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Crypto and Fiat

Since you are on the publication of Exchange, you have obviously heard of crypto. But, as soon as you chat with someone in the industry or just listen to an interview the term “fiat” will pop up.

If you hope to see a post about an Italian car manufacturer vs. crypto, sorry.

What most people mean by “fiat” is a currency that has been declared legal tender by a government. The word itself comes from Latin and can be translated with “let it be done”. It stands for “an authoritative decree, sanction, or order” ( and is used to refer to a currency that is declared legal tender by a government. Still, sounds confusing?

It is the money most people use in their daily lives to buy and sell. Fiat is the Euros, Dollars, Pesos, and Pounds of this world. It comes in different forms as physical bills or in electronic form on the spreadsheet of a bank. Normally fiat money is controlled by a central bank that is managing the supply. In the early days’ fiat money was still backed by assets like gold, but these days it derives its value solely from the trust in the system.

As you can imagine, there are pros and cons to fiat money. On the bright side, in most developed economies fiat money is pretty stable. You don’t have to worry that it might overnight lose all its value. Furthermore, by manipulation of the supply, fiat money allows central banks to counteract undesirable economic events like crisis or recession. In addition to relieving recession, managing the supply central bank have a tremendous influence on credit and interest rates.

On the downside, fiat transactions even in times of the internet are still slow. Especially when transferring internationally, it can take days until the money arrives and you have to pay high fees on it. Counterfeit is another problem with physical cash. Last but not least, whenever citizens in a country start losing trust in their government, their fiat currency is subject to sometimes rapid inflation. Unfortunately, this is the sad reality for many people living in developing economies around the globe.

What happens in many of the struggling economies, is that more and more people start using crypto-currencies for their daily purchases. In comparison to fiat, cryptocurrencies are not controlled by a single entity and instil more trust in these economies. Unlike fiat, crypto is created with a set amount to be issued preventing inflation. It is easily transferable and transparent, meaning anyone can track the trail of money. Furthermore, crypto is a perfect fit for sending money across the globe with high speed and low cost.

Unfortunately, not all is bright with crypto. As many are aware, crypto can be very volatile and subject to market manipulation especially on coins with a smaller market cap. Nevertheless, bigger and more established currencies like Bitcoin Cash or Bitcoin Core are now being accepted all around the world for payments. If you want to find the closest store where you can put your BCH to use, check out the Bitcoin Cash Maps.



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Naomi Oba

Naomi Oba


Writer in Crypto — passionate about financial education, blockchain, books, and food.