Money conjured out of thin air by government decree. It has value because the government says it does by legal decree by requiring it be accepted. Its primary utility is in dealing with the government. Usually inflationary and subject to broad manipulation by the issuing authority. Governments prefer fiat money to manage its debt. By issuing more fiat the government causes inflation which drives down the relative value of its debt. This benefits the government and the banks at the expense of everyone else. Constantly under close scrutiny by government regulators due to its known application in money laundering and terrorist activities. Not to be confused with bitcoin.
Malone, J.A (2015). Glossary of Bitcoin Terms and Definitions. United States: Lulu Press, Inc