A bit of both, really. Users of fiat money have to trust the government's effective use of force in supporting the transactional utility of the currency.
Examples of this sort of failure might be a hyperinflation scenario. Governments could try to place controls on wages or prices, but might (and will likely) still fail. Many historical examples of it.
Force helps, but all that’s really necessary for a fiat currency to have worth is for users to trust that it will remain reasonably scarce. Example: Bitcoin. In the case of traditional government-issued currencies, you’re trusting in humans rather than an algorithm, and that trust can be broken (which is what happens in a hyperinflation scenario), but it still exists in normal scenarios.
(And even Bitcoin’s value is in part based on trust in government - specifically, that various governments won’t ban it. A ban might not be 100% effective but would clearly decrease its utility and thus its value; recent events wrt China are a small-scale demonstration.)
all that’s really necessary for a fiat currency to have worth is for users to trust that it will remain reasonably scarce
... and that other people will accept it in exchange for goods and services. Scarcity alone is no guarantee of that. For the vast, vast majority of people Bitcoin is literally worthless - the only thing you can do with it is attempt to convert it into real currency so you can actually use it for something. And they would rather you did that rather than trying to fob them off with a bunch of numbers.
Don't understand why this is down-voted because it brings up a valid point.
The Financial Services sector is heavily regulated because of the importance of trust and correct information. You can bring the system to an immediate standstill since most of the automation in the sector relies heavily on credit bureau data.
I believe Amazon, Tesco, etc actually would hold now the most accurate information about customer repayment ability in the retail segment.
Regarding the 'correct information' you mention... I have never had a very 'active' credit history, I just don't borrow a lot. But when I went to buy my house, I pulled my credit report to see what its status was and do a sanity check. When I did, I found an error. What surprised me is that it was an error that was false on its face. It was an impossible entry. To this day I am perplexed how such a thing could exist on a credit report at all without being caught by even the most basic data consistency checks. It claimed, roughly, that on say July 2000 I had a balance of $0 on an account with a furniture company... and 30 days later, on August 2000, I was more than 180 days overdue with a balance of -$300 with that same company. Given that it is quite difficult to pack more than 180 days into the span of 30 days, I can only conclude that they just accumulate errors and do not value either correctness or basic sensibility.
Luckily I was able to easily get the error removed, but it seems absurd to me that a clear system error of some kind had simply persisted on my report for years.
With so many security breaches around does it mean that currency is losing its value rapidly? Is a dollar on a credit card worth less post-Equifax?