Fiat

Fiat money is currency issued by a government and declared legal tender, such as the US dollar, euro, or Japanese yen. Its value comes from public trust and government authority rather than from being backed by a physical commodity like gold. In crypto discussions, "fiat" usually contrasts traditional, bank-issued money with digital assets recorded on a blockchain, and converting between the two typically involves regulated intermediaries.

A common misconception is that fiat is "unbacked" and therefore worthless; in practice its value rests on legal frameworks, monetary policy, and widespread acceptance for taxes and everyday payments.