Fiat money is any paper, coin or cryptocurrency that gets its value from a government decree. Or, as in the case of bitcoin, from the network of bitcoin operators agreed to consider it legal tender. Fiat money is not backed by valuable commodities like gold or silver.

The value of fiat money is subject to the fluctuations of supply and demand. It can, therefore, become worthless in the event of hyperinflation, or in the case of bitcoin, when supply imbalances make its value decline drastically.

United States dollar, EU’s Euro are some examples of fiat money.

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