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Does Ethereum Have Similar Traits as Physical money?

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Cryptocurrency took over the financial system in a short period, and therefore, everyone was surprised to see this change. But it is nothing to be surprised about because cryptocurrencies are modern technology but Fiat money is not. So, the developmental changes were very much evident. So, people need to be clear that cryptocurrency technology was supposed to take out the financial system today or tomorrow, which has already happened. So, you should also be quite familiar with the information regarding Ethereum and Fiat money and their differences, as well as the ways how cryptos make money. If you think that Ethereum and Fiat money has similar traits, perhaps you need to learn more about them.

It is used for peer-to-peer transactions, while Fiat money is different. Using physical money is only possible when you connect to the banking system. You have to get the money, and it exists physically; therefore, it is also prone to damage. Apart from all this, many other things clearly state that Fiat money or physical money is not similar to Ethereum, but they have significant differences.

Even if you find a few similarities between the two options we discuss here, we cannot compare them with the target. They have their features, and therefore, they must only be studied on different grounds. If you want to clear your mind, we will specify a few differences between physical money and Ethereum in this post.


Before we dig deep into the world of both types of money, we should understand their meaning. While talking about physical money, it is backed by the government and another form of government bonds. Moreover, there is always a physically existing commodity behind the value of physical money, and therefore, it represents something electronically. On the other hand, cryptocurrencies like Ethereum a digital and encrypted. Their essential feature is decentralization, and the government does not regulate them.

Issued by

The parties behind the issuance of the physical money are also one of the most important reasons because it can be easily differentiated from the Ethereum. On the other hand, digital tokens like Ethereum do not require any issuance party because they operate independently.


The involvement of the intermediaries in the transactions increases the cost, an essential feature of physical money. Therefore, Fiat or physical money is costlier, but digital tokens like Ethereum or not.

If you are using Ethereum for making transactions, you are not supposed to involve any third party in it, and therefore, you can decrease the cost of a particular transaction. Moreover, there is no requirement for an intermediary because everything is done over the internet and with modern technology.


The unit of representation for both types of money is also different. For example, you might have seen that physical money is represented by the currency of different nations like the Dollar, rupee, euro, and pound. Moreover, there are other types of physical money as well. However, digital tokens like Ethereum are represented by their short forms like ETH for Ethereum and BTC for bitcoin.

Legal status

The legal status is also an essential ground under which we can differentiate physical money from Ethereum. In the case of physical money, the government defines the legal status. If you are going through any fraud activity, the government will know about it, and they can punish you. Moreover, if you are a victim of fraud by others, you can file a suit with the government. However, cryptocurrencies do not have any legal status. Even if you were trading in them and got into fraudulent activities, the government may not know about it. So, the legal status is significantly different between both types of money.


The supply of Fiat money can ultimately be limited because the government will be capable of making more of it whenever required. Therefore, issuing it to the public is sophisticated for the government. But, talking about the Ethereum, the supply is always limited. Even if they can create a lot of it, they are not going to do so because by doing so, they will decrease the value in the market, and, therefore, it may not be able to flourish.

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