How is Bitcoin different from physical currency?

Bitcoin is one of the oldest cryptocurrencies that paved the way for the entire cryptocurrency market.

This digital currency has experienced tremendous growth in its thirteen years of existence. Therefore, many virtual asset enthusiasts believe that this digital currency will soon replace fiat currencies. As more and more people transact with digital currency, the world is slowly moving towards a cashless society. However, it may take some time for this virtual currency to enter the mainstream sector. For more information on the bitcoin cycle, click here:

On the other hand, Satoshi Nakamoto created this electronic money to replace conventional money, but some people cannot distinguish traditional money from physical money. This is a guide to how electronic money differs from physical money.

What is physical currency?

Physical currency is what people call traditional money or fiat currency. This type of currency is issued by the government and regulated by the central bank. Furthermore, this physical currency often acts as legal tender and has no assets backing the money. Instead, fiat money is based on the credit of the economy.

Traditional currencies derive their value from supply and demand in the market. However, some physical coins are still at risk of losing all their value due to hyperinflation.

What is Bitcoin?

As a virtual currency, Bitcoin acts as a medium of exchange and a store of value. This digital electronic currency uses cryptographic technology to process, protect and verify transactions.

However, unlike conventional money, this virtual asset is decentralized, meaning that the government or any other financial institution cannot manipulate or regulate the currency. This virtual currency has a peer-to-peer system where no intermediaries are involved in the transactions of this virtual asset. Instead, you can use exchange platforms to buy, sell or trade Bitcoin. In addition, Bitcoin has an underlying technology called blockchain that allows transactions to be publicly recorded and verified.

Differences between Bitcoin and physical cash

This digital currency differs from physical money in several ways, including:


The main difference between this virtual currency and physical money is supply. The supply of Bitcoins is limited, individuals can only obtain 21 million Bitcoins. Due to this limited supply, the demand for this virtual currency is increasing. This causes the value of Bitcoin to increase. People have already mined 19 million bitcoins and there are 2 million bitcoins left in the market.

On the other hand, fiat currency does not have a limited supply. Moreover, it is quite difficult to know the amount of money in circulation at any given time with traditional money.

Due to the limited supply of this e-money, individuals use it as a store of value as it does not experience inflation. On the other hand, fiat currency has an unlimited supply and is therefore affected by inflation.


Due to its digital aspect, Bitcoin is only available online and stored only in digital wallets. Digital wallets are more secure, but there have been unfortunate times when hackers hacked wallets. People have therefore lost their Bitcoin assets due to these hackers.

On the other hand, fiat currency can be stored differently and has a physical presence. For example, payment service providers such as PayPal and WorldRemit allow the public to send digital money. Banks are also the custodians of physical currency.


Governments usually issue physical currency and in turn central banks regulate the currency. Fiat currency is also legal tender used by individuals to complete transactions. In addition, governments control the supply of traditional currencies and issue policies that affect the value of physical silver.

On the other hand, this virtual asset is decentralized and functions as a medium of exchange; therefore, the government has no control over this investment. Therefore, the government cannot influence the value of this digital currency.

To remember

Bitcoin differs from physical currency in one way or another. Therefore, consider the pros and cons of both currencies when looking for silver to trade.

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