An effective form of money acts as a medium of exchange and a store of value. Fiat money and cryptocurrency both meet these requirements but are different in key ways.

Fiat money is legal tender where the value is tied to a government-issued currency such as US Dollar, or British Pound. Cryptocurrency is a digital asset that derives its value from its native blockchain.

Distribution for both also varies: Fiat money requires intermediaries (such as a bank or payment provider), while cryptocurrency relies on distributed and decentralised networks to enable trustless transactions.

The value of Fiat money will fluctuate, being influenced by market conditions and the currency itself. Cryptocurrency markets are known for their high volatility, with significant price fluctuations which has led to the rise of stablecoins – a type of cryptocurrency that is designed to have a stable value by being pegged to another asset, such as a currency of commodity. As such, stablecoins offer business the benefit of digital transactions alongside stable value.

After a transaction has been completed, it is possible to make a chargeback with fiat currency, but not with cryptocurrency.