What is “fiat” 🚗?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

The crypto community often speaks of “fiat”, and no - they don't mean the Italian car maker, although we also think that is a cool company.

So what is “fiat” in the context of money?

Fiat is simply a government issued currency. The US Dollar is a great example, or the Euro.

What's more interesting though is, why fiat plays such an important role in the crypto world.

Everyday transactions anywhere in the world still require fiat. Crypto hasn't even made a dent yet – we are still very far away from a world of decentralized payment systems that were envisioned ever since Bitcoin launched over 13(!) years ago.

That also means that crypto has mostly been used as a means to speculate. And when you speculate, the value of your crypto portfolio is worth nothing in practice, if you don't cash out into fiat, that hard government backed cash.

And there you have it, that’s why fiat is so important - but maybe someday we'll all pay with crypto, or maybe fiat will even be blockchain-based. Interesting times ahead!

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.