What is fiat vs crypto (fiat currency vs cryptocurrency)?

06 Mar 2023

Fiat money and cryptocurrencies are similar in that they both lack intrinsic value, which means they are not pegged to the price of a tangible asset. These two are also divisible; similarly to how one Euro is divided into 100 cents, one Bitcoin (BTC) can be divided into as little as 0.00000001 BTC.

That said, there are some significant differences between cryptocurrencies and fiat. On the one hand, the money in your wallet or bank account is most likely a fiat. Fiat money is a currency issued, regulated, and legally recognized by the government. Its value derives from the stability of a country's economy and social trust.

On the other hand, cryptocurrencies are not declared legal by governments, meaning that no authority can issue them, thus affecting their value. Decentralized cryptocurrencies are resilient and do not require the involvement of a third party to validate a blockchain payment.

Although some people are skeptical that blockchain payment technology can truly replace fiat currency, both have distinct disadvantages. A frequently mentioned flaw is fiat money's susceptibility to depreciation. While cryptocurrency usage has dramatically increased, their adoption rate is low compared to fiat money as the complexity of blockchain notes various obstacles to widespread acceptance.

Read more:

• Crypto payment gateway
• Fiat to crypto payment gateway