Crypto Vs. Fiat: 5 Benefits Of Using Digital Currencies

Have you ever wondered how fiat currencies and cryptocurrencies compare? Our crypto vs. fiat blog post outlines five reasons why cryptocurrencies are beginning to redefine the future of global finance.

Low Fees

Cryptocurrencies are capable of supporting much lower transaction costs than fiat currencies. Many public blockchains charge only the equivalent of a few cents, regardless of whether a user wants to send a couple of dollars or millions of dollars of crypto. Litecoin, for example, has an average transaction fee of just $0.025 and Dash is even less at around $0.0094. Blockchains like Bitcoin and Ethereum do have higher fees on average, but solutions exist on both networks for more scalable transactions. Ethereum 2.0 upgrades promise to offer a substantial improvement that will benefit users and developers of the Ethereum blockchain.

Global Remittance

Crypto never sleeps. Want to send Bitcoin from your wallet to a friend’s wallet? This can be done at any time, including weekends, even if that friend lives halfway around the world. Settlement happens in minutes or less. Fiat, in contrast, may take a few business days. Another common pain point with fiat is the need to convert them depending on the country or region of a person’s bank. For instance, let’s say a person living in the US wants to make a payment to someone in France. This requires a conversion from USD to EUR. Then, the person living in France might want to pay someone living in India. This requires a conversion from EUR to INR. Each of these steps includes a foreign exchange (forex) fee, which is much more costly than sending cryptocurrency.

Financial Innovation

The token economy is being built and with it comes a new generation of the internet. All sorts of applications, from lending and borrowing platforms like Abra to NFT marketplaces to new social media platforms are utilizing blockchain technology. This new generation is often called “Web 3.0” and is rapidly emerging to change the global economy. At its core, blockchain is much more than the technology that powers crypto payments. It is the leading technology behind data innovation. The movement towards Web 3.0 doesn’t stop at crypto. Web 3.0 is creating new opportunities that would not be possible otherwise. Everything from art collecting to personal finance is realizing the benefits.

Inflation Resistance

Also outlined in crypto platforms vs. fiat banks, inflation is an issue that impacts just about every fiat currency. As more fiat is printed, the existing monetary supply is theoretically worth less – meaning a fiat currency (i.e. USD) has less purchasing power over time. Cryptocurrencies are generally more finite, although some do have higher issuance rates than others.

The best example of a cryptocurrency with a limited supply is Bitcoin. Well over 18.8 million BTC is already in circulation, and 21 million BTC is the maximum amount that will ever exist. That means 90% of BTC has already been created. Scarcity along with anticipation that BTC will become more popular over time implies that the value of a single Bitcoin should increase in the long-term. For this reason, Bitcoin is similar to commodities like gold. The biggest advantage is that Bitcoin is easier to move around since it relies upon a digital network for distribution rather than physical storage and transportation. Michael Saylor, a well-known proponent of Bitcoin, says Bitcoin is akin to “digital gold” or “digital real estate”.

Easy To Buy, Sell, and HODL

When Bitcoin was created in 2009, it was unknown by almost everyone. Even those that did know about Bitcoin recognized its main limitation was accessibility. Early crypto wallet software was rudimentary, and the first crypto exchanges were considered insecure. Only decade or so later, and the crypto market is vastly different. Now there are numerous ways and platforms that people can choose from to buy crypto with fiat. 

Today, Abra as well as many other platforms have transformed the crypto industry. It’s easy to wire or deposit fiat to an account to get started in crypto. Likewise, it’s effortless to sell crypto and send fiat to a bank. Because most regions of the world having multiple crypto platforms to choose from, participating in crypto markets has arguably become even easier than setting up a bank account or buying stocks. Perhaps even more important is being able to HODL crypto by storing it in a digital wallet or put your crypto to work with programs such as Abra Borrow and Abra Boost.

Crypto Vs. Fiat Summary

Blockchain combined with crypto payments is changing the world in so many ways. The fiat market cap is still much larger than the crypto total market cap, but that might not be true forever. The five reasons listed above are crucial factors for the swift adoption of cryptocurrencies and expansion of the global crypto ecosystem. The benefits of cryptocurrencies will only become more apparent in the years to come.

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About Abra

Established in 2014, Abra is on a mission to create a simple and honest platform that enables millions of cryptocurrency holders to maximize the potential of their assets. Abra enables both individuals and businesses to safely and securely buy, trade, and borrow against cryptocurrencies – all in one place. Abra’s vision is an open, global financial system that is easily accessible to everyone.

Why Abra

Based in the United States, Abra is available in over 150 countries and makes it easy to convert between crypto and a wide variety of local fiat currencies. With over 2MM customers, $7B in transactions processed, and $1.5B in assets under management, Abra continues to grow rapidly. Abra is widely loved and trusted – in April 2022, reviewed and rated Abra amongst the top 5 most popular crypto wallets in the market. Abra is backed by top-tier investors such as American Express Ventures and First Round Capital.

How Abra Protects Your Funds

Abra places clients’ financial objectives and security first. Abra practices a culture of risk management across all levels and functions within the organization.

Abra employs a state-of-the-art enterprise risk management framework that comprises a comprehensive set of policies, procedures, and practices detailing all applicable risk-related objectives and constraints for the entirety of the business. Abra has instituted a complete set of requisite systems and controls that continuously enforce these policies, procedures, and practices to manage all operations, including credit and lending. Abra’s independent Risk Committee comprises experienced compliance, risk, securities, and fraud operations professionals with backgrounds in industries ranging from traditional and digital assets banking, payments, remittance, to fintech.

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