Simply explained, fiat money is legal tender whose value is determined by the issuing government rather than by a tangible object or commodity. In this sort of money, the power of the government that defines the value of fiat currency is critical. The fiat currency system is used by the majority of nations throughout the globe to buy goods and services, invest, and save. In determining the value of legal tender, fiat money supplanted the gold standard and other commodity-based systems.