What is Fiat Currency?
Fiat currencies are the hard cash in your wallet and the digits on your phone or computer screen when you logon to your bank account.
Fiat currencies have existed for hundreds of years and each country on earth has its own fiat currency issued by its government.
The role fiat currency as a money supply is to ensure economic prosperity and facilitate trade between parties quicker and cheaper than with gold or silver. Throughout history many different approaches to use gold or silver to “back” fiat currency partially succeeded but mostly failed.
Every fiat currency in history has either collapsed financially, failed to war, economic sanctions or lost more than 95% of their buying power.
If you had £1 in 1970, the buying power of that same £1 in 2020 is the equivalent of £0.07. More than 99% of the GBP buying power has eroded to inflation.
How cryptocurrency compete with fiat currencies?
1. Cryptocurrencies like Bitcoin have a fixed supply and cannot be adjusted. The conversion rate between goods and services find a natural balance between supply and demand and market activity.
2. Cryptocurrencies are transparent and all transactions, values, sources, and destinations can be tracked in real-time through the Blockchain technology.
3. True Peer-to-Peer transactions are possible as no bank, government, or 3rd party are involved in a transaction. Only the Blockchain network where the network is completely decentralized.
4. Global reach for any currency transaction is possible with anyone with a wallet address on a mobile device, laptop, or even piece of paper.
With the friction in the banking system between individuals, businesses, and countries still a crippling factor in the world economy, cryptocurrencies and specifically Blockchain technology will unlock many barriers that hold back financial prosperity for the many and the few.
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