Most people don’t really understand how bitcoin currency differs from the normal fiat currency. Most unwittingly assume it is just the same except that bitcoin is digital. But there is nothing further from the truth – bitcoin and fiat are as different as night and day. Yes, both are currencies but they are very distinct in how they function.
Here are 5 key differences between bitcoin currency and fiat currency:
You cannot forge bitcoin currency
Even though hackers can steal bitcoin, they cannot forge, manipulate or even duplicate it. This is because Bitcoin is a digital token issued from a blockchain. The token is programmed to perform different functions, store different values and it can be divided into a million portions for trading purposes. It’s immunity to forgery and duplication makes it a great alternative to fiat.
Fiat currency is typically issued by the central bank of a certain government and the respective government comes up with policies via the central bank to regulate it. On the contrary, bitcoin currency is not issued by any central authority and neither is it backed by a particular government. Bitcoin is, therefore, not subject to any government or institutional regulation.
It is almost impossible to carry out anonymous transactions using fiat currency. Most governments have adopted the KYC (Know Your Customer) policy and banks are required to have all your personal information on file before you can transact. With Bitcoin currency, however, you can easily make online payments anonymously and securely.
Let’s say you want to wire money to someone in another country. Your bank might charge you a flat rate of at least $30 and then a hefty commission on the amount you want to send. If you were to send the exact same amount of money using bitcoin currency, you will only have to incur a small miner’s fee. Compared to what you would pay when transacting in fiat, the miner’s fees charged on bitcoin transactions are negligible.
If you have ever tried moving a million from your bank to some other place, you know how slow the process is. To add salt to injury, walking around with that kind of cash is not safe at all. The alternative is sending the cash electronically which is still slow and potentially exposes you to phishing attacks. You will also have to jump through so many identity verification loops and hurdles that the whole process can be a bit draining. But moving millions on the bitcoin currency Blockchain is not only effortless and fast but also very secure.
Bitcoin is the future of currency. No matter how many bad things the mainstream media writes about Bitcoin, it will not just go away. Bitcoin currency solves so many hurdles created by fiat. For instance, it gives you the ability to instantly transact large amounts with anyone around the globe. Unlike fiat, which is paper money, bitcoin is a digital piece of code that cannot be debased. Its value will likely keep increasing every time another person discovers its benefits.