Money must be uniform, durable, divisible, and portable. These features constitute the core parallels between cryptocurrency and FIAT currency: they both act as a medium of exchange. The real difference emerges from their suitability as a store of value.
Factors affecting FIAT money and cryptocurrency prices
FIAT money is backed by a given government’s stability, and the trust people place in it. Contrastingly, cryptocurrencies’ value doesn’t depend on the political or economic situation of any country. Cryptocurrency prices are influenced solely by the supply and demand of a particular coin, its production cost, the total number of coins in circulation at any time, etc. Therefore, people from unstable countries are often inclined to use cryptocurrency instead of their local FIAT money.
As crypto popularity rises, so does the number of companies accepting it as a payment method. However, Exeno remains the only company honoring payments made directly in cryptocurrency, that is without exchanging it for FIAT money.
A recent study by Mastercard found that 67 per cent of Middle Eastern and African Millennials (people aged 21 to 39) are more open to using cryptocurrency compared to last year.
The interest in crypto payments is also growing in Latin America, as more countries experience significant inflation.
The increased interest in crypto is global: 4 in 10 people across North America, Latin America, the Caribbean, the Middle East, Africa and the Asia Pacific plan to use cryptocurrency in the next year.
With FIAT money, transaction time varies greatly: it can take from several seconds to several weeks (especially with international transfers). This is largely because of the countless intermediary institutions on which one simple FIAT transaction depends. External conditions have an impact too: banks’ working hours and various emergencies can cause significant delays.
Cryptocurrency transactions follow a much simpler model. Thanks to the blockchain technology, you can make payments in 10 minutes; the average time for a new block, containing information on your transaction, to be linked to a blockchain. This timescale isn’t affected by your location, time zone, or time of the day. Blockchain expedites international money transfer significantly and makes the payment network truly global.
Embracing small transactions
There are significant constraints to how flexible and divisible FIAT money is in practice. Subunits are usually limited to one-hundredth part of a given coin. Minimum transaction values are often imposed because it’s just not profitable for banks to proceed with the money transfer below a certain threshold.
Contrastingly, it’s possible to send even 0.00000001 part of a given cryptocurrency (for example, Bitcoin). This elicits unparalleled flexibility of cryptocurrency and its unquestionable convenience.
Cryptocurrency inherits the best feature of blockchain, namely immunity to hacker attacks thanks to decentralized data storage. To temper with a blockchain, a hacker needs to change the majority of blocks with transaction information, on all the computers possessing this information. As an additional security layer, all the history of transactions is visible and inalterable. Plus, every block has its unique hash code that prevents double-spending and fraud.
Of course, FIAT currencies come with their own security mechanisms. Nonetheless, the centralized manner of storage makes them an easy target. With cryptocurrency, you are the principal holder of all your information; not a bank or any other intermediary that can be influenced in countless ways.
To meet people’s expectations, businesses must adopt cryptocurrency as a payment option. Offering FIAT money payment as the sole choice is just not good enough. Our online-centered world is driven by innovations. Cryptocurrency is one of them.