Fiat currencies are the hard cash in your wallet and the digits on your phone or computer screen when you logon to your bank account.
Fiat currencies have existed for 100’s of years and each country on earth has its own fiat currency issued by the government.
Fiat currency’s role as a money supply to ensure economic prosperity and facilitate trade between parties quicker and cheaper than with gold or silver. Throughout history many different approaches to using gold or silver to “back” fiat currency partially succeeded but mostly failed.
Every fiat currency in history has either collapsed financially, failed to war, economic sanctions or lost more than 95% of their buying power.
If you had £1 in 1970, the buying power of that same £1 in 2020 is the equivalent of £0.07. More than 99% of the GBP buying power has eroded to inflation.
How cryptocurrency compete with fiat currencies? Read there rest of the article here: https://blog.coinpass.com/blog/what-is-fiat-money-fiat-currency-101-introduction