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“Fiat currency” or “fiat money” can be defined as money issued or certified by a government.

What is Fiat?

Governments mint and distribute fiat money, which is not backed by precious metals like gold or silver.

As countries tend to print too much money in order to stimulate their economies, this could be dangerous (inflation). Governments can use fiat currency to implement policies to manage supply, liquidity, and interest rates, among other things.

Fiat money vs Cryptocurrency

In contrast to fiat currency, cryptocurrency is not regulated by any central authority. Therefore, the currency’s distribution and use are unconstrained by approval or control by any monetary authority or country.

There are no physical bills or coins in cryptocurrency; everything is digital. Many places do not accept cryptocurrency as a form of payment because it is not legal tender in most countries (except for El Salvador at the time of this writing).

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