Fiat currency refers to government-issued money that isn't backed by a physical commodity like gold or silver. Its value relies on trust in the issuing authority, typically a government or central bank. This currency isn't inherently valuable in itself; it's worth comes from the trust people place in it as a medium of exchange. Fiat currencies are widely used globally for transactions, and their value fluctuates based on economic factors, government policies, and market demand. Examples include the US dollar, euro, yen, and pound sterling.