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How is cryptocurrency different from traditional money?

Traditional money, also known as fiat currency, is issued and regulated by governments and central banks. Its value is supported by trust in the issuing authority, legal tender laws, and the stability of the broader economy. Banks and payment processors play a central role in moving and managing fiat currency.

Cryptocurrency operates differently. Most cryptocurrencies run on decentralized networks that are not controlled by a single institution. Transactions are validated by network participants using software-based rules rather than by banks. This allows users to send and receive value directly, often across borders, without relying on traditional financial intermediaries.

Another key difference is transparency. Many cryptocurrency networks allow transactions to be publicly visible on a blockchain, while traditional banking systems rely on private ledgers. These differences give cryptocurrency unique characteristics compared to government-issued money.