NOWPayments helps you accept crypto as payment. Accepting crypto payments offers many benefits when compared to fiat transactions – and as we are a crypto payment service, it is up to us to let the world know how and why payments in crypto take over the world!
Cryptocurrency is nothing but a digital currency that leverages encryption algorithms to securely generate coins and conduct transactions. The existing market of such digital currencies has already crossed the threshold of US$1 billion and is expected to reach US$1.4 billion by 2024 growing at a steady pace of 6.18% CAGR.
Fiat currency, on the other hand, is the conventional currency that is issued and backed by a country’s government. In the United States, for example, the US Dollar is the fiat currency. (And if you like that, you’ll probably like such stablecoins as Tether as it is backed by USD – accept USDT as payment!).
Although digital currency is yet to become as prevalent and widely-used for everyday operations as compared to their fiat counterparts, the advantages of cryptocurrency are vehemently fanning the crypto vs fiat debate. To be more precise, the dynamics of the crypto-fiat binary is slowly tilting towards the alternative currency.
For example, China is keen to introduce its digital currency soon. Named as digital yuan, it’s intention is to replace cash in transactions. Another digital currency that has gained much momentum in recent years and gone through pilot-testing phases is Sweden’s e-Krona. Apart from China and Sweden, a host of other strong economies of the world is examining the possibility of introducing a national digital currency. These countries include Canada, Australia, Israel, and Russia.
Can cryptocurrency replace fiat currency? Although it’s too early to answer this question, the inclination of many major economies towards digital currency shows that they’re quite aware of the advantages of a cryptocurrency over fiat. What are these advantages? Let’s have a detailed look at them in the next segment of this article.
Advantages of Cryptocurrency over Fiat
Security and Anonymity
One of the major advantages of digital currency which gives a significant boost in terms of the cryptocurrency vs fiat currency debate is its security. Fiat currency is made of paper and prone to counterfeiting. But, one can hardly counterfeit a digital currency on a blockchain protocol. The cryptographic models of digital currencies leverage their complex coding structure to secure their sensitive data transfers. The protocols use advanced mathematical logic and computer engineering principles to make them virtually impossible to counterfeit or create a duplicate.
Additionally, compared to fiat, digital currency is far more privacy-sensitive. Unlike fiat currency, bitcoin transactions do not require disclosing the name, contact details, address, and similar personal details. Not even to the person with whom the transaction is happening. This combination of enhanced security and increased sensitivity towards privacy-protection makes crypto better than fiat.
The decentralized nature of the cryptocurrency environment offers the users more autonomy and self-control over their funds compared to traditional money. The network of a blockchain-based digital currency is run by the crypto community instead of any central bank or the government. These networks have validators who verify every transaction that enters a block. Records of each one of these transactions are kept in a distributed ledger that is available for all the participants to examine if required. Compared to fiat, cryptocurrency transactions are therefore more transparent.
One needs to also remember that even though all the transactions are recorded in the ledger, no one has the authority to make any changes to them. Neither can any participant on the network can access the private data of another user.
Fast and Cheaper Transactions
Unlike crypto, fiat gateway payments are often subjects to the involvement of five parties. The entire model of a credit card transaction, for instance, includes consumer, merchant, issuer, acquirer, and the switch. The involvement of so many stakeholders necessarily makes fiat transactions costlier. In crypto, transactions are completed in exchange for a very nominal fee and even no fees in many cases.
Crypto transactions are fast. However, their speed often depends on the location, amount, and means of transmission. Whatever be the speed, crypto transfers happen instantly and are available 24X7 for users to carry out. Unlike international transactions in fiat, the digital currency does not take multiple days to reach the beneficiary. Such convenience and ease are factors that encourage users to prefer crypto to fiat.
Finite and Liquid
Printability is often considered one of the major benefits of fiat money. But, the fact that digital currency in the blockchain environment has an upper limit of supply makes it immune to inflation and reduced the purchasing power of holders.
Another advantage of cryptocurrencies is that they are highly liquid. They can be exchanged for US dollars or any other fiat currency for that matter if taken for exchange at the right place.
Once a user has committed to a crypto transaction, there is no scope of that transaction getting overturned. These transactions are irreversible. No one has the authority to alter the dynamics of the transaction once it has been recorded in the distributed ledger.
Weighing the advantages and disadvantages of cryptocurrency, one can say that there are several reasons why crypto can be considered superior to fiat. However, whether it will completely replace fiat currency backed by central banks or fiat currency backed by gold is too early to call. But, there are strong chances that cryptos like Bitcoin would be considered a credible alternative currency to the US dollar or other types of fiat money in the near future.
Why use NOWPayments.io?
NOWPayments is the easiest way to accept online payments in a wide variety of cryptocurrencies. This service is custody-free, has competitive fees and is available worldwide.
- Over 50 cryptocurrencies are accepted on the platform with an in-built exchange feature;
- API, widgets, plugins and a donation button are all easy to integrate;
- It is a non-custodial service ensuring the security of your funds;
- A very simple setup