What is fiat money? or What are cryptocurrencies?
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What is fiat money? or What are cryptocurrencies?
Commodity money derives its value from its own value, as withprecious metals (such as gold and silver), salt, or even shells. Fiatmoney has attributed value because the government declares it to be legal tender– it has no intrinsic value.
What are cryptocurrencies?
Cryptocurrency is a digital asset that is a medium ofexchange between two parties.They allow direct transactions between individualswithout the intervention of an intermediary such as a bank. While fiat money issubject to inflation and central banks can print more at any time, theleading cryptocurrency bitcoin has a fixed supply of 21,000,000 units, makingit even scarcer than gold.
Are cryptocurrency and fiat money the same?
Cryptocurrencies are for money as they allow exchangebetween two parties and act as a store of value. However, they also offerfeatures that the traditional monetary system is currently unable to offer.Cryptocurrenciescan be spent and received around the world anytime, anywhere, without the needfor any banks or governments. This is the most revolutionary aspect ofcryptocurrencies.
Furthermore, fiat money basically equals debt. When a centralbank issues banknotes, it is issuing a percentage of your government's debt toyou, the consumer, all at once. How is this the case, you may logically ask?Think about how, for example, the European Union and the United States makemoney. While fiat money derives a large part of its value from debt, this isnot the case with bitcoin.
Bitcoin has intrinsic value beyond the belief of itscommunity. Bitcoin is not dependent on a loan system, its value depends on howeffective it is as a medium of exchange. Bitcoin has created a new form oftrust for our future global monetary system. The system behind Bitcoin iscompletely transparent and based on mathematics and the actual consent of theeveryday user.