HOW DOES FIAT
RETAIN ITS VALUE?
The government maintains that value, using its centralized powers as tools to bolster or slow down the economy when appropriate. As opposed to gold, silver, or any other commodity-backed currency, fiat is an alternative which provides much more stability and is intrinsically valueless. Most countries use paper-based fiat and maintain its value by protecting against fraud, counterfeiting, and money supply problems.
HISTORY OF FIAT
Because it’s not linked to any physical reserves of commodities, fiat money runs the risk of becoming completely worthless if hyperinflation was to occur. If people lose faith in a nation’s paper currency, the money will no longer hold any value.
Fiat vs Crypto
Fiat currency is “legal tender” backed by a “central government” while cryptocurrency is not “legal tender” and is not backed by a central government or bank (it is decentralized and global).
Due to the secure nature of blockchain, which makes it possible to request and confirm transfers from your smartphone or another device without having to spend time jumping through hoops with your bank. As supply is capped, cryptocurrency increases in value as more people enter the market for them. Basic supply and demand models support this as a deflationary currency by nature, unlike any other currency out there. As such, many have pointed to cryptocurrency as being the future of finance given its decentralized nature.
Bitcoin Facts & Figures
There will only be 21 million BTC in circulation. To date, more than 16 mil BTC have already been mined.
If you lose your private key, you lose the Bitcoins tied to it forever. To date, a staggering 25% of all bitcoins (5.25 mil BTC) is estimated to be forever lost.
1 BTC can be further broken down into units called Satoshi. 1 Satoshi = 0.00000001 BTC / 1 BTC = 100,000,000 Satoshi.
Ethereum Facts and Figures
Ethereum was created in 2014 by Vitalik Buterin. The cryptocurrency associated with the Ethereum platform is called Ether. Just like Bitcoin, it can be traded and used for purchases.
As of June 2018, total supply crossed the 100 million mark: this means there is more than 100 million Ether in circulation.
In the beginning, Ethereum was the most widely-used blockchain platform for creating smart contracts. After all, this capability one of the major development goals of Ethereum. The Bitcoin protocol has since evolved, and is now able to support smart contracts. While smart contract functionality for Bitcoin is not yet as extensive as that of Ethereum, some may prefer it as it still allows the implementation of smart contracts without the security and privacy risks of the more complicated platform, Ethereum.
Why Shit(coin) Happens
Since Bitcoin, more than a thousand altcoins have been created. However, not all of them achieve success, due to lack of interest and implementation. When that happens, the altcoin becomes worthless – and becomes labelled as ‘shitcoin’.
Why Use Cryptocurrencies?
Cryptocurrency is revolutionary as it provides many possibilities that fiat currency (aka traditional money) cannot offer. Let’s take a look at some of the benefits of cryptocurrency.