Fiat and cryptocurrency are the same but people in society differentiate them and value fiat because its adopted by the government far back, and since the existence of the world and also a specific country, so from my research I find out that government just disliked cryptocurrency for nothing,
So differentiating fiat from bitcoin is valueless because irrespective the importance and massive adoption of fiat currency from its existence before cryptocurrency, it's obvious that fiat is money and bitcoin is money, their functions and contribution in society never depart from each other, so bitcoin now is the shortest way of transactions across the world without much process or procedures, using bitcoin everything buyable is easier to purchase without stress, so from my perspective I prefer bitcoin than fiat currency due to fast transactions process across another country, and nothing fiat can purchase bitcoin can't purchase, so no difference between both because all are currency.
Well, I would say yes they might be something similar to each other in a way both Fiat and cryptocurrencies are used as a mode of payment but cryptocurrencies can be more than that like being an asset. Regarding why government dislikes crypto, I don't think the government will dislike crypto for nothing, there must be some reason why they hate it and that is because they had no control over it, unlike fiat where they can monitor and manipulate everything. Yes, they could impose regulation on crypto exchanges but they can not directly control cryptocurrencies. One thing that could also be a reason is that knowing the fact that the transaction is being made anonymously, crypto can be used in illegal activities. Anyway, fiat and crypto are both very useful in their own way so there's no reason of comparing the two.