Crypto Dictionary
Fiat
Definition
Government-issued currency that is not backed by a physical commodity, such as gold or silver.
Deep Dive
Fiat currency refers to government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issues it. Its value is derived from public trust in the issuing authority and its legal tender status, meaning it is officially recognized as a medium of exchange for debts and taxes. Fiat money is the predominant form of currency in modern economies worldwide, used for everyday transactions, wages, and investments.
Examples & Use Cases
- 1Using US Dollars (USD) to purchase goods and services
- 2Paying taxes with Euros (EUR) in European Union member states
- 3A Japanese Yen (JPY) banknote accepted as legal tender in Japan.
Related Terms
Legal TenderCommodity MoneyCentral Bank Digital Currency (CBDC)