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It seems like a new cryptocurrency pops up every day. And while Bitcoin, Litecoin, and Ethereum continue to dominate the cryptocurrency landscape, extreme volatility remains. To this effect, cryptocurrency investments are all about timing.
But cryptocurrency shouldn’t overshadow investments in true currency, such as historic coins, bullion, or currency notes. However, amateur investors often have difficulty understanding the differences between these two types of investments, as well as their upsides and downsides. So to set the record straight, here are some of the differences between investment-grade currency and cryptocurrency.
Government Backing
One of the greatest differences between currency and cryptocurrency is government backing and centralization. Regular currencies have the full backing of the government where they’re from. Organizations like the Federal Reserve help determine the value of the currency, as do market conditions, inflations, and more.
Cryptocurrency, on the other hand, isn’t backed by any government. Moreover, no body or organization can print or make more cryptocurrency. There’s a finite limit, which can prevent saturation or a loss in value purely from creating more.
Transparency
While currencies, coins, and notes seem like straightforward ideas, transparency is always an issue. Only the sender, receiver, and banking agent see any given transaction of money, leaving outsiders to speculate or guess about these transactions.
The biggest advocates of cryptocurrencies often point to transparency as the biggest value proposition of digital currency. Every single detail of where cryptocurrency moves is completely outlined in every transaction. As a result, security and overall transparency are far great with respect to cryptocurrency rather than regular currency.
Legality
The legal framework surrounding cryptocurrency is volatile. While some countries like El Salvador have fully embraced cryptocurrency, others are more hesitant to allow it as legal tender. As countries move to regulate cryptocurrency in terms of overall transparency and to limit money laundering issues, legal problems for investors could arise.
Conversely, the regular currency has no problems with legality, as long as inflation remains in check and a strong government remains in power. However, developing countries can often face bureaucratic hurdles and red tape with regard to their currency, which can cause certain currencies to plummet almost overnight.
Volatility and Stability
Both cryptocurrency and regular currency may have issues with volatility and stability due to market conditions, demand, and world issues such war, economics, and regulation. Furthermore, the average investor understands the basics of currency and its usage; few actually understand how blockchain and cryptocurrencies work on the whole.
As a result, cryptocurrencies can fluctuate based simply on buying and selling or no news at all. In the case of currency, the free flow of information can help investors make better decisions on whether to buy a certain currency or collect it as a long-term investment.
Capitalizing on Real Currency
While the sharp price increase and volatility of cryptocurrency can make the virtual currency seem like a sounder investment, the actual currency is often a way to horde wealth without the potential for heavy losses.
If you ever need to liquidate your coins or currency, contact us at London Coin Galleries of Newport Beach. We have helped thousands of customers for multiple decades get the most return on their investment.
You will always get more money for your coins and currency from us when compared to pawns shops and jewelry stores. We put our numismatic experience to work for you.
Call our Gallery to schedule an appointment. We want to ensure we spend ample time with each client that visits us for the evaluation of coins or currency. We look forward to helping you.
