There have been many changes in the financial system with developments in technology. A cashless transaction is one such major change we experience today. It is predicted that fiat currencies may get replaced with cryptocurrencies in near future.
Let us see key differences between these two.
Fiat currencies are issued by governments and no individual’s intervention is involved in printing them. Central banks will take decisions like how much money to be pumped into the financial system and withdrawn from the system etc. Considering the demand and supply and other key factors, the banks will take decisions. So here central banking system is the authority which controls fiat currencies. Examples for Fiat currency are US Dollar or Euro.
In contrast, cyptocurrencies are digital money where no intervention of banks is present. These currencies use cryptographic technology for processing, verifying and securing transactions. Here no central bank controls the transactions. The existence of cryptocurrencies is enabled by Blackchain technology. Bitcoin is a poplar cyptocurrency which gained momentum while the world is moving to cashless society. Feat currencies are relatively stable whereas volality can be seen with cryptocurrencies.
Fiat currency transactions fees will be higher and takes time to process. International exchange transactions like $ to inr etc are costlier with fiat currency. However cryptocurrency transactions are instant and fee is less when we use cryptocurency like Bitcoins. Further, all your money stored in online bank accounts and debits and credits to the account everything can be tracked by the central authorities in case of fiat currencies. But Cryptocurrencies are more private as banking intervention is absent. People who prefer privacy can find cryptocurrencies more comfortable.