009. Fiat currency:
Is a type of currency that has no intrinsic value but is instead backed by a government's decree or law. In other words, its value is derived from the government's guarantee, rather than any physical commodity or asset.
Characteristics of fiat currency:
1. No intrinsic value: Fiat currency is not backed by gold, silver, or any other physical asset.
2. Government-backed: Its value is guaranteed by the government, which declares it as legal tender.
3. Centralized control: Fiat currency is controlled by central banks, which regulate supply and interest rates.
4. Unlimited supply: Central banks can control the amount of fiat currency in circulation. And they can print anytime to increase supply.
5. Widespread acceptance: Fiat currency is widely accepted as a medium of exchange.
6. Inflationary: Due to high supply and/or timely increase in supply makes Fiat currencies very inflationary (Inflation refers to persistent rise in prices of goods over time with persistent decline in monetary value)
Examples of fiat currencies:
1. US Dollar (USD)
2. Euro (EUR)
3. Japanese Yen (JPY)
4. British Pound (GBP)
5. Chinese Renminbi (RMB)
6. Uganda shillings (UGX.)
7. Etc.
>>Bonuses
(a). Fiat currency Vs. commodity-based currency:
Commodity-based currencies (e.g., gold standard) have intrinsic value due to the underlying asset whereas Fiat currencies rely on government trust and regulation.
(b). Fiat currency vs. cryptocurrencies: Cryptocurrencies (e.g., Bitcoin) are decentralized, digital, and often limited in supply (Deflationary in nature) while Fiat currencies are centralized, physical (although increasingly digital), and have variable supply.(Inflationary in nature) #BinanceTurns7 #Write2Earn! #ETH_ETFs_Approval_Predictions #MtGoxJulyRepayments
