Cryptocurrency is money that has a system that it follows, though it is very different from fiat money. Fiat money is a fiat legal tender with no intrinsic value, whereas cryptocurrency is a digital asset which derives its value from the blockchain, which is native to it. Cryptocurrency is a form of money in a digital form, whereas fiat also exists in physical form. There are various types of digital assets such as bitcoin, Ethereum, litecoin, etc. Even fiat money is available in various currencies such as $1, Pound, Euro, etc. [Sources: 2, 6, 9]
Although some believe that cryptocurrency could replace fiat money in the future, the majority of transactions in the world are still done using fiat currency. While fiat currencies are still the dominant form of money, cryptocurrency, and the blockchain technology behind it, could very well be the next step in moneys evolution. Some cryptocurrencies advocates believe that one day, digital currencies will take the place of fiat as the primary form of payment due to their ability to enable instantaneous transactions. While some mainstream financial institutions have warmed up to the concept of blockchain technology (or even to the idea of working together with digital currencies in some form), few have made any suggestions that they would embrace crypto currencies wholesale, to the detriment of fiat. [Sources: 0, 4, 5, 9]
Fiat money is currency issued by governments, which has the backing of a sovereign; crypto, by contrast, is digital coins or decentralized assets held together by blockchain technology. The primary difference between cryptocurrency and fiat currency is that cryptocurrencies are generally decentralized, meaning that there is not one authority controlling its value, creating multiple currencies and thereby diluted total value. You can hold cryptocurrency as well as fiat, using a variety of methods, and you can even give it away. Cryptocurrencies, just like fiat, can be used to pay for services and purchases. [Sources: 3, 6, 8, 10]
Much like fiat currency, which we will get into in a moment, crypto is yet another form of payments, that can be used to pay for goods and services, sent as gifts, or saved up as a form of investment for the future. Cryptocurrencies are money insofar as they enable trade between two parties and serve as a store of value. Cryptocurrencies are more volatile than fiat currencies, meaning the market value of any given cryptocurrency may experience sudden and massive fluctuations. Because crypto is unregulated and unbacked by the government, it is more volatile than fiat. [Sources: 1, 3, 11, 12]
While crypto is growing in popularity, it is still not able to displace fiat currencies, which are still the worlds favorite means for exchanging value. While there is a rapidly growing adoption of cryptocurrency - some experts think that eventually, it may be able to completely replace fiat currencies - fiat currency gives governments greater flexibility to run the countrys economy, so for years we can expect that it will continue to remain the main means of exchanging money. [Sources: 5, 7]
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