Fiat currency is government-issued money — the US dollar, euro, yen and so on — that is not backed by gold or any physical commodity. Its value rests on trust in the issuing government and the requirement that taxes be paid in it. "Fiat" is Latin for "let it be done".
Because supply is managed by central banks rather than fixed by nature, fiat can be expanded, which over time tends to erode purchasing power through inflation. That flexibility is also a feature: it lets policymakers respond to crises in a way a rigidly fixed money supply cannot.
On this site, crypto prices are almost always quoted against a fiat currency, usually the US dollar. Stablecoins exist specifically to hold a steady value against fiat, bridging the gap between traditional money and crypto markets.
Worked example
When you see Bitcoin priced at "$60,000", that figure is quoted in US dollars — a fiat currency.
This definition is general education, not investment advice. Markets — especially crypto — are volatile and you can lose money. Please read our disclaimer and see our methodology.
Related terms
Frequently asked questions
What does Fiat currency mean?
Government-issued money such as the US dollar or euro, not backed by a physical commodity. Crypto prices are usually quoted against fiat.
Is Fiat currency a crypto or a stock-market term?
It applies across both cryptocurrency and traditional stock markets.
Is this Fiat currency definition financial advice?
No. The Market Capitalize glossary is educational — it explains terms and concepts, never a recommendation to buy or sell. See our disclaimer.