Fiat Currency is government-issued money that is not backed by a physical commodity like gold or silver. Its value is derived from government decree and public trust in the issuing authority. Examples include the US Dollar, Euro, and Japanese Yen. In the digital asset world, fiat currency serves as a primary on-ramp and off-ramp for converting between traditional finance and cryptocurrencies. It remains the dominant medium of exchange globally.
Context
The state of Fiat Currency is subject to discussions regarding its stability and the potential disruption from central bank digital currencies and stablecoins. Debates often focus on inflationary pressures and government monetary policies affecting its purchasing power. A critical future development involves the ongoing integration of fiat currency systems with blockchain technology, particularly through regulated stablecoins. This interaction is central to the broader evolution of global finance.
Stripe CEO Patrick Collison asserts that the rise of yield-bearing stablecoins will force traditional banks to offer more competitive interest rates to customers.
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