Crypto FAQ: What is the difference between cryptocurrency and fiat currency?

As explained in the FAQ: What is a currency?, both fiat currencies and cryptocurrencies are types of currency, where the former is the dominant type of international currency form of currency backed by the vast majority of world governments, and the latter is the emerging disruptive challenger.

As the table below shows, neither fiat nor crypto currency is commodity-based (e.g., convertible to gold, silver, etc.). In addition, most fiat currencies are electronically exchanged: at the consumer level, it is common to exchange fiat money for goods and services; at the corporate level, it is common for corporations, banks, and central banks to exchange fiat currencies via Electronic Funds Transfer (ETF) services such as ACH, SWIFT, etc.

So could a cryptocurrency become a de facto fiat currency (i.e., a currency backed by a government decree ("fiat")) that it is valid as legal tender for paying for goods, services, and taxes? Absolutely — it is simply a matter of a government selecting or designing one and backing it with its "full faith and credit".