Currencies

Currencies are a typically a form of money in wide circulation, being the primary medium of exchange with respect to buying and selling goods and services.

These are often issued by a specific government or collection of governments, by way of paper notes and coins.

Other forms of currencies include previous metals such as gold and silver, and digital currencies such as Bitcoin.

Currencies serve as a backbone of the country’s or countries’ economy, due to the perception of value held by the population that uses that currency.

For example, the United States dollar, (symbol $, code USD), or the British pound sterling, (symbol £, code GBP), also known as fiat money, since they are not linked to any specific asset, such as gold or silver.

Such metals were traditionally used as the main method of payment, since they held real and actual value.

Even after the introduction of paper notes, many countries maintained a gold standard for much of the 20th Century, meaning a unit of money could be exchanged for a fixed amount of gold.

How to Trade Currencies?

The modern world, with the invention of electronic networks, computers and the internet, has allowed the transfer of money to occur almost instantaneously.

It has also spawned a new era in currencies, including digital money, such as Bitcoin and Litecoin.

Not backed by any government, but based on a complex set of mathematical software algorithms, the ubiquity of the internet has generated interest and uptake of digital currencies, whilst providing relative anonymity.

Digital currencies can now also be traded online, via exchanges and brokers, similar to trading foreign currencies, known as the foreign exchange market.

Forex is the world’s largest market, with over $5 trillion turnover per day, where fiat, floating currencies are bought and sold against other currencies, such as the euro vs the dollar (EUR/USD), and the British pound vs the Japanese yen (GBP/JPY).