Currency Preference: Digital vs Fiat
If you’re reading this blog, chances are that you’re at least somewhat interested in digital currencies. Whether you’re a seasoned cryptocurrency veteran, or completely new to this field, you’ve probably heard some talk about “digital currencies” and “fiat currencies.” But what even are those, and what makes one better or worse than the other?
In this article, we’ll give you a quick rundown on what these two types of money are, why some may prefer one over the other, and how you can buy digital currency if you’re interested.
What is a fiat currency?
Almost everyone uses fiat currency in their daily life. Fiat currencies are any type of money that is controlled by a centralised government, which decides how much will be printed and when. Fiat currencies aren’t backed by any sort of commodity or inherently valuable resource – they get their value from the government that backs them.
For governments that are relatively stable, like the United States government, this works out fine – which is why the US Dollar is widely recognized even outside the United States. For less stable governments, like Venezuela, this doesn’t work out too well – the value of their currency can drop drastically, causing prices to soar and people’s savings accounts to become worth far less.
What is a digital currency?
Digital currencies, often referred to as cryptocurrencies, are any type of money who’s production and supply is controlled by mathematical algorithms, not a centralised government. This steady, predictable control can be attractive to some people who are weary of government-backed currencies. However, because of this attractive quality, the price of a cryptocurrency can change suddenly, as more or fewer people buy and sell it.
Why do some people prefer digital currencies over fiat currencies?
There are many reasons why someone might choose digital currencies over fiat currencies, but here are two of the top reasons:
- Digital currencies can’t be hyperinflated. While the price might fluctuate rapidly, chances are it won’t see the rapid hyperinflation and devaluation that is so prevalent with fiat currencies backed by an unstable government.
- Digital currencies can be kept more securely. The use of “cold wallets,” 2FA codes, and cryptographic keys can make cryptocurrencies very hard to steal. Additionally, due to the nature of a cryptocurrency, it cannot be faked or counterfeited.
Why do some people prefer fiat currencies over digital currencies?
Not everyone is a fan of cryptocurrency, and there’s many reasons for that. Here are two of the main reasons:
- Fiat currencies can be more stable. If you’re someone who lives in a country with a stable government, chances are your local fiat currency doesn’t have rapid and unexpected changes in valuation. For people trying to plan around financial predictability, this can be an attractive quality of fiat currency.
- Fiat currency feels easier to understand. Although the nature of how and why fiat currency is printed remains a mystery to many people, there’s no getting around the fact that fiat currency is what most of us grew up with. For people looking for familiarity, fiat currency provides that better than cryptocurrency can – for now.
How can I buy digital currency?
If after reading everything above this you’re intrigued by cryptocurrencies, you’re in luck! We’ve made buying digital currencies easier than ever!
For most people, the first digital currency that they buy is Bitcoin. This was the first digital currency ever created and enjoys the most users and holders around the world.
To buy Bitcoin through Yellow Card, here’s what you do:
Step 1 – Create an account on YellowCard.io or Find a Yellow card merchant or seller near you
Step 2 - Click on the “Deposit” button
Step 3 - You can top your account up with Yellow card Pin, Bank transfer or Deposit, Debit or
Step 4 – Go through the steps to buy Bitcoin with your local currency, no bank account required
Step 5 – Enjoy!
We’re working hard to make buying Bitcoin, and other digital currencies, easier than ever. We’re rapidly expanding around Nigeria and across Africa, so keep your eyes open for a Yellow Card Merchant near you. Don’t have a Merchant nearby? No worries, we’re about to launch a Web App to make buying and selling of Bitcoin easier than ever.