How is Bitcoin different from regular money (fiat currencies)?

How is Bitcoin different from regular money (fiat currencies)?

Twelve years ago, Bitcoin was introduced in the financial world. Bitcoin is a digital currency or cryptocurrency that uses cryptography and allow users to complete peer-to-peer transactions in a decentralized way. With Bitcoin, people were introduced to blockchain technology, which has attracted many people. Due to blockchain, bitcoin usage has been increased dramatically because it provides utmost security to the system, and people have started using blockchain in different industries.

Bitcoin has benefitted people and businesses by allowing fast and cost-effective transactions electronically over the internet. It has the potential of making a mark in the financial world. Even after knowing the unique features and benefits of bitcoin, some people are still not impressed. The reason behind this is because they haven’t compared regular money or traditional currencies with bitcoin. There are many points of differences between both that can make things clear for you and help you understand bitcoin in a better way.

In this article, we will compare bitcoin with regular money (fiat currencies) based on a few points and will mention to visit to know more  why bitcoins are preferred more.

Fraudulent activities

In fiat currencies, the users have to provide their personal information, including bank account number, phone number, addresses and more, to banks to make the transactions. Also, Bitcoin transactions are recorded in a private ledger, which means they can be easily altered, and there can be an issue of double-spending. There are high risks that malicious users can attack the details that are saved with banks.

Bitcoin’s case is entirely different as each bitcoin transaction is recorded in a blockchain ledger that is a distributed public ledger. The transactions are collected into blocks that contain data and information of users and their transactions. Each block has its hash code, and blocks are connected to their previous blocks. Blockchain uses cryptography which secures bitcoin transactions and their data.


The significant difference between bitcoin and regular money is that bitcoin is a decentralized system, whereas regular money or fiat currencies are centralized. A decentralized system means it doesn’t involve any central authority for approval of transactions, and no one has control over the system. A centralized system means central authorities control the printing and regulation, and the government keeps track of the cash flow of users.

Any government or bank doesn’t set the value of bitcoin, but it is determined according to demand and supply in the market. Also, the value of fiat currencies is set according to what people can pay for specific goods and services. No involvement of any central authority makes bitcoin an anonymous system means to transact the money; no real identity or personal information of users is required.

Transaction cost

The process of fiat currencies’ transactions is completed through banks. There is the government and banks’ involvement, which increases the transaction fee and time of processing the payments. If a user wants to make international transactions, they have to wait for 15 days or a month to get the transaction completed. While in bitcoin or other cryptocurrencies, there are minimal transaction fees, and bitcoin allow borderless transactions. The international transactions are completed within a few hours because the bitcoin system operated 24/7.


There isn’t any limitation on the number of fiat currencies as they get printed by RBI whenever required. Fiat currencies are inadequate, which creates inflation, which affects the purchasing power of buyers and sellers. But in the case of bitcoin, the supply is limited as there are 21 million bitcoins that can ever be mined. There is no situation of inflation or deflation in Bitcoin. By considering the limited supply of bitcoin, the buyers are sellers mine bitcoins.

The Bottom Line

It is expected that the banks and cryptocurrencies will merge in the future, and the government will impose regulations on Bitcoin. But with the increasing popularity and adoption of blockchain, it might be possible that traditional banks will adopt blockchain technology, making banks powerful. Despite the volatile market of bitcoin, people are investing in it because of its high flexibility, cost-effective and high-speed transactions. More and more businesses are accepting bitcoin because it is helping businesses to expand their business globally.


Leave a Reply

Your email address will not be published. Required fields are marked *