Fiat Money vs Cryptocurrencies: What is the real difference?

The basics: Fiat money ( like the dollar or euro ) has value because the government says it does. Nothing physically backs it. Cryptocurrencies, on the other hand, use blockchain and do not rely on governments.

Where did all this come from? China was a pioneer with paper coin in the 11th century, but it was a disaster (hyperinflation = fall of the Mongol Empire). Europe tried it in the 17th century and failed. The U.S. abandoned the gold standard in 1972 under Nixon, and that's where the modern era of fiat money began.

The advantages of fiat money:

• There is no artificial scarcity
• Cheap to produce
• Flexible for economic crises
• Facilitates international trade

The problem: Governments can print it uncontrollably → hyperinflation. And yes, this has historically collapsed economies.

Bitcoin vs fiat currency in 3 points:

1. Bitcoin has a limited and controlled supply of 21M maximum. Fiat money is created by banks at will.
2. Crypto transactions are irreversible and borderless. Traditional money requires intermediaries.
3. Crypto is volatile ( because the market is small ), but as it matures, that will change.

The reality: Bitcoin is unlikely to replace the entire monetary system. It is more of a parallel system, a P2P network where people can operate without relying on central banks. The future will likely be a coexistence of both, not a war.