Fiat Money !
Fiat is a Latin word that means “by decree”. Meaning the dollars, or euros or any other currency for that matter have value because the government orders it to. It’s what is known as “legal tender” coins or banknotes that must be accepted if offered as payment.
So the value of today’s money actually comes from a legal status given to it by a central authority, in this case, the government. And so the trust model has changed, from trusting something to trusting someONE (in this case, the government...
1- It is centralized – You have a central authority that controls and issues it. In this case the government or central bank...
2- It is not limited by quantity – The government or central bank can print as much as they want whenever needed and inflate the money supply on the market. The problem with printing money is that because you’re flooding the market with more money the value of each dollar drops, so your own money is worth less. When you see prices rising throughout the years it’s not necessarily that prices are rising as much as that the purchasing power of your money is dropping. You need more dollars to buy something that used to “cost less”...
