traditional currency

4 Differences Between Bitcoin and Traditional Currency

A financial crisis that shocked the world back in 2008 is one of the most important occurrences that marked the future of the global economy. As you can remember, its effects were pretty severe on a plethora of different elements and industries. One of the, let’s say, positive side-effects to this whole story was the creation of cryptocurrencies.

While there are no direct links between the creation of these, many people believe that their creation was under the direct influence of this financial crisis. This theory goes so far that many people believe that the whole intention was exposing all the bad sides to the traditional way of doing business. The arrival of cryptos on the stage marked a significant change in various different industries, not just finances. Now, we can see that there are a lot of political movements that were directly caused by it.

Now, we are witnessing a new era that will change our perception of financial systems forever. There is one more thing that heavily influenced the popularity of cryptos. We are talking about the global pandemic of coronavirus. Cryptos like BTC suffered a heavy drop during the first quarter of the year. However, they managed to recover completely in the last two months and we are on a brink of a new record when it comes to its worth.

Even though we can see that there was a lot of skepticism towards digital currencies, we can see that people treat them much more seriously these days. If you want to learn more about this change of heart, you can take a look at eng.ambcrypto and inform yourself a little bit better about it. Anyway, we would like to talk about the most important differences between traditional currencies and BTC. Without further ado, let’s begin.

Source:europeanbusinessreview.com

1. Anonymity

The first difference we would like to point out is the anonymity you will be able to have when you are using digital currencies, particularly Bitcoin. For example, it doesn’t really matter which one of these you are using, you will be able to have full control over them, without being asked to provide your personal information. It’s needless to say that this is the main reason banks are against this whole concept.

We are not talking about some conspiracy theory. We are talking about pure common sense. This is an approach that’s vastly different from the traditional ways, and banks wouldn’t like to choose their clients, right? Plus, there isn’t any kind of authority you will have above you, no banks and no governments.

2. Flexibility

Source:finextra.com

Next, we would like to point out why digital currencies are much more effective when it comes to the pace of transactions. Surely, you are aware of the fact that there are some restrictions when it comes to the traditional way of conducting transactions. Any user could wait for up to a couple of days before the transaction is fulfilled. Just think about it, when the transaction is made on Friday, you could wait until Monday before you can withdraw your money.

Plus, we can say that, since there are so many restrictions, the accumulation of money can lead to some serious inflation. However, we need to say that it is important to be patient since not all BTC coins are mined as a whole. We can even see that some predictions can say how much time we need to wait before all of them are at our disposal. But it doesn’t matter how much of it the market will have, there will be no inflation.

3. Low Taxes and Fees

We are witnessing that banks have pretty high transaction fees. Add to that the fact that you could wait for up to a couple of days before you can get your money, and you have a bad situation. However, we can say that this kind of situation would be a standard if there weren’t cryptocurrencies to interfere. If these are so high when you make local transactions, just imagine their fees when we are talking about international transactions. They would be high, right?

When it comes to Bitcoin and other cryptos, you will see that these taxes and fees are not so high as is the case with traditional transactions. Plus, the receiver will have all the coins in its e-wallet pretty much the same moment they were sent. The same goes both for local and international transactions. Therefore, you shouldn’t worry about something like that. Relax, and do whatever is that you need to do.

4. A New Level of Security

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For those who are not aware, we would like to say that all cryptos are supported by the blockchain system. We are talking about a system that has numerous layers of security that represent the main one that protects your coins from all the malicious outside influences. Therefore, you can expect that you will have much more protection for your coins than for the money we have on our credit cards.

While there is some room for these breaches, we can see that the largest part of the system is so well-protected that we can say there are zero chances of them being breached. The situation when you don’t provide any kind of personal information surely helps, right? Plus, the only valuable information is the addresses of the sender and a receiver. If these two are protected in the best possible way, there isn’t a chance of you losing your money for these reasons.

The Bottom Line

Even those differences we’ve named can be considered crucial, we can see that there are tendencies that tell us we will see the merge of these two concepts in the future. While this merge will not be complete, we can expect that the best elements of both approaches will be combined into one. Without any doubt, the result of this mixture will surely mean the future of the financial world. The repercussions it will cause will be pretty significant and it will have a massive influence over the future of our civilization, you can be sure of that.

Can Bitcoin Become an International Settlement Layer?

Bitcoin and cryptocurrencies generally are on the rise. Big brand names such as eBay are stating they will start to accept the currency for payment. Arguably, this will be the biggest brand in the world to do so.

This not only marks a change in Bitcoin’s acceptance but given its rise the question that is increasingly asked is: Could Bitcoin replace the US dollar as a global currency becoming an international settlement layer?

Img Source: coindesk.com

You may be surprised to know that many experts believe it can.

Research from Imperial College London

According to research carried out by Imperial College London and eToro who you will find on https://www.bestbitcoinexchange.net/,  cryptocurrencies are moving to a point where they can replace fiat currencies that are in circulation at the moment.

The research suggests that there are three criteria to traditional currency. They are:

  • A store of value
  • A medium of exchange
  • A unit of account

Currently, all cryptocurrencies are a store of value. One of the authors of the study, Professor William Knottenbelt said,

“There’s a lot of scepticism over cryptocurrencies and how they could ever become a day-to-day payment system used by the man on the street. In this research, we show that cryptocurrencies have already made significant headway towards fulfilling the criteria for becoming a widely accepted method of payment.”

Img Source: oracletimes.com

The other aspect that is sure to work in favour of Bitcoin is the fact we are moving towards a cashless society. Sweden is already cashless and China is not far behind. This is partly driven by the Middle Kingdom’s desire to implement its social credit score.

Those that argue for Bitcoin to be the dominant currency in the world point out that it is censorship resistant. As it is not the currency of a single country many argue it is perfect to be used internationally as a settlement layer.

Some detractors, however, have stated that Bitcoin and cryptocurrencies generally are too volatile to be an everyday currency. Coinbase CEO Brian Armstrong refutes this stating, “Volatility is a self-correcting problem and we’ve seen that as it’s dropped in the last three years, year-on-year.

Img Source: insights.dice.com

“I foresee it continuing to do that over the next few years.”

Perhaps, however, one of the major factors that prevent the use of a cryptocurrency as a worldwide currency is the lack of a central bank. Currently, the central banking system controls the world’s money supply. Many countries issue debt when they issue currency and this as you can imagine is lucrative for high finance and the banking industry.

Furthermore, austerity has hit the EU countries with the Euro currency harder than it has hit EU currencies that have their own currency. There are several reasons for this but one is that they no longer have their own national bank. Instead, they have branches of the European Central Bank.

This may lead to a worldwide rejection of Bitcoin both at the political and people level.

Img Source: bitcoinist.com

That said, with a global push to go cashless and the advantages Bitcoin has, this could see the currency used as an international settlement layer replacing the U.S. dollar.

For more information visit Bitcoin.org to keep up to date with developments.