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Cryptocurrency v/s Fiat currency

Updated: Feb 29

Currency plays a very important role in our day-to-day lives. In the caveman era, a system of exchange ( Barter System ) was used as a transaction method. Due to some glaring flaws in the barter system, the currency went through a couple of iterations. The paper currency gained a lot of popularity around the world, this is how modern currencies came into existence.

With the evolving technologies, we are progressing towards a #cashless economy. Now, modern currency includes paper currency, coins, credit cards, and payment apps. So, what's in line to replace this current culture? The answer is the one that has triggered a lot of discussions in the past few years: Cryptocurrency.

Some people argue that #cryptocurrency has the ability to swipe out fiat money completely, while others say that cryptocurrency is nothing but fiat money in digital form. This article will help you to get a better idea to compare cryptocurrency with fiat currency.


Fiat Currency
Fiat Currency

#Fiat currency refers to the currency issued by the government and regulated by a central bank authority. The term is derived from the Latin word fiat meaning determination by an authority. The value of fiat money is not determined by its construction material. The government retains its value based on the nation's economy.

These currencies are always at a risk of becoming worthless due to #hyperinflation as they are not linked to any physical reserves or commodities. Most of the modern paper currencies are fiat currency, including the Indian Rupee, U.S. dollar, and other major global currencies.


Fiat #currency is retained by the government which makes it more stable and controlled. Stability allows it to act as a means of storing value and facilitating the exchange. It is much easier to track the source of criminal behavior, as it is controlled and managed by government authority.

Though Fiat Money is considered a stable currency, this is not always the case. Economic depression over the past few years have highlighted some of the weakness associated with Fiat currency.


Cryptocurency Transaction
Cryptocurency Transaction

Cryptocurrency refers to #digital currency that works as a medium of exchange. They use #blockchain technology, in which transactions are added to a container called a block, and a chain of blocks is created in which data cannot be altered. Since there is no central server where transactions are hosted, transactions can be done anytime with just one click, unlike other transactions that take days to process.


The constant increase in global prices and its control by the government created the need for cryptocurrency.

  1. It allows us to make fast settlements that continue to accelerate the widespread adoption of digital currency.

  2. Unlike fiat currency, cryptocurrency requires no transaction fees which makes it preferable means to send money across borders.

  3. Users don't have to share their identity to be able to make #transactions. This helps to maintain one's privacy.

  4. It uses #cryptography technology to make secure communication in the presence of third parties who want to steal your data.



#Bitcoin and #Ethereum are the most common and valuable cryptocurrencies right now. They are operated independently without a bank or a central authority by using cryptography technology to make secure transactions.


  1. Some countries and regulators continue to shut cryptocurrency, as they are difficult to understand.

  2. Cryptocurrency can be used for illegal transactions. Due to its high privacy and security, it's very hard for law enforcement agencies to track the user. Bitcoins are frequently been used as a mode of transactions in a lot of illegal deals, such as buying drugs on the #dark web.

  3. In the case of wrong transactions, the coin cannot be retrieved by the sender. Due to the absence of a refund facility, users can easily be cheated on a transaction whose product or services they never receive.


  1. Bitcoin is winning the #Covid-19 monetary revolution where most of the industries and mutual funds are struggling.

  2. #Paypal has initiated Crypto services to millions of eligible account holders in the US.

  3. Amit Bharadwaj scam: The CEO of GB Miners, an Indian Bitcoin Mining Pool, got arrested for the US$300 million cryptocurrency Ponzi scheme.

The crypto market can evolve to create a more positive product that might change the current transaction system.


Cryptocurrency has divided the world into different opinions. On one side there are supporters like Bill Gates, Richard Branson, and Al Gore who believe cryptocurrencies are better than regular currencies. While on the other side, many people like Warren Buffet, Paul Krugman, and Robert Shiller, are against it by calling it a means of criminal activity.

Although there are many advantages of a cryptocurrency over a fiat currency, it seems like cryptocurrencies are not yet mature to replace fiat money.


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LearnElectronics India's explanation is spot-on. Great work!


Anushka Gupta
Anushka Gupta
Jul 25, 2023

This blog by Learn Electronics India is an absolute gem! The way they have compared cryptocurrency and fiat currency, highlighting their strengths and weaknesses, is commendable. I particularly enjoyed the section on the advantages of cryptocurrency, which opened my mind to the possibilities of a decentralized financial system. I can confidently say that I now have a better understanding of these two types of currencies, thanks to the author's excellent writing and in-depth analysis. Great work.

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