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cryptocurrency

Cryptocurrencies Replace Fiat Currencies

Is Cryptocurrency Similar To Fiat Money And How Is It Different?

Both have no intrinsic value. Their value is the result of user trust; placed in the State and Central Banks for fiat currency, placed in the blockchain system, and validation consensus for crypto.

Fiat currency is centralized — issued and controlled by third parties, while cryptocurrency is decentralized — transactions are peer-to-peer.

Cryptocurrencies exist in limited quantities, while fiat currencies can be issued at will. Bitcoin, for example, is limited to 21 million units.

This fundamental difference explains the deflationary aspect of cryptocurrencies and the inflationary aspect of fiat currencies.

Fiat currency is considered less secure than cryptocurrency. It is indeed sensitive to virtual attacks aimed at collecting banking data.

In addition, fiat currency is always vulnerable to theft and robbery. Conversely, the cryptocurrency system is supposed to be perfectly inviolable.

The speed of transactions is significantly different between the two currencies: a fiat currency transaction will take 2 to 3 days to be validated between two banks,

While a Bitcoin transaction will only take 10 minutes.

Cryptocurrency and fiat currency, therefore, diverge in many aspects, the former having been created by Satoshi Nakamoto in response to the flaws inherent in the latter.

Degree of centralization, level of security, inflationary or deflationary aspect.

Each has its advantages and disadvantages, and each has its supporters and detractors.

Only the future will tell how important cryptocurrencies will be in the global economy compared to fiat currencies, which are the majority today.

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