Introduction
Traditional currency (also called federal currency or fiat currency) refers to the form of money issued and controlled by the central bank or government entity. US Dollar, Indian Rupee, Euro etc. are some examples of traditional currency. Conversely, cryptocurrency is a virtual currency that operates in blockchain system and uses cryptographic technology to make secure and transparent transactions. Bitcoin, Ethereum, Tether, Solana etc. are some examples of cryptocurrency.
What Is The Difference Between Traditional Currency And Cryptocurrency ?
Major dissimilarities or differences between traditional and cryptocurrency can be highlighted as follows:
1. Meaning
Traditional Currency: It is a type of currency printed and issued by the central bank and controlled by the government authority.
Cryptocurrency: It is a digital currency that uses cryptographic technology and blockchain system to perform and record financial transactions.
2. Centralized Or Decentralized
Traditional Currency: It is printed, issued, regulated and controlled by the government entity. Therefore it is centralized
Cryptocurrency: Cryptocurrencies are operated in decentralized network using blockchain technology without regulation and control of central authority,
3. Physical Or Digital
Traditional Currency: It exists physically as notes or coins. Therefore, it is tangible in nature.
Cryptocurrency: It has no physical existence and it is 100% digital. So, it is intangible in nature.
4. Transaction Speed
Traditional Currency: It requires intermediaries like banks and credit card companies to make transactions. Therefore, it is slower than cryptocurrencies.
Cryptocurrency: It avoids intermediaries and transactions can be done directly between two parties. So, it is faster than federal currency
5. Transaction Cost
Traditional Currency: Transferring funds through banking system is expensive due to high transaction fees.
Cryptocurrency: It eliminates third parties to transfer funds so transactions can be performed with minimal charges.
6. Volatility
Traditional Currency: It is more stable than cryptocurrency because it is regulated by the government
Cryptocurrency: It is volatile in nature and its value fluctuates dramatically
7. Value Determination
Traditional Currency: Value of fiat currency is determined by the government policy and economic stability of the country
Cryptocurrency: Value of cryptocurrencies is determined by its demand and supply
8. Acceptance And Use
Traditional Currency: It is universally accepted and used in almost all types of transactions
Cryptocurrency: It is in growing phase and its acceptance is limited compared to federal currency. It cannot be used for all types of transactions
Also Read
Advantages and disadvantages of cryptocurrency
Difference between blockchain and cryptocurrency
9. Storage
Traditional Currency: It can be stored in the form of cash or in the bank account
Cryptocurrency: It can be stored in online or offline digital wallets.
Traditional Currency Vs. Cryptocurrency (Comparison Table)
|
Basis |
Traditional
Currency |
Cryptocurrency |
|
Physical Existence |
Yes |
No |
|
Transaction speed and cost |
Low speed high cost |
High speed low cost |
|
Volatility |
Less |
High |
|
Value Determined By |
Economic Stability |
Demand And Supply |
|
Regulation |
High |
Light |
|
Nature |
Centralized |
Decentralized |
|
Acceptance |
Widely accepted |
Limited acceptance |
