What is flat money defined as?

Flat money is defined as an item that has no intrinsic value but is used as money primarily because a government maintains it and people have faith in its value. Unlike commodities such as gold or silver, which have intrinsic worth due to their physical properties and uses, flat money does not possess any value apart from the trust placed in it by the users.

This definition is pivotal in understanding modern economies, where the value of currency is not backed by physical assets but rather by the stability and economic strength of the issuing authorities, such as governments and central banks. This trust allows flat money to function effectively in facilitating trade, investment, and economic activity.

In contrast, currencies with intrinsic value rely on their physical components for worth; gold and silver coins represent value based on the metal's market price. Digital currencies are a specific type of modern money but do not encompass the broader category of flat money as a whole, which can include paper money and other forms as well.