Can fiat currency and digital currency coexist?

Proponents of digital currency and blockchain technology advocate fast, fair, modern, and low-cost digital payment solutions to replace high-consumption, unfair, and inefficient fiscal products to revolutionize.

This leads to an obvious question: can fiat and digital currencies coexist, or will there be a winner in the end?

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Fiat currency: Despite its shortcomings, it is still widely accepted

When we talk about cash or money, we usually mean some kind of legal tender.

It can be in U.S. dollars, pounds sterling, or renminbi, etc.

These currencies usually exist in the form of paper and coins, and are often issued by the central government of a country to supervise the economic activities of a region.

Therefore, the US Federal Reserve (Federal Regress) will print the banknotes used on the territory of the United States, and the Central Bank of China and the Bank of England will print the renminbi and pound sterling used on the territories of China and the United Kingdom, respectively.

This form of money is pure paper, so it has no real value in itself.

Gold coins are as valuable as silver coins. Paper does not have that value.

Because the central issuing authority considers it valuable, it can only be accepted as an exchange medium.

The price is completely self-determined.

To illustrate this point, on January 1, 2005, the Turkish government directly cut a few zeros from their currency (Turkish Lira).

The 1 lire banknote is the same new banknote as the 1 million lire banknote.

Old banknotes were phased out, new banknotes were introduced, and the lira rose a million times.

In spite of these shortcomings and obvious problems, legal tender has the first advantage and can be used for longer than other solutions.

Therefore, although it has no actual value, it is generally accepted in terms of goods and services.

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What about digital currencies?

Digital currency is a form of digital currency supported by encryption and mathematics.

In design, these currencies can support instant digital payments, and can also be used to pay for goods and services.

In addition, in order to use these currencies quickly and safely, they can be designed to control inflation and prevent double-spending mechanisms (the usage examples are not explained in detail here).

One of the similarities between digital currency and fiat currency is that neither has intrinsic value.

Legal currency is paper money, and digital currency is 0 and paper money stored in a computer.

However, the difference between encryption is that it is not issued by the central government and does not control the overall supply chain of digital tokens or assets. (In some encryption projects, the issuance project team controls supply and other related factors, but in general, these digital currencies are not dispersed to the extent that they are fast, fair, and can become a world-recognized medium of exchange.)

Therefore, there is no inspection of digital currency, government measures are flexible, and other companies do not need to verify transactions.

Therefore, it can be widely accepted and become a safe medium of exchange without manipulation and fiat currency.

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Can fiat currency and digital currency coexist?

Based on historical evidence, we can safely assume that digital currency and legal tender coexist within a predictable time.

Bitcoin is the most widely recognized digital currency since it was first manufactured more than 10 years ago.

It is not only a medium of transaction, but also the investment focus of large institutions, and it has become a store of value.

Trailblazers and early investors are also involved, but only a large number of adoption can say that the real cryptocurrency era has arrived.

Prior to this, it was only used as an exchange medium and value preservation.

Institutions that support digital currency, better forms of currency, and changes in financial status will continue to increase the adoption of digital currency.

We have faced major changes and it is interesting to be part of these changes now.

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Fiat currency is used for a longer time than digital currency and is universal in the world.

However, digital currency, especially in terms of preventing inflation and building a fair and open financial system, provides many benefits that legal currency does not have.

It is expected that interesting changes will take place in the way currency is used in the next few years.

In the process of promoting such changes, digital currencies have played an important role.

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