What is a fiat currency?

Fiat money is a government-issued currency that is not backed by a commodity such as gold. Fiat money gives central banks greater control over the economy because they can control how much money is printed. Most modern paper currencies, such as the U.S. dollar, are fiat currencies.

What is the difference between cryptocurrencies and fiat money?

In addition to the notes and coins in circulation, most of the fiat money supply is created digitally, either by central banks which is then credited to major banks or created by banks themselves in the form of loans to governments, businesses and consumers. Cryptocurrencies, on the other hand, are private and operate independently of governments.

What is Fiat in crypto used for?

As a financial asset, fiat is primarily used here for direct conversions and trading. If you want to see what is fiat in crypto used for in practice, this short preview of Binance's services is a good place to start.

Why is fiat money a good investment?

In contrast to commodity-based money like gold coins or paper bills redeemable for precious metals, fiat money is backed entirely by the full faith and trust in the government that issued it. One reason this has merit is that governments demand that you pay taxes in the fiat money it issues.