Fiat
Government-issued currency that is not backed by a physical commodity like gold.
Legal tender
Definition
Legal tender is any form of payment that a government requires to be accepted for settling debts. Most countries designate their national fiat currency as legal tender. In 2021, El Salvador became the first country to give Bitcoin this status, though it reversed the requirement in 2025.
Example
The US dollar is legal tender in the United States — businesses must accept it for payments. In 2021, El Salvador briefly made Bitcoin legal tender too.