To really discuss fiat currency in the right light, we must understand what money is, and what it is not, along with what it was intended to be.
 
Money is supposed to be simply a means of trade.  It was a step up from a barter system, enabling indirect trade.  In other words it enabled someone possessing product/service A to trade with someone having product/service C, even though vendor C wants something from vendor B.  In a barter system, vendor A would first have to trade with vendor B and take product/service B to vendor C to trade for what he wanted to begin with.  With money, vendor A can use the money to get product C and vendor C can then take the money to vendor B for what HE wanted. 
 
Money could and can be anything that those in the trading system agree to use as a "legal tender" or "common means of trade".  In our day and age, in the USA, that's the dollar, as it is in many countries up until recently when that started shifting.  Still in the USA, the dollar is the legal tender, but internationally people are starting to use or prefer other currencies, which we'll address at a later date in a different page.
 
Money was NOT intended to be a means of wealth accumulation, at least to the vast majority of people.  No one can know for certain what anyone else is truly thinking, but it can be surmised based on outcomes that there were people influencing the design of money or the rules of money so as to allow the simple possession and manipulation of money itself to enable wealth generation and accumulation.  Somewhere along the way there was a shift such that providing an actual service or product or performing a valuable function (or even a conquest) was no longer required to become rich and powerful.
 
The concept of "gold backing" came into being with the transition from gold or silver coins to bank receipts signifying gold deposits.  
 
See the video "money is debt" for a good explanation of this:
 
 
But gold itself is not what gives the money value.  People's acceptance of the gold or the receipts as the means of trade or as having value is what gives it it's value.  There is an example, for instance, of something called the Tally Stick.  That was the use of a simple "split wood" system where people found wood, cut a specific way, to be worthy as a means of trade and it was accepted as well for payment of taxes and debts to the monarchy.
 
There are people who claim that a fiat currency is a bad thing.  But it's not the government issuance of a currency without any other backing than the order of the government that makes a fiat currency a bad thing.  It's the ownership and regulation (or lack thereof) that makes such a currency bad.  In the case of the United States, the currency (dollar) is essentially fiat now, but it's not a true fiat currency.  It is a debt currency.  It is borrowed from a private bank as debt.  It is owned, controlled, created, and distributed and is therefor callable by that private bank.  And that is the root cause, in all actuality, of the national debt.  If we had a sovereign, debt free, usury free, private bank free currency, whether "backed" by a metal or not, it would enable the nation to eliminate its debt very quickly indeed and any issue revolving around money would be quickly resolvable. 
 
The Tally stick was a fiat currency.  Worgl had a fiat currency.  Guernsey has a fiat currency.  The original colonies had a fiat currency for a while.  Fiat is not bad.  Bank owned fiat is bad, and unregulated fiat is bad (subject to runaway inflation).