Fiat and cryptocurrency: for and against, pros and cons

While some early users don’t have to convince to join the excitement around cryptocurrencies, others may not understand why they are needed. I can’t put them in the Bank, can’t use them in (most) stores, so what can I do with cryptocurrencies? Before you approach the basics of cryptocurrencies and how they can be used, let us first consider some similarities and differences between Fiat and cryptocurrency.

The following text is a translation of the article of Aletai Cho on Medium.

The contents


Fiat money is currency that is declared by the authorities as legal tender, but not provided a real physical resource. Fiat is the money day-to-day uses most people in the world. Since Fiat is no longer based on a physical commodity, such as gold or silver, as in the past, he actually only appreciated by the trust and is declared by the authorities as the standard for debt repayment. Fiat currency became popular only in the XX century, when the demand for currency and fixed resources such as gold and silver were too scarce and were thought to be unstable.

Source: Unsplash

The pros of Fiat

  • Centralization. Because fiatnym money does not need to rely on a fixed resource, the Central banks can manage their offer. This gives them the economic power to control, among other things, credit, interest rate and liquidity.
  • The easing of the recession. FIATA currency may mitigate a local recession and to help manage the crisis by printing or retention. However, it is not effective in large scale or in the case of a global recession.
  • The relative stability. Unlike gold or cryptocurrency, whose value fluctuates depending on the market power of Fiat currency typically remains stable, but largely depends on the strength of the government concerned.

Cons of Fiat

  • Due to the unlimited offers of the Fiat occurs the problem of inflation. Tied to fixed resources of the currency in the long run more stable due to limited supply of a resource such as gold or silver.
  • High taxes depending on wealth and location.
  • The inability to repay due to the lack of provision of physical goods.
  • The risk of instability, depending on the government. When the country is all right, the banks and FIATA currency succeed. However, when a country is poorly managed or suffering from something, the suffering and FIATA currency, and hence the population.
  • Slow transaction. Despite the innovation of the Internet and the acceleration of transactions, electronic transfers still occur with a delay, depending on the timetable of the Bank, and they deducted the Bank charges.
  • The possibility of forgery. Printed Fiat money and checks are especially easy targets for forgery.

Source: Bitsgap

Cryptocurrency – digital currency, many of which are based on the technology of the blockchain and use cryptography for security. This security feature also allows you to control the creation of new units and ensure the safe transfer of assets. Unlike Fiat, controlled by the Central banks and governments, cryptocurrencies, decentralized control. Bitcoin – the first decentralized cryptocurrency that emerged in 2009. Since its development it was created thousands of other altcoins and tokens for different purposes.


  • Limited emission. Usually, cryptocurrencies are created in a predetermined amount, which limits the number of new units and prevents inflation. Central banks or governments can print or mint as many currency, which may lead to hyperinflation.
  • Global access. Since cryptocurrencies are decentralized, they are available all over the world. Not only those who have access to banking services.
  • Transparent transaction. One of the main advantages of cryptocurrencies is that thanks to the public Ledger – the blockchain – committed transactions are recorded, confirmed and cannot be cancelled or changed.
  • The complexity of taxation.
  • The simplicity of the translation. The transfer amount is not limited, and the transaction happens almost instantly.
  • It’s impossible to fake. Due to the decentralized nature of the digital tokens and coins verifierade in the blockchain and can’t be tampered with.
  • The lack of Bank fees. Banks charge various commissions for various reasons: for the translation, for service, for withdrawal, for the excess of the credit limit, the international Commission. From cryptocurrency transactions sometimes charged a small fee for network costs.


  • The value of crypto currencies depends on demand and cannot be controlled.
  • The unpopularity at the moment. Since many still don’t understand how to use cryptocurrencies, yet few people use them and few businesses accept cryptocurrency payments. The application is limited.
  • Exposure to criminal activities. Because cryptocurrencies are still very new, their regulation to prevent criminal activities on the stock market is still in the development process. Before many cryptomeria there were demands on customer identification, criminals and fraudsters could easily avoid detection, as the transactions cannot be traced or linked to a real person.
  • Speculative. Because they are not controlled by the Central Bank or government, the cryptocurrency is characterized by high volatility and rapid price fluctuations. To some this aspect of cryptocurrencies like, as it makes it possible to trade with high risk and high reward, while others would prefer more stable assets.
  • The exposure to market manipulation. Schemes “pump and dump” and insider trading is difficult to track due to the confidential nature of cryptocurrency transactions.

How to use cryptocurrencies?

In addition cryptotrading and the accumulation of wealth, there are amazing ways to use cryptocurrency. Every day there are new channels for their use.

Source: Interactive Crypto

  • Investment. Thanks to the cryptocurrency has become much easier to invest in startups at an early stage, which reduces the barrier of entry for new investors.
  • Transfer funds worldwide without any international banking fees. Every day there are new developments that provide access to assets for millions of people without access to banks. This was an important decision for the poor and marginalized around the world.
  • Travel planning. In the tourism industry is one of the most active cryptocurrency integrations with the global market due to its decentralized nature. More and more companies are allowing tourists to book flights or accommodation, accept the cryptocurrency. You can even plan a trip into space!
  • Marketing opportunities. Given the large number of new companies on the stock market is a thriving industry of content creation and marketing. Participation in airdrop and the bounty gives people the opportunity to benefit from the promotion of marketing activities.
  • Purchase. Online markets are starting to accept payments in cryptocurrencies, blockchain and some sites accept in exchange for goods and services only the crypt.
  • Game. Actively appear online games that use cryptocurrency, and some even let players withdraw in-game currency in Fiat or other assets.
  • The purchase of housing. Real estate is another growing sector, joined the cryptocurrency market. Several companies also are developing options for joint land use and construction on the basis of tokens.

At the end

Fiat and cryptocurrencies are not much different in terms of application. They can be used as a medium of exchange, for the purchase of goods and services, credit, savings and transfer of funds. They depend on the economic factors that lead to increase or decrease their value. They are not provided with physical goods, and their value depends on supply and demand. And Fiat and cryptocurrencies are not too long.

Just like the Fiat it took time to stabilize and become a global norm, cryptocurrencies are still going through their early days and, most likely, will be getting more familiar, as people learn to interact with them. Both currencies have their advantages and disadvantages, but an incredible array of opportunities associated with the use of a decentralized currency system are truly inspirational. Perhaps the world is not yet ready for the revolution of digital currency, but it is possible that he needs it. In our cryptodata of hontarov you will find lots of other useful information.

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