One of the consequences of the current situation is the negative impact this has had on an economic level, which has led to a significant drop in the economy worldwide. Stock markets have suffered historic declines and the volatility in financial markets has risen. This is largely because in times of crisis, stocks tend to be the first assets that people sell.
Cryptocurrencies and their market have not been the exception, as they also have suffered heavy blows due to the current situation. This leads us to ask ourselves the question of which currency has more stability. FIAT money or cryptocurrencies? Which one offers more stability to its users?
First, it is important to establish the advantages that both types of currencies offer their users. FIAT money its easier to use since it has a physical value that allows it to be spent without many complications. Another of its main advantages is that currently it is more accepted than cryptocurrencies. On the other hand, cryptocurrencies offer the advantage of working under a decentralized, safer, and more effective system. Another of its main benefits are the low transfer fees that are charged in its transactions compared to the amount banks charge their users.
Now, what do we mean when we talk about the stability of a currency? Any type of money, whether it’s crypto or FIAT, needs to have stability to build trust in its users and be able to be used to exchange assets. If a currency has stable prices, the population will have more confidence in it. In other words, stability is achieved when there is a balance between the real growth of the economy and the amount of money that is printed by the government. Therefore, when money is printed without the support of the economy, inflation is created and this is how stability is lost.
Why are cryptocurrencies said to have more stability than FIAT money? One of the main problems with traditional money is that it can be easily manipulated because it is controlled by the government. This situation doesn’t apply to cryptocurrencies since there is no government or a central entity that regulates them. Regulation of FIAT currencies makes them vulnerable to inflation, as they may suffer from overproduction. The most obvious example of this problem is Venezuela. In this case, the currency has lost its value because the government printed more money than it could be supported by the country’s economy. One of the biggest consequences of this problem is the collapse of the currency and the precarious situation suffered by the population.
On the other hand, a situation like the previous one would not be possible in an economy based on cryptocurrencies. Why? Because the value of cryptocurrencies is determined according to their circulation and value in the market. Another reason that helps the stability of cryptocurrencies is that they have a finite production. This means that nobody can create more money than the established amount, which will end up creating a greater demand for the currency. Furthermore, the inflation of world currencies will continue to increase while the supply of Bitcoin will decrease. This will probably result in a price increase of the cryptocurrencies due to the supply and demand.
This situation leads us to believe that people will begin to look at non-centralized options for the stability of their currencies. The first examples of this trend are Zimbabwe and Venezuela, where the inflation of their currencies has hurt their economies so much that users have started to look for financial stability in cryptocurrencies like Bitcoin. Also many wallets as Binance ,Coinbase, Bitfoliex, Etoro and to see their comparison or review you can check Binance vs Coinbase comparison at Bitcointester.
Doing your own research (DYOR) is one of the most important aspects of engagement in the crypto space — not just regarding exchanges, but the entire industry as a whole.
The above 10 aspects can be good examples of things to consider and research when choosing a crypto exchange, although they will vary from person to person or platform to platform based on their goals, values and activities. For example: you can find a lot of stuff about bitcoin exchange compare at Bitcointester. Skepticism and research may prove more valuable than not in the young and developing crypto industry.