Since Bitcoin is the most popular kind of Cryptocurrency, let’s dive a little more into this.

Quick disclaimer: I’ve constantly expressed how I am fairly new to the perplexed world of Cryptocurrency. So please take anything I write here with a grain of salt. Below are some information I’ve gathered that might help shed light on the opposition of bitcoin versus traditional currencies.

person holding gold round coin

Bitcoin is a digital currency created way back 2009. Yes, it has been present for more than a decade and yet, its astonishing popularity has just been known for the past few years.

In a laymanized term, bitcoin is a means to pay someone for something, just like any traditional currency. But of course, each has notable differences that make Bitcoin a more appealing option in this age of technology.

Differences between Bitcoin and Traditional Currency

The differences between Bitcoin and Traditional currency are as follows:

  • Bitcoin is not a physical currency. It only exists online, meaning there are no actual coins or paper notes of Bitcoin.
  • Bitcoin can be used to buy and sell products from companies or merchants that accept Bitcoin as payment, but not all people and companies accept it.

Some of the 11 major companies that accept Bitcoin are Microsoft, Starbucks, and Home Depot.

black android smartphone on brown wooden table
  • Traditional currencies are managed by the central bank, which manages the money supply to keep prices steady. They can print more money or withdraw some from circulation if the need arises.

  • Bitcoin, on the other hand, has no central bank and isn’t linked to or regulated by the state. The supply of this cryptocurrency is decentralized.

“Decentralized? Ameena, Please expound.”

If fiat currencies rely on centralized entities like central banks, commercial banks, governments, payment processors like Mastercard or VISA, and other intermediaries, Bitcoin is the opposite.

Traditional currencies, since they are centralized, are under the organizations mentioned above. These organizations have the authority to decide whether to approve your transaction, whether you can send money to certain people or companies, or if the money you’re using is legal or not.

On the other hand, no one controls Bitcoin (decentralized). Thus it is an independent peer-to-peer money system that can function regardless of anyone’s wishes.

  • Traditional currencies is minted by a central bank while Bitcoin is minted by a bitcoin “miner”. This miner solves a diffiuclt mathematical problem then receives a fraction of a bitcoin as a reward.
  • The supply of bitcoin in the world can only be increased by a process known as “mining”. And it can only increase until it reaches around 21 million Bitcoins. With the current rate of mining, this may occur sometime in 2140. After that, there MIGHT NOT be any more mining of bitcoin in the world. As of February 24, 2021, 18.638 million bitcoins have been mined, which leaves 2.362 million yet to be introduced into circulation.

Final Thoughts

A lot of investors call Bitcoin the next step in the evolution of money. Since we’ve never had money like Bitcoin before, it is quite normal to question the concept and compare it with traditional currencies.

Hopefully, you now know the key differences between Bitcoin and conventional money.

If you liked this article, don’t forget to share it with to your loved ones and friends.

By Ameena Rey-Franc

Recognized as one of the Top Finance Blogs in the PH. Ameena Rey-Franc (founder of TTP) is a former Banker and BS Accountancy graduate turned Blogger, Keynote Speaker, and entrepreneur. Currently an RFP delegate, she is also the Author of a book about Financial Resilience and has held seminars for reputable companies like GrabFoodPH, Pru Life UK, VISA, JPMorgan Chase& Co., Paypal, Fundline, Moneymax, and many more. The Thrifty Pinay's mission is to empower women to LEARN, EARN, and be FINANCIALLY-INDEPENDENT no matter what life stage they are in.