Fiat money (fiat)

Fiat money is a government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it. It is generally accepted as a medium of exchange for goods and services and is used as a standard unit of account for financial transactions. It has replaced commodity-backed currencies in many countries because it is easier to produce and manage. However, it is subject to inflationary pressures and can lose value over time if the government prints too much of it, leading to a decrease in purchasing power. In trading, fiat money is often used to purchase assets such as stocks, bonds, and cryptocurrencies.