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Home > Courses > Cryptocurrency Fundamentals > Cryptocurrency Basics > What is FIAT Money | Cryptocurrency Advantages

What is FIAT Money | Cryptocurrency Advantages

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What is FIAT Money | Cryptocurrency Advantages

A cryptocurrency is a form of money. Think of it as a new, electronic "cash-of-the-future".

Or, think of it as a sort of "PayPal 2.0". Same basic concept; deposit money, send money, receive money, withdraw money; with one big difference. 

There is no centralized computer holding your electronic money; YOU control it without outside influence or control.

Traditional forms of money are printed on cloth paper, using special tricks and hidden features for security measures. 

Cryptocurrencies are their security measures in the way they are built. 


Cryptography


Each crypto has its algorithm (computer program) that automates the creation, storage, and transfer of money, including recording those transfers onto that crypto's "blockchain" (a public ledger that broadcasts every transaction ever made with that crypto). Thus, every user has a constantly updated copy of the blockchain, making the entire system completely safe from fraud and hackers. So, instead of being printed by a central authority, cryptos are created by the programming built into each one as the various "miners" (computers that clear pending transfers) create new coins. 


Decentralized nature


Cryptocurrencies are designed to make electronic payments, much like online banking, credit cards, and payment platforms. However, the decentralized nature (meaning, no one is in control of your money except you) of cryptocurrencies removes external influences, fees, and the possibility of fraud as every crypto user is part of the entire system. So, rather than being held and controlled by a bank or website, cryptocurrency is controlled only by the user while being tracked and monitored by the entire network of users.

While conventional cash (called "fiat") is given a value about silver, gold, and the amount of debt held by the government backing it, cryptocurrency is assigned a value strictly according to supply and demand as dictated by the users. So, the difference is clear.

Thousands of years ago, a man somewhere picked up a seashell or a handful of salt and traded it to his neighbor for a fish, or one of those stone wheels we see the caveman carving in cartoons. Since that time, seashells and salt have become Dollars, Pesos, Rubles, and Euros. The governments decided long ago to take control of those fiat forms of cash.


Conclusion


Cryptos are a gift born of the desire for freedom from that traditional centralized system, allowing the entire world to control their own money for the first time in 10,000 years. It is a true revelation of financial freedom created within the beauty, complexity, security, and transparency of the codes and blockchains that make each crypto unique. 



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