The rise of cryptocurrencies and “blockchain” technology linked to them has indeed revolutionized electronic commerce. Blockchain technology has great potential to fundamentally change global markets and the global financial system. Virtual currencies and blockchain technology can significantly contribute to increasing consumer welfare thanks to a great decrease in transaction costs of payments or money transfers.
Despite the fact that cryptocurrencies were invented relatively recently (only about 10 years ago) their worldwide popularity is growing at a tremendous pace, and this also includes the RUBT cryptocurrency. Many countries develop legal and regulatory settings for the cryptocurrency market and its place in the economy. Companies in various countries start to increasingly accept cryptocurrency as payment method. Also, the use of cryptocurrency as an investment tool is growing rapidly.
This could be explained by the fact that today we are affected by trends of globalization and digitalization, the development of digital technologies, the transformation of the banking field, the emergence of digital banks, the rise of artificial intelligence, machine learning, and data analysis. And in connection with all this, there is a need for a currency that does not depend on borders and banking systems. In recent years, services allowing you to quickly and inexpensively send money across the border have become popular, as well as services in the field of e-money and money transfers.
How are cryptocurrencies comparable to fiat money and traditional payment systems?
Cryptocurrency is a virtual alternative to conventional monetary symbols and existing electronic interbank payment systems. The main purpose of its creation is to eliminate intermediaries involved in the transfer of funds between people even living in different parts of the world. And cryptocurrency transfers are especially important in the undeveloped financial markets of Africa, Latin America, and Southeast Asia where it is often impossible to perform a traditional bank transfer due to the lack of banks or even passports for some citizens.
A distinctive feature of cryptocurrencies compared to conventional bank transfers is the relative speed of transfers and much lower transnational fees. In this case, a payment becomes more profitable and fast, unlike, for example, the SWIFT network with a rather high transaction fee and the processing time of several days for some transactions (for example, money transfers involving a conversion).
The key difference between cryptocurrency and fiat money (classical exchange means issued by governments in paper, plastic, metal coins, and also presented in a non-cash form) is that cryptocurrency has no physical expression. At the same time, at the information level, the coins are carefully encrypted which makes counterfeiting probability pretty much nonexistent.
Cryptocurrencies and fiat money are similar in the fact that neither one nor the other is today backed by a product (for example, something like gold or another asset with a base value).
The main difference between the price of cryptocurrencies and fiat money is that fiat currencies are supported by national governments and are recognized as legal currency for payment of public and private debts. Technically their value is based only on a government statement that they have a value and that the two parties to the transaction trust this value.
Today, most countries use the fiat currency system, where central banks and monetary reserves control the money supply and, therefore, indirectly control inflation. The government is not more than an “official and properly established guardian supervising the behavior of the citizens and managing their spending”. Cryptocurrencies are not controlled by a centralized government or power authorities and in most regions are not accepted as legal currency. The cryptocurrency offering is usually fixed which almost completely eliminates any risks of its devaluation. This is one of the ways to resolve the contradictions laying in the foundation of the modern capitalist system and democratic society.
Other than that, fiat currencies and cryptocurrencies have similar characteristics. Both can be used as an exchange medium for the purchase of goods and services and as a conditional store of value.
Cryptocurrency in general (and RUBT coin in particular) is a convenient form of mutual settlements allowing you to complete transactions without banks and other institutions. A seller and a buyer from different countries can settle accounts among themselves using a secure Blockchain platform.
- Low commissions that do not depend on the transactions, amounts, and location of the counterparty.
- The platform operating around the clock.
- A high degree of protection and safety for operations.
- No possibility of falsification and counterfeit.
- A dynamic rate, independent of government authorities.
- No intermediaries and banks.
- Fast transactions.
Those are not all of the advantages of cryptocurrencies including RUBT compared to ordinary money, and transactions made using them. But at the same time there are also certain disadvantages that can be heard from some doubters:
- Governments of several countries having a negative approach to cryptocurrency, the introduction of norms and bans on its turn-round, mining, and exchange.
- The risk to lose everything you earned in case you’ve lost the secret wallet code.
- Cryptocurrency not being backed by official reserve assets.
- The volatility of the rate.
Many shortcomings and disadvantages are corrected and addressed in the standard operating mode since this form of mutual settlements and technology have not yet been fully developed. But the attitude of governments towards digital money is alarming and worrying, as a number of countries have already rejected their circulation. Algeria, Lebanon, China, and Kazakhstan are the countries which for unknown reasons introduced a number of such restrictions. The restrictions definitely do not contribute to the development and strengthening of cryptocurrencies. But the countries have to practice compulsory national centralization of exchange activities.
For individuals the key advantages of cryptocurrencies and RUBT compared to fiat money are the following:
- it is a cheap tool for large settlements;
- there is the possibility of getting profit by investing in the cryptocurrency purchase and mining.