Fiat Currency refers to any currency that a government declares to be legal tender for transactions but is not backed by a physical commodity, such as gold or silver.
Instead, the currency’s value comes from the trust and confidence of the people who use it, and the stability of the issuing government.
Fiat currency, from the Latin word “fiat” meaning “let it be done,” is based entirely on trust.
Unlike representative money which represents a claim on a commodity, fiat money’s value is not based on physical goods but rather the trust and credit of the economy.
Governments and central banks regulate and manage their fiat currencies, adjusting monetary policy to achieve economic objectives such as controlling inflation, stabilizing employment, and maintaining the value of the currency.
Fiat money has several unique characteristics:
Fiat money and cryptocurrencies are fundamentally different:
Fiat currencies have been used for over a thousand years.
However, the modern concept of fiat money became more prevalent in the 20th century, especially after the Nixon Shock in 1971, when the US fully abandoned the gold standard, converting the US dollar into fiat money.
BuyBitcoinWorldWide writers are subject-matter experts and base their articles on firsthand information, like interviews with experts, white papers or original studies and experience. We also use trusted research and studies from other well-known sources. You can learn more about our editorial guidelines.
Disclaimer: Buy Bitcoin Worldwide is not offering, promoting, or encouraging the purchase, sale, or trade of any security or commodity. Buy Bitcoin Worldwide is for educational purposes only. Every visitor to Buy Bitcoin Worldwide should consult a professional financial advisor before engaging in such practices. Buy Bitcoin Worldwide, nor any of its owners, employees or agents, are licensed broker-dealers, investment advisors, or hold any relevant distinction or title with respect to investing. Buy Bitcoin Worldwide does not promote, facilitate or engage in futures, options contracts or any other form of derivatives trading.
Buy Bitcoin Worldwide does not offer legal advice. Any such advice should be sought independently of visiting Buy Bitcoin Worldwide. Only a legal professional can offer legal advice and Buy Bitcoin Worldwide offers no such advice with respect to the contents of its website.
Buy Bitcoin Worldwide receives compensation with respect to its referrals for out-bound crypto exchanges and crypto wallet websites.
Wallabit Media LLC and/or its owner/writers own Bitcoin.
Registered Address: 530-B Harkle Road Ste 100 Santa Fe, NM 87505