Can you buy anything without money? Many will say that affection, love, care can’t be bought with money. Possibly, it is true but as we move on, there will be nothing in the world that can’t be bought without money, be it in a tangible medium or non-tangible medium, currency is the ruling content of the world at present.
From coins, notes and now digital, virtual and cryptocurrencies, we have been moving forward in the process of money making and bringing to a world of transparency and under single and digital roof. Here is a look at the various currencies that we use and the basic difference between them.
- Fiat currency:
The physical and tangible note and coin that we touch and feel and carry it in our wallet every day is the fiat money. The actual money we see and trade every day. The value of fiat money is determined by the government based on the demand and supply and it comes under a centralized medium like banks and other small sectors.
- Digital currency:
The best way to understand digital money is by the games we play every day. You lack tokens or coins at some point in your game and it lets you do the in-app purchases by trading real money with the tokens, this is exactly called digital currency. You accept the tokens as a reward for you real money and transact it through your debit or credit cards. Digital currency in simple words is that trading real money on the virtue of purchasing the virtual money through a medium. Similar to fiat money, this is also centralized and is monitored of your transactions and is put in a ledger.
Now, we know the difference between a fiat currency and a digital currency, and now what is cryptocurrency? The basic difference you need to know between the money that you have saved in your savings account and the money in your cryptocurrency that you purchased is that, there is no centralized medium in the latter as in the former. Cryptocurrencies are not regulated by a centralized mainstream medium but rather uses a Blockchain system which is a digital ledger, and all the buyers will be able to see the value of their currency and trends from the previous transaction. This in much simpler words can be put as a medium, which is encrypted and on the other hand very transparent and safe. The most common form of cryptocurrency is the Bitcoin.
Though these three differ in the medium, they revolve around the word called currency and it’s up to the economists and leaders in the future to choose the medium of our routine.