The Difference Between A Fiat Currency And A Cryptocurrency

As the payment method all over the world is turning cashless, the digital economy is spreading its wings widely with each passing year. Physical currency forms are much less used currently as most of the money exchanges are done electronically using payment apps, debit cards, and online sites.

Even though the world is largely moving towards cryptocurrency, only a few people understand the difference between cryptocurrency and fiat currency.

Fiat currency is the money that is issued by the government of a country. It can be considered as a legal tender that has the support of the government that has issued it. A cryptocurrency is a digital form of currency that uses encryption techniques that make it more secure.


Cryptocurrency is not connected to any governmental bodies or banks. It uses blockchain technology for a more secure payment method, unlike traditional currencies. Bitcoin, Ripple, Ethereum, Bitcoin, Dash, etc are some of the common cryptocurrencies used. As they do not have any connection to the government, the user does not need a third party to buy or sell these currencies. Free, open source systems with peer-to-peer networks handle the trade of cryptocurrency.

Cryptocurrencies were initially introduced as alternatives for fiat currencies in digital transactions. But still, many customers, as well as companies, have not yet completely adopted the idea of cryptocurrency. They find it unreliable as a safe payment method.

Fiat Currency

Fiat currency can be either physical currency or digitally represented such as using credit or debit cards. They are completely controlled by the government and the citizens can use these currencies, physically or electronically to pay taxes. Banknotes, paper currency, bills, coins, all forms have a value of their own and can be used to buy or sell goods and services.

Fiat money has increased the dominance of central banks in the economical and financial sector because they are mostly in charge of the printing of currencies. The monetary value is decided by the power of the consumer supply and demand. The most popular fiat currencies that prevail all around the world are the US Dollar, Japanese Yen, Euro, and Korean Won.

Major Differences

● Tracking

The issuer and the recipient can easily recognize and monitor the transactions of fiat currencies which is difficult in the case of cryptocurrencies.

● Medium Of Exchange

Fiat currency is traditional, tangible, as well as a medium of exchange. Cryptocurrency completely follows a digital medium for all transactions.

● Safety

As fiat currency is backed by the government, it is much safer when compared to cryptocurrency. The transactions in crypto trading happen anonymously.

● Supply

As central banks print fiat currencies, their supply is limitless. There is a supply limit for many cryptocurrencies, which means the number of accessible coins is limited.

● Legality

As the government issues fiat currencies, there will be regulations that can influence their value. As cryptocurrencies are not regulated by governmental bodies, there is no such control over them. Therefore, fiat currencies are more legally strong than cryptocurrencies.