Cryptocurrencies Versus Fiat Currencies - A Beginners Guide

  |  Dec 1, 2020

The primary examples of the most prominent cryptocurrencies in the world are - Bitcoin, Ethereum, Ripple, Tether, and Litecoin. Among them, Bitcoin was the first cryptocurrency that was released officially in 2009. Since then, a lot of other cryptocurrencies have emerged, which are termed as altcoins, by taking inspiration from Bitcoin’s success. However, it has been 11 years since the origin of Bitcoin, and currently, more than 2000 cryptocurrencies are circulating in the market. The cryptocurrency market is growing immensely throughout the finance market. A lot of cryptocurrency backers and investors believe that cryptocurrencies are far better than fiat currencies, and also, they are among the best lucrative investments in the world. 

Now, the question is, “What Is the Difference Between Cryptocurrency and Fiat Currency?” Fiat currencies are said to be the existing currencies such as USD, Euro, Pounds, etc., which are governed by a centralized authority. Conversely, cryptocurrencies are decentralized currencies that are circulated among a distributed ledger system or blockchains. Each and every ledger of this distributed ledger system is equally important. The reason why they were named cryptocurrency is that they are based on a strong encryption methodology of cryptography to secure the storage, usage, exchange, and transactions of almost all kinds of cryptocurrencies. It is also the method used for ciphering and deciphering the algorithms used for making transactions of cryptocurrencies. 

How Are Cryptocurrencies Better Than Fiat Currencies

There are different reasons to support this argument. Before that, one must understand the need for bringing the concept of cryptocurrencies in the first place. Fiat currencies are the most primitive source of monetary transactions and they have been serving this purpose right from the very beginning. Cryptocurrencies are considered the next step of evolution in the financial sector. And, they are believed to be better than fiat currencies as they have a large number of advantages. In fact, the benefits of using cryptocurrencies are so overwhelming that most crypto investors believe it could be a viable alternative for fiat currencies. Let us check the reasons why cryptocurrencies are better than fiat currencies. 

Highly Secure Transactions

There are multiple threats of thefts in fiat currencies these days. Mostly, the hackers are able to steal your money through online loopholes. However, cryptocurrency/digital currency is backed up by blockchain technology, which is also known by the name - distributed ledger technology, the strong multi-level encryption mechanism used in blockchain technology very much immune to online thefts. 

Every node in the loop is given a private key to successfully operate all kinds of cryptocurrency operations such as transferring, exchanging, and transacting the cryptocurrencies. So far, Bitcoin and Altcoins have given enough evidence to conclude the fact that transactions of cryptocurrencies are highly secure. Moreover, cryptocurrency miners work very hard to mine cryptocurrencies with high-level cryptographic algorithms. 


One of the biggest advantages of using cryptocurrencies instead of fiat currencies is that they are decentralized, and therefore, they do not have any centralized authority to control them. This makes cryptocurrencies completely immune to government policies and not bound to any governing authority. This is the autonomy of a decentralized distributed ledger system.  

Large Scale Acceptance

Cryptocurrencies are gaining so much popularity and the scope of Bitcoin has largely increased in the last years. Nowadays, most businessmen have started using Bitcoin Pro to trade cryptocurrencies. Meanwhile, many merchants of different stores and e-commerce platforms have started taking payments in bitcoins. Bitcoin has gained acceptance in so many areas of the market, that is why some crypto enthusiasts believe that Bitcoin has the potential to replace fiat currencies. 

Transaction Fee Is Low

One of the biggest perks of using cryptocurrencies is that the transaction fee is very low as compared to fiat currencies. In fact, it doesn’t matter how much you are transferring or where you want to transfer, the transaction fee will still be low for making transactions in millions. Now that is something which could be counted as really extensive, that is the reason why so many traders want to make transactions using cryptocurrencies instead of fiat currencies. It has completely eliminated the presence of third-party for making transactions. This extensive feature has encouraged a lot of investors and traders to make use of cryptocurrencies as much as possible. 

Good Investment Option

Cryptocurrencies could be a great option for investments as you will have great chances of increasing your investment returns at a higher rate. Currently, the fiat currencies are not deemed to be worthy enough to make investments. As per the current scenarios, we are experiencing great inflation all over the world. In these times, the best option for making a large income or profit is by investing in stock properties and cryptocurrencies. In fact, cryptocurrencies are becoming a more promising source of income despite being a volatile market. And, a lot of investors have greatly benefitted from investing in cryptocurrencies


The points mentioned above are more than enough to conclude the fact that cryptocurrencies could prove to be far better than fiat currencies. The benefits of using cryptocurrencies for making transactions and investments are overwhelming, which has led to a big increment in the population of crypto-investors in the world. Consequently, a lot of investors and traders in the market know the true worth of cryptocurrencies. 


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