There’s no doubt that the world is moving toward a “cashless” existence. If you think this isn’t true, just ask yourself when the last time was that you had any cash in your pocket? Most people don’t even carry enough change to pay a toll or parking meter anymore. Almost everything that has to do with our money has been moved online. Did you know that you can take an entire week’s vacation to Walt Disney World and you don’t need to take any cash, whatsoever? If the happiest place on earth is moving away from cash, it’s probably a good idea to believe that this is the way of the present, and not the future anymore. But this can be difficult for people who don’t fully understand what cryptocurrencies, digital currencies and fiat currencies are. So here’s a rundown on each one and what the differences are.
The world’s monetary supply is only so large. This is true of cryptocurrencies as well. The difference between the money sitting at your bank and the cryptocurrency you purchased online (bitcoin for example) is that the cryptocurrencies aren’t regulated by the mainstream financial systems. Cryptocurrency is unique because it is secured and encrypted online. The money that changes hands on the internet is verified through a Blockchain, which is a digital ledger, and buyers can see quite transparently the value of their currency, and the trends from previous transactions.
The terms cryptocurrencies and digital currencies are often used interchangeable but they are different. Digital currencies are forms of money you can buy online through certain platforms that give you access to products in this platforms. For example, if your child purchases “tokens” to buy new weapons for their game characters online, the tokens are a form of digital currency. They traded real money to buy virtual money, and then can make purchases with the platform’s currency. Steam, the most popular and widely used online gaming platform in the world, uses digital currency, but started accepting bitcoins (cryptocurrency) in 2010 as a way to bolster sales.
Fiat currency is our actual money. The paper money we trade in stores for groceries and goods. The value of fiat money determined by governments based on supply and demand and the value of that money changes regularly. To clarify, when people used to trade silver and gold pieces of coin for goods, they coins had an intrinsic value based on the material they were made of; however, because we use paper and coins of much lesser value these days, the value that paper represents has to be determined by someone, including the government and economy.
Problems and Solutions
One major problem that fiat currency faces is that as more and more people move to a digital economy (trading money electronically for goods and services), the value of the paper money ebbs and flows. We’ve already seen the impacts of this in Canada and India where coins and paper bills are being pulled from circulation because they aren’t being used enough to continue to produce them in mints. There are pros to this digital age of money, though. Dentacoin, is a new Blockchain cryptocurrency that will provide the dental industry with a digital space to conduct financial transactions for services rendered, create opportunities for insurance-like models, and provide opportunities for financial investment in the industry. So while some aspects of business are being impacted by cashless societies, others, like the dental industry, are about to get a complete makeover for the better.