Which type of money includes currencies like paper and bitcoin?

Fiat money is a type of currency that has no intrinsic value and is not backed by a physical commodity. Instead, it derives its value from the trust and confidence that individuals and businesses have in the government that issues it. Currencies such as paper money and digital currencies like bitcoin fall into this category because they are established as money by government decree or societal acceptance rather than being tied to a physical asset like gold or silver.

Paper money is a classic example of fiat money, where the currency itself has no inherent value beyond what people collectively agree it represents. Bitcoin, while a digital asset that operates somewhat differently from traditional fiat currencies, is also considered fiat-like because it operates based on trust in the technology and network that underpins it rather than a physical commodity.

This makes fiat money a broad category that includes various forms of currency, distinguishing it from commodity money, which is based on physical goods, gold-backed money that ties the currency to gold reserves, and metal coins which, while including some form of money, are typically based on their material value and not a government decree.