Money issued by a government, like the Taiwan Dollar (TWD) or the US Dollar (USD).
Fiat Currency is a form of government-issued money that is not backed by a physical commodity like gold or silver. Its value is derived from the government's declaration that it is legal tender.
The most common examples of Fiat Currency are the U.S. Dollar, the Euro, and the Japanese Yen. Unlike money in the past that was tied to a commodity's value, the value of Fiat Currency is based on the trust and stability of the issuing government and economy. Central banks manage the money supply, using tools like interest rates and quantitative easing to control inflation and stimulate economic growth.
This centralized system provides a high degree of stability, and its universal acceptance makes it the dominant medium of exchange for global commerce. Most people today store their wealth and conduct their daily transactions using Fiat Currency, whether it's physical cash or digital money in a bank account.
While cryptocurrency was created as a decentralized alternative to Fiat Currency, the two are still deeply intertwined. Most people enter the crypto market by converting Fiat Currency to Bitcoin or other cryptocurrencies on a centralized exchange. Stablecoins, which are crucial for DeFi, are often pegged to the value of a Fiat Currency to provide a stable store of value in the volatile crypto markets.
Fiat Currency is the foundation of our current financial system, but its centralized nature is what blockchain technology and decentralization aim to challenge. As cryptocurrency gains adoption, the relationship between these two forms of money will continue to evolve, with each influencing the other.
Fiat Currency is a form of government-issued money that is not backed by a physical commodity like gold or silver. Its value is derived from the government's declaration that it is legal tender.
The most common examples of fiat-currency are the U.S. Dollar, the Euro, and the Japanese Yen. Unlike money in the past that was tied to a commodity's value, the value of fiat-currency is based on the trust and stability of the issuing government and economy. Central banks manage the money supply, using tools like interest rates and quantitative easing to control inflation and stimulate economic growth.
This centralized system provides a high degree of stability, and its universal acceptance makes it the dominant medium of exchange for global commerce. Most people today store their wealth and conduct their daily transactions using fiat-currency, whether it's physical cash or digital money in a bank account.
While cryptocurrency was created as a decentralized alternative to fiat-currency, the two are still deeply intertwined. Most people enter the crypto market by converting fiat-currency to Bitcoin or other cryptocurrencies on a centralized exchange. Stablecoins, which are crucial for DeFi, are often pegged to the value of a fiat-currency to provide a stable store of value in the volatile crypto markets.
Fiat-currency is the foundation of our current financial system, but its centralized nature is what blockchain technology and decentralization aim to challenge. As cryptocurrency gains adoption, the relationship between these two forms of money will continue to evolve, with each influencing the other.
A set of rules that financial companies must follow to stop criminals from using their services to hide illegal money.
It's a way for a new crypto project to raise money by selling its tokens to the public for the first time.
It's the same as an ICO, but the new token is sold on a crypto exchange.
A standard process where a financial company verifies your identity to prevent fraud.
