FIAT currency is the term used to describe centralised media for value exchange and generally refers to sovereign currencies such as the British Pound, the Euro and the United States Dollar. Historically though, the use of gold and salt would also have been considered as a FIAT currency when it was under the control of a central body. The difference that cryptocurrency has here and one of its many advantages is that crypto is not controlled by a central body – what does this actually mean though?

The problem with FIAT currency is that when we spend it, it needs to be approved by a central body, a middleman who processes transactions to confirm that the transaction has been carried out in a fair manner and the money has been moved from one place, to another. It’s slightly different when we pay cash to our friends (for example) but even so, before we had the cash, it’s been through a bank and the legitimacy of that money has been confirmed prior to us owning it. With FIAT, there’s no way out of this chain, and now the population is getting sick of it.

By having a middleman and by having other factions handle our money and transactions, our money is at risk of collapse under them – how many times have we seen major banking collapses totally screw our economies? Too many to count.

Cryptocurrencies like Bitcoin and Ethereum provide solutions to this problem by existing within a decentralised network, one that does not require human intervention and one that does not allow money to pass though hands. Another bonus is that when using crypto, we don’t have to pay others to handle our money for us, we make the decisions and we have control. All of this is then moderated by the blockchain, a piece of technology that lies beneath cryptocurrency, recording transactions and ensuring that the right money moves to the right people in the most efficient way possible, this ensures costs and low and transactions are quick.

The blockchain also ensures legitimacy and is able to ensure that they money that moves through it has come from legitimate means. Yes, at the moment some blockchain security features can be bypassed, but let’s not forget that this is a new technology, one that is being developed day by day.

Through the blockchain, cryptocurrency addresses all the problems that FIAT currencies have caused both in the modern era and through history.