fiat currency

noun

plural fiat currencies

: a currency that is issued by a government and that is not backed by a physical commodity (such as gold)

The U.S. dollar is a fiat currency that has been the leading instrument for just over a century. A fiat currency derives its value from the full faith and credit of the government that issues the legal tender.

—Andrew Hecht

The currency of the United States is no longer backed by either silver or gold as it once was. It is therefore a fiat currency made legal by law rather than exchangeability for something of real value.

—Robert W. Schmidt

Over the years, Bitcoin has been described in many ways, reflecting its evolving role in the global financial landscape. In its early stages, it was seen as … a decentralized alternative to fiat currencies.

—Scott Matherson

Word History

First Known Use

1876, in the meaning defined above