crypto vs fiat -

Cryptocurrency vs Fiat Money

Cryptocurrencies have very similar characteristics to traditional fiat money, but with the exception of quite a few impressive benefits. 

It should be noted that both cryptocurrencies and fiat money are essentially used for the same purpose, to act as a store of value and facilitate payments. But before we get into the details on their differences, make sure you’re familiar with the definitions: 

Cryptocurrencies, such as Bitcoin and PMA, are digital assets that are run on a decentralized system, without a middleman. 

Fiat money, such as Euros and Dollars, get their value from governments that declare them as legal tender. 

The differences between these currencies lie in how they are created/issued and the impact this has on their governance, how transactions take place, their security, and the privacy they allow. Let’s take a closer look! 

The Creation of Crypto vs Fiat 

Cryptocurrencies are created by decentralized, blockchain platforms. While fiat money is issued by a ruling government. 


Because of the decentralized nature of blockchain, cryptocurrencies are not run by one central authority, they are instead governed by a network of individuals by majority rule. This differs from traditional fiat money that is issued by central banks and governments. 

How do Transactions Take Place? 

The main advantage of cryptocurrencies utilizing blockchain technology is that transactions are peer-to-peer, meaning that no middleman is required for the transaction to take place. Whereas fiat currency runs on a centralized system, so an intermediary, such as a bank or payment provider, is required for transactions. 

This lack of central authority for cryptocurrencies means that users are in full control of their funds. For example, businesses are no longer restrained by hefty transaction fees implemented by central authorities and are not at risk of funds being stopped or controlled at the discretion of the bank, which is common in the high-risk industries. Also, transactions made over the blockchain are final and cannot be reversed, unlike fiat money, leaving merchants free from chargebacks. 


The finality of blockchain transactions also works to increase the security of these payments, meaning that they cannot be altered once made. 

The decentralized nature of cryptocurrency systems has additionally worked to increase the cybersecurity of transactions with data being shared across a network of computers. This is compared to the traditional centralized financial systems that have a singular point of attack. 


Also, crypto addresses are not easily associated with any one person, separating it from fiat payments that don’t offer its users this type of financial anonymity. 

Cryptocurrencies have created a new form of trust, enabling the exchange of funds through a decentralized network and creating many advantages for its users in the process. So, what will it be, crypto or fiat? 


Why not experience the advantages of cryptocurrency yourself? Manage all your digital assets easily with the PumaPay Mobile Wallet – available in iOS and Android! 


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