When the word “currency” is mentioned, images of banknotes and banks pop up into your mind. We are used to the fiat system in the financial sector, a standard, regulated currency such as a dollar or a euro. The main differences between cryptocurrencies and fiat currencies are:
Cryptocurrency has no physical appearance. Yes, fiat also exists in electronic form, but there are no banknotes and no cryptocurrency coins. Don’t confuse physical coins, storage wallets, and QR codes that are used to work with crypto with actual physical currency.
Cryptocurrency is not issued by the central bank and is not tied to the economy of any country. No one controls the primary issue and the following emission of cryptocurrency. No one can influence these processes. The price is formed by supply and demand on the market and is not directly connected with the economy of any country.
Cryptocurrency is anonymous. To work with a bank or payment systems (Paypal, Venmo, etc.), you must specify at least part of your personal data. Cryptocurrency doesn’t require anything, just like paper cash. Each member is anonymous. All information about the owner’s wallet (account) is a set of characters in the wallet address (example of wallet address: 19emjx4vqHPn6ZTsh1ZNbBD7uFZqWA5Cq)
Direct transactions. There are no processing centers, intermediaries, issuers, and third parties in this virtual currency system. The transaction goes from Alice to Bob directly, like giving cash to someone physically. This means that no one can suspend, recall, freeze, or cancel the transaction. All transactions are irreversible, so if you received bitcoins in your wallet, you can be sure that no one can take it away.