Most people are familiar with cryptocurrencies to some extent today. It's hard to miss the headlines about it, whether you already own crypto or have never considered having it. However, many people still prefer using good old fiat currency — paper money issued by a government. Are you missing out on something important if you don’t have crypto?
While fiat currency is not going anywhere anytime soon, cryptocurrency can be a good investment in the future. Let’s explore why.
Benefits of using crypto
The biggest advantage of the cryptocurrency world is its decentralisation. It means that the virtual money is not issued and not controlled by any government, which makes the digital coins completely independent. Cryptocurrencies are immune to inflation, bank failures and monetary policies of the governments. Aside from this, there are a number of other advantages of using these decentralised currencies:
Due to inflation, fiat currencies lose their value and buying power over time. The global yearly inflation rate can be anywhere from 1% to 10% and higher, depending on the economic situation. So 100 USD deposited into your fiat account will have a lower value a year later.
On the other hand, cryptocurrency is a highly volatile market with big price fluctuations. It means if you invest the same 100 USD in it, its value can either increase or decrease over time. However, the value of the majority of digital coins has increased significantly over time.
For example, people who bought one Bitcoin in 2011 with 1 USD and kept it until today have thousands of dollars in value for the same digital coin at the moment of writing. Although it experienced a few upward and downward price swings, it has never dropped back to 1 USD multiplying the value of the initial investment thousands of times.
Although the cryptocurrency world has witnessed some hacking attacks, they were targeting crypto wallets, while the virtual currencies and technology behind them are still highly secure and cannot be hacked. There is no way to make fake cryptocurrency or steal your identity to use the digital coins you own. Nobody can show up at the bank with a weapon and demand giving them all the crypto it has.
Cryptocurrency transactions are also irreversible, which adds an extra level of security. Unlike regular debit and credit card transactions, which face fraud activities frequently nowadays, cryptocurrency is not exposed to this risk. Once a transaction is completed and digital coins are transferred to a new account, they cannot be recalled unless the recipient decides to transfer them back.
Fiat currencies are limited to the borders of the countries using them. For example, the USD is accepted worldwide, but in many countries, you still need to change it to a local currency to be able to use your money. Cryptocurrencies have similar prices everywhere, regardless of the country and continent.
Moreover, cryptocurrency transactions are very fast, and the majority of them are still considered inexpensive. You don’t have to wait 3-4 business days and pay a high fee to receive the transferred amount like you normally do with regular bank transfers. You can also transfer a tiny fraction of cryptocurrency, up to the 100th million part of it, unlike fiat transfers that require a minimum amount.
Now that you know why crypto is such a hot topic and why you need to get in on the crypto action, head on to the next blog, where we talk about the top 3 myths about owning cryptocurrencies.
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