their business needs. Additionally, the company also aids others in providing them with ideal financing that can earn them profit and interest on their loans.