Fiat Currency or fiat money is the money you’re used to using in everyday life, like the U.S. dollar, the euro, the British pound, the Japanese Yen or the Chinese Yuan.

Any currency backed by a government and issued by its central bank is considered legal tender and fiat.

Fiat currency is considered a centralized currency because again, a single entity has authority over the currency.

Examples of central authorities include the Federal Reserve central bank of the U.S., the European Central Bank that issues the euro, and the Bank of England.

When you hear, “fiat”, that doesn’t include cryptocurrencies.

Cryptocurrencies are digital, decentralized, and not issued or backed by a government, bank, or other financial authority.

Fiat currency, when discussing cryptocurrencies, is often used to fund centralized cryptocurrency exchange trading accounts and personal wallets used to buy, sell and transfer cryptocurrencies.