So What is Fiat Currency & Cryptocurrency?
Unless you have been living under a rock, you have come across at least one of these two terms. A lot of people think that Fiat Currency and Cryptocurrency are the same thing. This is because of the following similarities between the two:
- Both can be called money or currency.
- Both are mediums of exchange that are used to store and transfer value.
- Both can be used to purchases goods and services.
- Both can be traded on exchanges.
However, they are not the same and there are some noteworthy differences between the two:
- Fiat currency is “legal tender”, declared and backed by a central government. It can be represented by physical dollars, or by bank credit or bonds. The supply of it is supervised by the government itself. It can also be used to pay taxes.
- Cryptocurrency is not “legal tender” and it is not backed by a central government or bank. Therefore, it is decentralized and global. The supply of it is supervised by an algorithm. It cannot be used to pay taxes with. Moreover, you would have to pay taxes on it.
Cryptocurrency Related Crisis That You Need To Know
When using cryptocurrency, you should remind yourself about security from time to time.
- In 2014 Mt. Got, the largest Bitcoin exchange, collapsed after hackers stole more than $470million.
- Whereas on November 2017, $31 million Tether tokens were stolen.
- On December 2017, India’s central bank warned people to not invest in the Cryptocurrencies due to the hackings.
Why are governments against Bitcoin & Cryptocurrency in general?
Since Bitcoins and other Cryptocurrencies in general are decentralised, the fundamental reason to why governments are fearful of them is because of the lack of their central authority.
Bitcoin, for example, was created by an anonymous computer programmer and the identities are still not confirmed. In accordance with a research paper issued by the European Central Bank, users are in the danger of losing their money if they don’t carry out enough antivirus and backup measures. Since governments have no control over Cryptocurrencies in general, and they comprise of an environment where there isn’t any legal recourse, governments are against them.
Cryptocurrency in Venezuela
Bitcoin has become a regular part of a lot of Venezuelans’ everyday lives. It has become a common means of payment for Venezuelans, whether it is for buying foods or plane tickets. As a result of its popularity, authorities have essentially permitted the trading of Bitcoin in Venezuela, although they have heavily fined and apprehended people who attempt to mine the digital currency.
How to start using cryptocurrency?
To get started with cryptocurrency, and in order to buy into an initial coin offering (ICO), purchase cryptocurrency, or execute smart-contracts – you will need a wallet first. The two types of wallets are hardware wallets and software wallets.
Here’s a few software wallets to help you start off:
- Blockchain – possibly the most popular cryptocurrency wallet
- Electrium – has been around since 2011
- Gemini – boasts regulation by New York State Department of Financial Services (NYSDFS).
- Jaxx.io - offer both mobile and desktop version.
I hope you like the simple overview that I have prepared and please suggest any topic that you'd like to read in the comments below :)