Fiat money is generally stable money as compared to cryptocurrency. However, some major economies are still not accepting cryptocurrency as a mode of payment due to its fluctuating prices on Bitcoin Era. Therefore, money, Fiat and cryptocurrency have advantages and disadvantages. But cryptocurrency is still new and has to become more stable than Fiat Currency to get accepted as a mode of payment in every country.
Shortly, there are chances that cryptocurrency can replace Fiat money because the use of cash is continuously dropping. At present, credit cards and debit cards have replaced cash transactions. However, cryptocurrency will take time because many users still use cash, a physical form of money, but cryptocurrencies do not offer any physical currency. Moreover, some user is still not aware of cryptocurrency. They do not believe in crypto for its digital base, and the absence of any regulatory authority makes it riskier for people to use it.
Government authorities regulate fiat money. Fiat money creates belief among people for exchange as it is a tangible asset, but crypto is still not connected to any tangible asset. Central banks manage the flow of cash in the country and maintain a balance between economic growth and inflation. Cryptocurrencies do not have any regulatory authority to rule crypto. But crypto allows technological advancement for its user as these are safer than regular payments. One can make the payments much faster, whereas fiat currency can take 5-6 working days.
Advantages of replacing Fiat money with cryptocurrency:-
Decentralized platform: – cryptocurrencies are decentralized. They do not subject to any control by the government. It allows more freedom to their customers and flexibility of payment on how they can use them. Crypto use a blockchain platform to record its transactions where transactions are recorded in the public ledger, and anyone using some specific tools can view these transactions. So crypto creates transparency of payment, which helps to control defrauding transactions.
Irreversible: – cryptocurrencies do not sport a reversible charge mechanism. You cannot cancel the transaction once it is made. This segment makes cryptocurrency more secure than Fiat currencies. Which can be subject to inflation or manipulation by the central bank?
Cheaper payments: – cryptocurrencies provide secure and speedy transactions. If you want to send money overseas, receiving the money will take 5 to 6 working days, but through cryptocurrency, it takes a few minutes. It gives us a more viable option for international payments and online transactions. The absence of financial institutions makes it more cost-free as they charge high fees to provide rudimentary services.
Technology advancement: – Cryptocurrency offers a significant advancement worldwide as you do not have to carry cash. You can quickly pay using your crypto wallets, which are very easy to use. Crypto wallets still charge low fees as compared to big banks fess. It also offers many benefits. Due to these features, cryptocurrency is gaining popularity and has grown worldwide in the last few years.
Disadvantages of replacing Fiat money with cryptocurrency:-
Crypto exchange security: – cryptocurrencies are digital coins which highly rely on digital technology as it brings a question of cyber security into our mind. Crypto wallets can be hacked. There is some living proof of these reports of hacking some initial coin offerings, causing a loss of million in dollars. The security infrastructure should be controlled and managed in some better ways than it currently is.
Value and volatility: – cryptocurrency has a volatile nature. It does not have any fixed value. It is where crypto lacks trust. Due to its volatile nature, crypto does not create any fixed value as fiat money creates fluctuating prices.
Lack of proper regulation: – Due to lack of proper supervisory management. There is a lack of any proper regulating authority that can regulate cryptocurrency. You know so, but a significant risk will always dominate if any regulatory entity does not adopt cryptocurrency.
Cryptocurrency offers many benefits like faster payments, cheaper payments, and a decentralized platform bypassing all the intermediaries like banks and other financial institutions which charge fees to provide their essential services. There are chances of replacing Fiat money with cryptocurrency shortly, but before that, it should be regulated appropriately and show some fixed prices.