Top differences between digital and fiat currencies

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So you’ve heard and read on so many people who are using digital currencies such as Bitcoin, Bitcoin Vault, and so forth in order to transact online. But have you ever wondered why? Wondered why digital currencies in South Africa and the world as a whole, have gained so much traction? We’ll tell you why 😃

What is Digital Currency?

Who would’ve thought we’d ever reach an era where we have digital and physical currencies in South Africa or even the world altogether?. Fascinating, isn’t it?

But anyway, what is a digital currency? Easy. Coded money 😜

Digital currency is a type of currency available in digital form, obviously. It exhibits properties similar to physical currencies but can allow for instantaneous transactions and borderless transfer-of-ownership. Examples include virtual currencies, cryptocurrencies.

We’re on the same page, right? Great! Let’s move on 😄

What is Fiat Currency?

According to Investopedia, “Fiat money is a government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it. The value of fiat money is derived from the relationship between supply and demand and the stability of the issuing government, rather than the worth of a commodity backing it as is the case for commodity money.”

In simpler terms, the Rands in your wallet and bank account, that’s fiat currency. 😃

What’s the difference? It’s all money

True. Both fiat and digital currencies are money and essentially accomplish the same thing. However, there are key differences to remember:

a) Legality

  1. Governments issue fiat currencies such as the South African Rand, which are in return regulated by the central bank. Governments control the fiat money supply and issue policies from time to time that affects their value.
  2. Cryptocurrencies, on the other hand, are merely digital assets that act as a medium of exchange that governments have no control over.
  3. The decentralization aspect means no central body can control or influence their value. Cool right? 😄

b) Tangibility

  1. It is not possible to have a physical feel of cryptocurrencies as they operate online as virtual coins.
  2. Fiat currencies, on the other hand, have a physical aspect as they exist as coins and notes.
  3. You can’t touch it, but you can own it by buying some on ChainEX, the best South African cryptocurrency exchange😄

c) Supply

  1. A major difference between fiat money and cryptocurrency has to do with supply. Fiat money has an unlimited supply which means central authorities have no cap to the extent to which they can produce money.
  2. Most cryptocurrencies have a cap when it comes to supply, which means there is a set amount of coins that will ever be in supply. For example, the total number of Bitcoin coins that will ever be in supply is capped at 21 million.
  3. With fiat money, it is impossible to tell the amount of money in circulation at any given time, but with cryptocurrencies, it is possible.

So where can I buy some crypto?

If you’re not signed up to ChainEX, get to it! Plus you’ll be partnering with what could potentially be the best cryptocurrency exchange in South Africa. I mean, EVERYONE is talking about ChainEX.

I mean, you’re here because you want to own some crypto. So here’s how:

ChainEX is a South African digital asset exchange that provides a platform for South Africans to buy, sell, or trade a variety of different digital assets using the South African rand as the default fiat-buying currency.

ChainEX provides you with a secure, online platform from which you can purchase and trade with different digital assets. But you know this already ?

It pays to have friends. Literally.

Not only do we provide a platform for you to trade, but we also reward you for the people you refer!

We not only want you to succeed at ChainEX, but we also want you to impact those around you and potentially build your own crypto trading business, we’ve built the platform to allow you to invite and refer your friends and family to the platform and earn when they trade! For a complete guide on how the system works, read our article on it. ?

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Disclaimer:

All content and topics covered are mere opinions and do not constitute investment advice. Trading and investing in Bitcoin carries a high level of risk. We do not assume any responsibility for actions taken upon reading any of our articles. Cryptocrowd is not a financial advisory firm, nor are we an investment manager.

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