Representative money refers to money that consists of token coins, other physical tokens such as certificates, and even non-physical "digital certificates" (authenticated digital transactions) that can be reliably exchanged for a fixed quantity of a commodity such as gold, silver or potentially water, oil or food. Representative money thus stands in direct and fixed relation to the commodity which backs it. This is to be distinguished from commodity money which is actually composed of a real physical commodity. It is also distinguished from fiat money, in which the value of the money varies with regard to commodities, according to government dictate in regions where government authority holds sway, or else according to market forces where it does not.
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