Fiat

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Fiat money or fiat currency is money that a government has declared to be legal tender. The rupiah and the US dollar are two examples of fiat money, in which the government issues legislation stating that it is legal and accepted for payment in public places.

Fiat money does not have intrinsic values it is not backed by a physical commodity (like gold) and is usually made of low-value material. Its viability as a means of payment is instead derived from the support of the governments that mint and distribute it.

Fiat money is widely considered as the primary means of payment after the US decided that they no longer wanted their currency to be backed by gold in 1971. However, as the 2008 financial crisis has shown, the value of fiat money is only as good as the policies behind it. Indonesia also suffers its own crisis in 1998 where the value of the Rupiah is almost nonexistent compared to Dollars. This is where cryptocurrency comes in.

Unlike fiat currency, cryptocurrency is decentralized. This means that no monetary authority or country has approved of or has a say in the distribution or use of the currency. This makes cryptocurrency completely different in characteristics compared to a fiat currency because its value cannot be tempered and determined by a government.

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