A form of money that lacks value in-and-of itself (ie, it is not backed by gold, silver, copper, etc). In contract to commodity money, the value of fiat money is based on supply and demand as well as the credit of the issuing institution. The money of the United States and Europe (the dollar and the euro) are both fiat currencies. Unlike commodity money, fiat currency cannot be converted into gold or redeemed for metals. It is inherently worthless and given value by government decree.
We don't know everything about the markets. We're just devoted to learners. Taken from those smarter than ourselves, here's how we define Fiat Currency.