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Home Is fiat better than crypto? / Why is cryptocurrency better than fiat?
06 Mar 2023 By PAYCEC
It's not accurate to say that fiat is better than crypto or vice versa, as they serve different purposes and have their own advantages and disadvantages.
Fiat money is issued for circulation by the government's reserve, treasury, and central bank systems. It empowers governments to implement policies that control supply, liquidity, and interest rates. Fiat money is not backed by gold or silver but by the government that issues and distributes it. It holds certain risks because countries often print too much money to stimulate their economies, causing inflationary pressure.
Cryptocurrencies, unlike fiat money, are decentralized, meaning no authority or country approves or has a say in their distribution. There are many different and confusing names for virtual currency, digital currency, and cryptocurrency on the market. In short, cryptocurrency is a virtual currency that uses Blockchain technology, and can function as a medium of exchange, a store of value, and a unit of account.
Blockchain in payment processing obviates the need for an expensive and inefficient intermediary like a bank. However, the problems payment processing using blockchain has are instability, high transaction speeds, and energy consumption. As a result, Blockchain technology in payments is not a legal option in many places (except El Salvador).
Though technology research is undertaken to address these issues, no financial system is superior to fiat money in every way. One of the urgent issues is that if private cryptocurrency development cannot be prohibited, governments will have to deploy their blockchain payment solutions to mitigate risks caused by non-bank payment systems.
Ultimately, the choice between fiat and crypto depends on individual circumstances, preferences, and goals. Both have their own unique advantages and disadvantages, and each can be useful in different situations.
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