Frequently hear the term fiat but still confused about what fiat means? I also used to 😅

So simply put, fiat means a currency whose value is determined by official government decisions, not based on physical assets like gold. If you look at our paper money, in Rupiah it clearly states "By the grace of the Almighty God, the Unitary State of the Republic of Indonesia issues Rupiah as a legal tender with value." In US Dollars, it also says "This note is legal tender for all debts, public and private." That’s concrete proof that fiat means money that is valid because it is established by the government.

Previously, it wasn’t like this. In the past, currencies like the Dollar and Pound were backed by gold and silver reserves, a system called the Gold Standard. But in the 1930s, America started to move away from that system and finally in 1971, they officially ended international convertibility. Since then, fiat has been the system we use up to now.

Now, this is also the reason why crypto emerged. Many people are dissatisfied with the fiat system because its value can depreciate due to inflation or government policies. Bitcoin and other coins come as alternatives that are not dependent on the decisions of a single government. So now we have a choice, we can hold fiat or explore crypto according to our preferences on platforms like Gate.