INSUBCONTINENT EXCLUSIVE:
Cryptocurrency is a new form of exchange that is secured by cryptographyThe rise of cryptocurrency has started a debate on the future of
fiat money, those that are backed by the government, like the US Dollar or the Indian Rupee
Though the virtual currency is gaining wide acceptance, it is not yet in a position to replace fiat currency, which remains the preferred
means of exchanging value across the world
Most people see cryptocurrency as a way for rapid wealth creation, given its volatile nature
So to understand how cryptocurrency fares in relation to fiat money, we need to understand how both the currencies operate and what
separates them from each other.What is cryptocurrency?Cryptocurrency is a new form of exchange, only a decade old, that is secured by
This electronic form of encryption makes it nearly impossible to counterfeit or double-spend
Like the fiat money, it can be used to buy goods and pay for services
Many companies have issued their own crypto coins
Think of them as casino chips that you exchange for fiat currency and use to access goods and services.All cryptocurrency trade is entered
on a distributed online ledger that is accessible to everyone all the time, so there is no requirement of any central authority
According to CoinMarketCap.com, a market research website, there are more than 10,000 different cryptocurrencies in circulation today.How is
it different from fiat money?Unlike fiat money, cryptocurrency is not regulated by central authorities or backed by governments
This makes the virtual currency less credible than the real one (hard cash or digital money in bank accounts)
Cryptocurrency is also much more volatile than fiat money
The volatility is primarily driven by the speculative nature of the trade, where investors are focussed on wealth creation quickly by
The crypto transactions are verified using the blockchain technology, because of which all trading activities are recorded permanently,
enhancing the security of every exchange.What are the similarities?Both these forms of currency largely derive their value from the wide
acceptance they have around the world
More acceptance means more credibility
Like fiat money, crypto coins can be used to pay for services or buy things
They can also be given as a gift used as a store of value.
