What is FIAT ?

FIAT

The history of Fiat goes back a long way, but for those who want to know:

Fiat money is an object without intrinsic value, which serves as a means of exchange.

In the past, you paid for things with earth metals, for example. Gold or silver. That's how salt used to be more valuable than gold. These are or were objects of intrinsic value.

At the end of the 13th century, King Gaichatu of Persion tried to fill the treasury. On August 13, 1294, he announced that anyone who did not accept the new paper money would be punished by death.

So what is this paper money now? Well actually, no matter which paper money in the world has no value. The system actually works like this: -> "See picture"

This is how the system should look and should not run. Exactly this system is called FIAT money.

The system actually works like this: As in the picture we understand one bank / state owns gold worth 1 million. It squeezes money worth 1 million. The bill would normally work like this:

1 Million Value of Gold : 1 Million notes = 1 note is equal to 1 money. That means in the case 1 euro or 1 dollar.

But there are more bills in the course as the value is covered z.b. :

1 million money: 2 million bills = 1 bill is equal to 1/2 money. That is 0.50 euros or $ 0.50.

That's why cryptocurrencies will work and FIAT will not. Let's take the Bitcoin:

Current:

244,861,609,038 USD: 16,794,925 bitcoins = $ 14,579.50 per coin

As long as the value of the front is greater than the sum of the notes or coins is always the bill or coin min. have the value of a 1. Math: Same value: Same value = 1

Term: The term fiat derives from the Latin passive verb fieri. This is the 3rd person singular present subjunctive active. The German translation reads: "He, she, it happen, arise, take place, become or happen". A well-known example for the use of the verb can be found in the biblical quotation from the creation story "Fiat lux!"; to German: "Let there be light!".