This comprehensive guide explores fiat currency, a government-backed money system without physical commodity backing that dominates modern global finance. The article defines fiat currency's core characteristics, including its reliance on government decree and public trust rather than intrinsic value. It examines major fiat currencies like USD, EUR, and CNY that facilitate trillions in daily transactions, then details distinguishing features such as centralized control, universal acceptance, and inflation exposure. A critical comparison with cryptocurrencies highlights key differences in decentralization, volatility, and regulatory frameworks. The guide addresses common questions about value basis, central bank roles, and advantages over commodity-based systems, providing readers with essential knowledge for understanding contemporary financial markets and economic systems.