Introduction
There is a difference between Crypto Currency and physical current, and these two currencies are used in different transactions. Crypto Currency is a digital currency, which can be used in the form of digital coin online. Interestingly, Crypto Currency has emerged in this modern business era, and it is taking place in different online business. On the other hand, physical currently seems traditional, and its values are backed by the central bank or government. Thus, it seems imperative to compare and contrast the difference between these two currencies along with some key insights
Thesis Statement
Global businesses are expanding rapidly, so business transactions remain limited if the physical currency is used as a medium of exchange. That is the reason; cryptocurrency facilitates global business transactions by replacing the physical currency and fulfilling the needs of today’s world.
Context and History of Crypto Currency and Physical Currency
The idea of digital currency was derived by David Chaum, as he idealized the use of digital cash. However, the modern form of the digital currency emerged as Cryptocurrency. In 2009, Satoshi Nakamoto developed the bitcoin as a Crypto Currency, which was different from the physical money. On the other hand, physical money or paper money was introduced in Song Dynasty in the 11th century, and after it, it became known in Europe. In this context, there is a huge gap between physical and Crypto Currency development, and therefore, some key differences regarding the advantages and disadvantages have been observed. The practice of the physical or paper money started in China 500 years before. It was used in the form of folding money. The money evolved with the passage of the time. It was evolved through block printing, sometimes called stamping. Until the 11th century, paper money was not visible, as the people intended to contain the barter system. The physical form of money was spread throughout the Mongol empire (Katz).
Advantages of Crypto Currency
Easy access is a key advantage of the Cryptocurrency. For Instance, it is easily available to the general public on different online channels. During the term of the business, it has been revealed that investors from all over the world contain easy access to this money. Also, another big advantage of this currency is easy payment. In a few seconds, the user can make payments. As compared to the physical money, the transferring process is cost less due to the online and integrated system. The user does not have to share the information about this money to the government. Interestingly, when dealing in this currency, there is no any third party, which enhances the visibility of the ownership (Popper).
Advantages of Physical Currency
The big advantage of physical currency is the portability as compared to the Cryptocurrency. For Instance, this money can be paid easily at different places, and conversely, Crypto Currency needs online channels only. Even in the small bulk, the physical currency contains the highest value/worth due to broad acceptance in the world (Chang). Comparing with the Cryptocurrency, it contains the low values even existing in bulk. It is a fact that the printing of paper money is quite cheaper and quicker, which is the big strength or advantage of this current. Crypto Currency seems expensive due to material and design (Raskin and Yermack, Preparing for a World Without Cash). For the general public, it is quite easy to count as compared to the Cryptocurrency. Normally, the physical currency can be recognized easily. It is a widely accepted in all over the world, and it has been secured or backed by the central bank and government. It is necessary to use it properly, as it can increase the elasticity of currency with the passage of the time. Moreover, it is more convenient than the Cryptocurrency, as it can be easily paid. Another prominent advantage of this currency is that it is economical due to its cheaper material. People are using this money for many years, and therefore, it is trustworthy and reliable for both, businesses and people (Popper).
Disadvantages of Crypto Currency
The big disadvantage regarding the Cryptocurrency is the difficulty in understanding. On the other hand, people are usually depicting immense resistance when dealing in the Cryptocurrency. Also, people usually do not have much knowledge about this currency, which reduces the visibility of its usage. Due to lack of knowledge and understanding, this money is not widely accepted by people around the globe. The big disadvantage is lack of reverse payments, as if a user wrongly pays someone, it cannot be reversed. Also, the Cryptocurrency is volatile, which also increases uncertainties (Alkhalisi). It has been observed that the physical money is not widely accepted in the international transactions. Obviously, there is a need for some digital channels to transfer the money, and it is the main factor, which makes Crypto Currency better than the physical currency in this context (Katz). Also, due to the fluctuation in the exchange rate, there can be some spikes in the value of the company with the passage of the time.
Disadvantages of Physical Currency
Comparatively, Crypto Currency cannot be affected due to this factor; a value of the currency remains the same (Zweig). The paper money can be destroyed easily, and it depicts its limited durability. On the other hand, the Cryptocurrency is triggered by the long duration due to its quality. The danger of over issuing the money in the country is in the limelight, and it has been considered as a prominent disadvantage. In an economy, the government has to contain some strategic considerations regarding the issuance of the money, which may also take much time. Conversely, Crypto Currency is free of all these complications. Also, it has been observed that physical money is quite vulnerable to different fraudulent activities. The physical money is containing the limited circulation of the money. For instance, in different countries, the money can be circulated only if the country is issuing it. Gold, a precious metal can be accepted around the globe, but physical money contains some limitations. Due to less stability of the value of physical money as compared to the Cryptocurrency, it can be the second choice for business people in this dynamic business era (Alkhalisi).
Future of Both Currencies
Acceptance
Both currencies are the need of this modern and dynamic world. There are some advantages and disadvantages of Crypto Currency and physical currency. Deriving insights from the research, it has been revealed that paper money is containing the acceptance. An immense range of people in different parts of the world does not know or understand the importance or value of this new digital currency. In business transactions, people are decocting their trust on the physical money despite knowing the mentioned disadvantages (Raskin and Yermack, Preparing for a World Without Cash).
Current Business Need
The trend of business has been changed, and financial experts are looking to find some key currency alternatives. However, when making the decision, it is necessary to examine or evaluate these differences to enhance the viability of advantages of currencies (Popper). The intervention of the bitcoin or other digital currencies in different online businesses has changed the nature of the transaction. In this modern business era, there is a need for a currency, which is safe, secure and backed by an authorized financial institution. However, if businesses understand the advantages and eliminate the disadvantages, Cryptocurrency can take place prominently to gain advantages in online business (Zweig).
Conclusion
In the end, it is to conclude that there are several differences between Crypto Currency and physical currency. The most important thing is to understand the importance of both currencies and make some effective financial decision. Summary of main points is as under
The advantages of the Cryptocurrency are easy to access, rapidness of the transactions, visibility of the ownership, investor preferences, easy payments and the protection. Conversely, disadvantages create barriers to understanding the value of the currency, reduction in resistance, increasing knowledge, and increasing the acceptance and its volatility. Comparing and contrasting the advantages and disadvantages seem worthy. Advantages of physical currency are portability, high value, cheaper printing process, easy to count and widespread acceptance. Also, some disadvantages have been presented, which also create barriers in the international markets as compared to Cryptocurrency. Concerning the online transactions, the flow of paper money is not visible. Spikes in the exchange rate, inflation, and lack of durability are some disadvantages. The physical money is containing the highest value as compared to the Cryptocurrency.
This research matters due to the future mobility of money. Online businesses have shown intentions towards the alternative currency. Due to the emerging trends of alternative currency on different online channels, the study justifies its importance. Obviously, people are looking to choose a currency, which is less risky and vulnerable, and through this research, people can make their preferences.
Work Cited
Alkhalisi, Zahraa. “IMF chief: Cryptocurrency regulation is ‘inevitable’.” CNN. CNN, 11 February 2018. Web. 17 February 2018. http://money.cnn.com/2018/02/11/investing/lagarde-bitcoin-regulation/index.html.
Chang, Sue. “Here’s all the money in the world, in one chart.” Market Watch. Market Watch, 28 November 2017. Web. 21 February 2018. https://www.marketwatch.com/story/this-is-how-much-money-exists-in-the-entire-world-in-one-chart-2015-12-18.
Katz, Lily. “Goldman Says Cryptocurrencies May Succeed as Form of Real Money.” Bloomberg. Bloomberg, 10 January 2018. Web. 17 February 2018. https://www.bloomberg.com/news/articles/2018-01-10/goldman-says-viability-of-crypto-is-highest-in-developing-world.
Popper, Nathaniel. “Cryptocurrencies Come to Campus.” The New York Times. The New York Times, 8 February 2018. Web. 17 February 2018. https://www.nytimes.com/2018/02/08/technology/cryptocurrencies-come-to-campus.html.
Raskin, By Max and David Yermack. “Preparing for a World Without Cash.” The Wall Street Journal. The Wall Street Journal, 4 August 2016. Web. 17 February 2018. https://www.wsj.com/articles/preparing-for-a-world-without-cash-1470353068.
Zweig, Jason. “How to Lose 93% of Your Money… And Be Happy About It.” The Wall Street Journal. The Wall Street Journal,12 January 2018. Web. 17 February 2018. https://blogs.wsj.com/moneybeat/2018/01/12/how-to-lose-93-of-your-money-and-be-happy-about-it/.
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