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Will Cryptocurrency ACTUALLY Replace Fiat Money? (Differences Explained)Cryptocurrencies exist in digital form as they're created by computers and operate as private pieces of code. The means of exchange are thus purely digital. In. Bitcoin distinguishes itself from fiat currencies through mechanisms like the Bitcoin halving that controls its inflation. This event, occurring approximately. However, a key difference between bitcoin and traditional fiat currencies is that while fiat currencies are legal tender that are backed by a government and.