Currency is a medium of exchange that defines value through reference to the geographical location of the authorities which are responsible for its maintenance. A currency, in its basic sense, is money in any form that is currently in circulation or used as a medium of exchange. This is specifically the case for banknotes as well as coins. Another definition of currency includes the system of money that is commonly used by people in a nation.
Currency is essentially the paper and coin money that a country uses in order to conduct business. An example of this would be The United States, which uses dollars, quarters, nickels, dimes and pennies. Aside from being used as a country’s monetary system, currency can also mean that something is accepted or used as a medium of exchange.
In the world of crypto, you will find that currencies are addressed in two ways:
- Cryptocurrencies – these are digital or virtual types of currencies that are secured through the usage of cryptography. This makes it nearly impossible for them to be counterfeited, or result in double-spending. Keep in mind that a lot of cryptocurrencies are based on decentralized network blockchain technology, which fills the role of a distributed ledger that is enforced by a network of computers across the entire globe.
- Fiat currencies – fiat currencies, otherwise known as fiat money, is a government-issued currency that is not backed up by a commodity. Fiat money gives central banks a lot more control over the economy due to the fact that they have the ability to decide how much actually gets printed. Many modern paper currencies, including USD, EUR, or AUD are FIAT currencies.
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