The payment system all around us is changing into a digital economy as the world transitions to a cashless society. Only a small portion of the world's currency is currently represented physically; instead, most transactions take place online, via debit cards, or through online payment apps.
The word "fiat currency" refers to money issued by a country's government. It is a legal tender that is backed by the government that issues it rather than a tangible good or commodity. Cryptocurrency is a digital means of exchange that is fully secure due to the use of encryption techniques. Cryptocurrencies are radically different from traditional fiat currencies. However, you can still buy and sell them like any other commodity.
There are a few factors that differentiate both the currencies mentioned below:
Tracking: Fiat currencies and cryptocurrencies differ in that fiat currency transactions are simpler for issuers and recipients to track and identify.
The exchange method: Fiat money and cryptocurrencies are different in that fiat money is a physical, or traditional, medium of exchange, whereas cryptocurrencies are digital.
Safety: Real money is safer than cryptocurrency because it is backed by the government and the movement of money can be monitored. While in cryptocurrency transactions can be made anonymously.
Supply: Real money has an infinite supply, which means that central banks are able to print an unlimited amount of money. Many cryptocurrencies have a supply limit, which makes sure that there will only ever be a finite number of coins available.
Legality: Governments control the supply of real currency and enact laws that affect how much it is worth. Digital assets known as cryptocurrencies serve as a medium of exchange and are ungoverned by governments.