Financial advisors believe that cryptocurrency is all set to become the future of digital currencies. More people now prefer cashless transactions via cryptocurrencies because they’re safer, more comfortable, and faster. But a vast majority of the population remains unaware of the differences between fiat currency and cryptocurrency.
Ben Armstrong, a crypto enthusiast who runs a YouTube channel called BitBoy Crypto, explains the differences in easy terms so that you can understand the core concept easily. According to Ben, there are three primary differences between cryptocurrency and fiat currency: deposit and withdrawal, variety in currencies, and trading approach. Let's take a look at these differences in detail.
1. Deposit and withdrawal
First of all, Ben advises you to check the crypto exchange you want to use as your trading platform. Some of them accept common fiat currencies like the US Dollar and Euros. On the other hand, some exchanges only allow you to use your digital assets or Bitcoins. Ben believes that crypto exchanges that accept fiat currencies make it easier for new traders to get their feet wet in the crypto industry.
He frequently advises his YouTube subscribers to use crypto exchanges that accept fiat currencies. These exchanges accept debit and credit cards and wire transfer for payments, making them more accessible to the average individual. Additionally, the withdrawal method is also more straightforward as you only need to link your bank account to send money from your trading account directly to your bank account.
If you are dealing with cryptocurrency, you need an intermediary currency like Bitcoin or Ethereum to enjoy the cryptocurrency exchange benefits. Alternatively, you may open a crypto wallet to store your Ethereum or Bitcoin before transferring money for payments. This makes the entire process lengthier compared to depositing or withdrawing fiat currency.
2. Variety in currencies
While fiat currencies do have an advantage over cryptocurrencies when it comes to deposits and withdrawals, the latter has the upper hand when considering the variety of coins. Fiat only has a few limited currencies, while cryptocurrencies have tons of coins that you can buy and sell when their prices are favorable. Crypto-only exchanges link various cryptocurrencies so that traders can trade multiple coins. This not only gives you options to trade but also improves market capitalization.
One of the reasons why traders prefer trading on a wide range of coins is that even if they lose money on one trade, they can make up for the loss with multiple trades on other digital assets. This may not happen if you trade with fiat currencies because of their limited variety.
3. Trading approach
Your trading approach depends on your experience in the crypto trading industry. Ben suggests new traders always use a trading platform that supports both fiat currencies and cryptocurrencies. This way, your transition from fiat to cryptocurrency will be smooth. These trading platforms also come with charting tools and technical indicators pointing out the highs and lows of different currencies. If you want to know more about the market or get a forecast based on key performance indicators, you can follow the latest updates on BitBoy Crypto.