Bitcoin And Fiat Currencies
People have gotten more interested to learn about Bitcoin over the last few years as a store of wealth over the traditional fiat dollar used today. The digital world seems to be interlaced into nearly every part of our lives now so it is not surprising that money is moving that direction also. Fiat money has been around for some time and we have gotten used to it and how it works. Bitcoin is fairly new and people are slowly learning the benefits it has. Both can be used for payments and as a store of wealth. Fiat and Bitcoin both rely on consumer trust. But they are worlds apart in the grand of things. Let’s take a look at some of the pros and cons of Bitcoin and fiat currencies.
- Since the government controls the money supply, more can be printed at will to help out during times of emergency for aid.
- Fiat currency usually stays pretty stable allowing regulators and governments to control the economy during times of recession and inflation.
- Fiat currency is centralized and controlled by the banks. Banks are a business so we are subject to paying high fees for transactions, transfers, and just for them holding it.
- Although controlling the money supply can help steady inflation, it is inflation itself that is a problem.
- Delays wiring and transferring money. If you were to wire money to someone across the world, it could take days depending on where it is being sent and cost quite a lot.
- Bitcoin is produced and distributed through a process called mining made up of a network of clients or nodes and is not associated with any banks or governments. This makes it decentralized.
- It can never face inflation because only 21 million will end up being in circulation.
- Little to no transfer fee is paid to send Bitcoin to anybody anywhere in the world and only takes minutes for them to receive it rather than days.
- Bitcoin can’t be counterfeited and transactions cannot be reversed or canceled. Since it is tamper-proof, it cannot be spent twice.
- Bitcoin can be quite difficult to understand what it is and how it works. This lack of knowledge can scare people away from investing in it.
- Bitcoin is very volatile and this can keep investors away. This is probably the biggest hurdle Bitcoin will have to get over before big investment groups put large amounts of money in.
At the moment it looks like the fiat system isn’t going anywhere anytime soon and neither is Bitcoiin. Governments and authorities around the world know about Bitcoin. They are keeping a close eye on it but not banning it. Bitcoin is still fairly young and many believe it will evolve to be a positive product that could change the money system we currently use.