Off-Ledger Currency: Fiat Money in the Crypto World
Off-Ledger Currency is a currency that is created outside a particular blockchain register but is accepted or used.
What is Off-Ledger Currency?
Off-blockchain currency is currency that is not on the blockchain or other distributed registries. After off-blockchain currency is not specifically designed for blockchain, it can be used in the world of blockchain because of its usefulness and widespread acceptance. For example, the Ripplenet blockchain and Stellar blockchain transmit currencies around the world through its bridge XRP and XLM. The Ripple Ripplenet blockchain is also able to transmit off-blockchain cryptocurrencies in the world through them Bridge currencies, XRP or XLM.
The dollar (USD) is a prime example of an off-register currency – the dollar is used around the world because of its value, with most banks typically holding it as reserve currency. It is centrally controlled and issued without any restrictions. Unlike blockchain-based currency (on-ledger-currency), it has the same central control system, as well as its internal controls.
On the other hand, the value of off-register currencies can be said to stem from government support and their subsequent declaration as legal tender. It is the right of central banks to issue and control fiat money that gives them absolute power, influence and influence over the economy. At the same time, fiat money can still be counterfeited by attackers. If issuance continues uncontrolled, it can have consequences for the economic development.
Unlike digital currencies, the existence of off-blockchain currencies does not require the constant stimulation of computing power. Some off-register currencies are virtually digital fiat equivalents that are used on the blockchain – such as the US dollar or the euro – because of their stability and popularity. Fiat Stablecoins (tokens tied to the value of nation-state currencies) may fall under the definition of off-blockchain currencies because their value is still generated from off-register currencies.