Cryptocurrency is completely different from fiat currency with the fact that it is totally decentralized i.e. not under the control of government. It gives right to an individual to acquire right on his/her money. The technique used in production as well as distribution of cryptocurrency is also fully decentralized. Everyone who owns an appropriate hardware and 24×7 internet connectivity, can mine cryptocurrencies. It is a kind of digital currency that offers an extreme level of transparency because cryptocurrency transactions undergo with peer-to-peer networking. The blockchain technology enables everyone to see the dispersed online ledger which is being updated with each transaction. By seeing the open source code, any one may know how exactly cryptocurrency works.
Fiat currency is the currency monitored by government which has its value because people require it in order to pay taxes. The meaning is simple that if you’re using this money too much or not using it at all, both the situations can be troublesome to you. So one must have to take care that these situations don’t get generated in order to make every processing legalized. Fiat currency is simply under the whole and sole acquisition of Government and if this currency is the best possible alternate of money then why does it need safety or kept under the monopolistic rights of government.
BASIC DIFFERENCES IN BETWEEN THESE CURRENCIES:
1 . Fiat currency offers physical medium of exchange whereas cryptocurrency allows to exchange digitally.
2. Fiat currency is availed by government whereas cryptocurrency can be controlled by an individual and it is being produced by computers through mining process.
3. Fiat currency is completely under the control of government; Cryptocurrency is fully decentralized i.e. without any involvement of central authorities.
4. Fiat currency can be represented as currency notes, coins as well as bills; Cryptocurrency, being a digital currency can be seen in the form of code (1 private & 1 public).
5. Value of Fiat currency is decided by government according to market conditions; Value of cryptocurrency is determined according to the level of supply and demand.
6. Fiat currency can be generated by government according to market requirements because there is not limit decided. But creation of cryptocurrency is limited to certain extent.
7. Examples of Fiat currency are USD (US Dollar) and JPY (Japanese Yen) etc. whereas examples of cryptocurrency are BTC (Bitcoin), ETH (Ethereum) and LTC (Litecoin) etc.
8. Fiat currency is generated by each country’s mint that is controlled by government of respective country. Cryptocurrency is generated by using computer in which extremely difficult mathematical puzzles are being solved and the reward for the right solution is digital coins.
9. One can acquire Fiat currency as salary/wage, by performing sales, as a result of investment and as a reward after winning lottery or prize money. Cryptocurrency can be acquired by the process of mining, cryptocurrency exchanges or via sales.
10. Fiat currency is used to fulfill almost all purposes within a country and some powerful currencies like USD, Euro and Yen, are used globally to manage international contracts. Cryptocurrency can be used majorly for online operations to buy or sell anything keeping internet as the base. Some brick and mortar service providers accept payments done in cryptocurrencies.
11. While using Fiat money, users can get interest payments but no interests are associated with cryptocurrencies because of 0% involvement of government.
12. Unlike Fiat money, Cryptocurrency doesn’t get affected with inflation or any market fluctuations. Its value depends only on the demand (supply i.e. creation is kept limited).
13. It is possible to counterfeit Fiat Currency because it involves third party interference. But to counterfeit cryptocurrency is next to impossible as it is being secured by cryptographic code.
cryptocurrencies are all ready to change the way people think of money. It has already revolutionized mindset of people. Major population has already started believing in it because of excessive security, ease and future possibilities. Though Bitcoin is being used more than any other cryptocurrency but slowly, people are investing in other ones too.