Fiat money is a type of money that is declared to be legal tender by a government, but is not backed by a physical commodity such as gold or silver. Instead, it is backed by the full faith and credit of the government that issues it. This means that the value of fiat money is derived from the relationship between supply and demand, rather than the value of the material from which it is made. In other words, fiat money is worth something because people are willing to accept it as payment for goods and services, not because it has intrinsic value.
