As I sit here with a fiat currency worth less than 1/100th of the value of a USD (and is constantly depreciating in value), some people are saying that Bitcoin (BTC) is too volatile. They say the same about other cryptocurrencies as well.
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There are many people who wouldn’t write all cryptocurrencies off <a href=”https://ccinews.net/putin-condemns-bitcoin-calls-for-russian-ban-of-digital-currencies/” target=”_blank” rel=”noopener”>as pyramid schemes</a> or <a href=”https://www.bloomberg.com/news/articles/2017-09-12/jpmorgan-s-ceo-says-he-d-fire-traders-who-bet-on-fraud-bitcoin” target=”_blank” rel=”noopener”>frauds</a>. However, the onslaught of negative stories from the media and big bankers like Jamie Dimon has caused considerable uncertainty among prospective cryptocurrency adopters.
People are often distracted from the issues facing the conventional way of doing things, while bashing new ways. This is the case with fiat currencies and cryptocurrencies like Bitcoin. The volatility of Bitcoin is a matter that must be taken into consideration. However, its tendency to recover soundly, and its upward trend are equally important. It is worth more than it ever was (over <span style=”color: #008000;”>$5,300</span> now, with the exception of its <span style=”color: #008000;”>~$5,800</span> peak earlier this month).
Under many circumstances (if not most), fiat currencies keep inflating, including but not limited to the Russian Ruble, the Indian Rupee, the JMD, the Japanese Yen, Venezuelan Bolivar, and the (now defunct in Zimbabwe due to extreme hyperinflation) Zimbabwean dollar.
Could the volatility of cryptocurrencies like BTC be a bigger issue than inflation? Maybe in countries with currencies that aren’t free-falling like some of those mentioned above, but one must also consider the issues of costly international transfers and the absurd exchange rates offered by banks.
<h2>Fees Resulting From The Use Of Fiat Currencies</h2>
Bank fees in general are (in some cases) charged to your account on a monthly basis, charged for wire transfers, and ATM withdrawals. Even if all inflation was to stop, you would still be hemorrhaging money every month. Every time you withdraw or do a wire transfer! These fees not only compound inflation, but they are actually worse.
You can store money in a Bitcoin or Ethereum wallet for free, and without having to maintain a minimum balance. You may, however want to maintain a minimum balance to benefit from Bitcoin’s strong gains! (and you don’t even have to be an investor to do so)
<h3>Other Fees Associated With Fiat Currencies</h3>
Two <span style=”color: #008000;”>$30</span> wire transfer per month would cost you <span style=”color: #008000;”>$720</span> per year. If a company is paying your salary via bank transfers, it is costing them too. Let’s also talk about credit card fees. You don’t pay the 3% fees up front, but stores and bill payment services do, and they likely factored them into their prices already, so you’re paying for that as well.
The moral of the story is, Bitcoin and similar cryptocurrencies avoid these fees (and inflation), and as a result, that helps to compensate for momentary price drops.