Fiat

Fiat refers to government-issued currency that isn’t backed by a physical commodity like gold or silver. Its value comes from the trust and authority of the issuing government, which declares it legal tender for transactions.

How Fiat Works

Examples of fiat currencies include the US Dollar, Euro, and Japanese Yen. These currencies are centralized and regulated by national banks and governments. They can be printed or digitally created in unlimited amounts, depending on monetary policy.

Fiat vs. Crypto

Unlike cryptocurrencies, which are decentralized and often have fixed supplies, fiat can be inflated through monetary expansion. However, it remains the dominant medium of exchange and unit of account in the global economy.