A lot of debates have been made over the years now and since the invention of blockchain technology and cryptocurrency concerning the differences between cryptocurrencies and the traditional fiat currencies. Both currencies have their pros and cons, however, cryptocurrencies has proven to offer a lot more and have more benefits.
Reduced time and cost
Time and cost very important factors in any financial system and in the conventional financial system, time and cost are a major drawback because it can take a long time to send and receive money over a long distance most especially funds transfer that requires sending money to different countries. Also, time and cost are a big factor in any industry, whether it is finance, business, health, etc, time and cost are very crucial factors.
The benefits of cryptocurrency over conventional financial system is that is much faster to send and receive funds. Also there is a much reduced time and cost when sending funds using cryptocurrencies since everything happens on the blockchain and is peer-to-peer. The manual methods used by the conventional financial system increases the time and cost it takes to process a transactions. The charges of sending funds from one person to another through far distance can be very high, that is why cryptocurrency has helped in reducing the time and cost of sending money from one place to another.
Efficiency
Efficiency is also one of the main differences between cryptocurrency and the conventional financial system. Since cryptocurrency runs on blockchain technology, the efficiency of transactions, most especially multiple transactions are higher. In the conventional financial system, some tasks are done manually which reduces efficiency and can lead to human error which can cause delay in transaction. Using cryptocurrency increases the efficiency of transactions.
Better financial security
Security is very important in any financial system. No one wants to lose money that is why security is key in any financial system. In the conventional financial system, people can lose money because of theft in the financial institution, or financial institution going bankrupt, or error or manipulation in the system. Using cryptocurrency eliminates all that because the users are their own bank and have full control of their funds in their wallets. Also, financial records are stored safely on the blockchain, increasing its authenticity, compared to the conventional financial system where records can be changed or edited.
Faster transactions
Faster transactions of money is something that is very important in any industry. It is possible to make fast transactions by making payments on the spot using fiat currency, however, it is only possible physically. When it comes to sending money overseas or from one nation to another nation, it can be a very slow process and can sometimes takes weeks to process because of the different third parties involved in the process and the policies and the country’s regulations. Using cryptocurrency helps solve this problem by making faster transactions since there are no third parties involved that can affect transaction times. Cryptocurrency can be sent anywhere in the world much faster in less time.
Full control of your funds (keys)
Users having full control of their funds and keys is one of the main advantages of cryptocurrency over the conventional financial system. Money in the bank or conventional financial institution is in the custody and control of the banks or any centralized financial institution which means that the banks or centralized financial institution can do anything with the user funs since they have full control of the funds. The advantage of cryptocurrency is that users can safely keep their cryptocurrencies in a secure wallet and having full control of their funds and wallet keys.
Peer-to-Peer
Under the conventional financial system, before money is sent from one place to another, it has to pass through different third parties or departments for approval or processing which can take a lot of time depending on the transaction. Cryptocurrency removes that as money can be sent through peer-to-peer transactions anonymously and faster. Peer-to-peer transactions requires sending fund from one user to another without any interference of third parties.