Before anything else, you may be prompted to ask: “What is currency?” Here is a concise background about the currency and its history.
In brief, the currency is mainly used in the exchange of commodities, and may be either a banknote or a coin issued generally by the government. In addition, it is accepted at its face value as a method of payment.
Moreover, the currency is a premier means of exchange in the modern world. It has long replaced barter as a means for exchanging commodities and services.
The currency, in its different forms, was used almost 3000 years ago. It proved its importance in facilitating trade across continents.
What are the advantages?
The currency is a generally-accepted method of payment, and is usually issued by the government within its jurisdiction.
Any currency fluctuates constantly against other currencies, and traders can benefit from such fluctuations through the forex market.
It is worth noting that the currency has no value in itself, as it may be just a piece of paper or metal, and it is not necessary to be made of gold, silver or bronze.
Moreover, the concept of using paper as a currency was developed in China since 1000 BC.
According to the World Atlas website, a total of 180 national currencies recognized by the UN are traded.
The exchange rate is defined as the current value of any currency against any another currency. In addition, the exchange rate fluctuates constantly in response to the economic and political events.
The forex market is open 24 hours a day, and trading is not done at one central location.
Many countries accept the US dollar as a method of payment, while others link the value of their currency directly to the dollar.
In addition, most countries issue their currencies. For example, the official currency of Switzerland is the Swiss franc, and the one of Japan is the yen. An exception is the euro which was adopted by the majority of European Union member states.