what is currency 
currency is a medium of exchange for goods and services in short it s money in the form of paper and coins usually issued by a government and generally accepted at its face value as a method of payment currency is the primary medium of exchange in the modern world having long ago replaced bartering as a means of trading goods and services in the 21st century a new form of currency has entered the vocabulary and realm of exchange the virtual currency also known as cryptocurrency virtual currencies such as bitcoin and ethereum have no physical form or government backing in the united states they are traded and stored electronically understanding currencycurrency in some form has been in use for at least 3 000 years at one time only in the form of coins currency proved to be crucial to facilitating trade across continents 1a key characteristic of modern currency is that it is worthless in itself that is bills are pieces of paper rather than coins made of gold silver or bronze the concept of using paper as a currency may have been developed in china as early as 1000 bc but the acceptance of a piece of paper in return for something of real value took a long time to catch on 2 modern currencies are issued on paper in various denominations with fractional issues in the form of coins money vs currencythe terms money and currency are often thought to mean the same thing however while related they have different meanings money is a broader term that refers to an intangible system of value that makes the exchange of goods and services possible now and in the future currency is simply one tangible form of money money is used in a variety of ways all related to its future use in some kind of transaction for example money is a store of value this means that it has and maintains a certain value that supports ongoing exchanges people know that the money they received today essentially will have the same value next week when they need to make a purchase or pay a bill money is also referred to as a unit of account that means it can be used to account for changes in the value of items over time businesses use money as a unit of account when they prepare a budget or give assets a value profits and losses are established and relied upon using money as a unit of account money also has certain properties that allow for the smooth exchange of goods understanding what money is clarifies the meaning of currency it s a form of money used every day by people all over the world checks are another form of money known as money substitutes cigarettes have even been a form of money as they were for soldiers during the second world war 3the bureau of engraving and printing is responsible for printing america s paper currency its parent agency is the u s dept of the treasury 4 the u s mint founded in 1792 is the nation s sole manufacturer of legal tender coinage and is responsible for producing circulating coinage for the nation to conduct its trade and commerce 5types of currencythe united states mint defines currency as money in the form of paper and coins that s used as a medium of exchange 6 currencies are created and distributed by individual countries around the world u s currency in paper form is issued by the bureau of engraving and printing as 1 2 5 10 20 50 and 100 bills the 500 1 000 5 000 and 10 000 bills are no longer issued but those still in circulation are redeemable at full face value currency issued in 1861 or earlier is no longer valid and would not be redeemable at full face value 7u s currency in the form of coins is issued by the mint in denominations of 1 5 10 25 50 and 1 7there are over 200 national currencies currently in circulation 8 including the u s 42 countries either use the u s dollar or peg their currencies directly to the dollar 9 according to the international monetary fund imf the dollar makes up 58 8 of the foreign exchange reserves 10most countries issue their own currencies for example switzerland s official currency is the swiss franc and japan s is the yen 1112 an exception is the euro which has been adopted by most countries that are members of the european union 13some countries accept the u s dollar as legal tender in addition to their own currencies like the bahamas zimbabwe and panama 8 for some time after the founding of the u s mint in 1792 americans continued to use spanish coins because they were heavier and presumably felt more valuable 9there are also branded currencies like airline and credit card points and disney dollars these are issued by companies and are used only to pay for the products and services to which they are tied currency tradingthe exchange rate is the current value of any currency relative to another currency as a result rates are quoted for currency pairs such as the eur usd euro to u s dollar exchange rates fluctuate constantly in response to economic and political events 14these fluctuations create the market for currency trading the foreign exchange market where these trades are conducted is one of the world s largest markets based on sheer volume all trades are in large volumes with a standard minimum lot of 100 000 15 most currency traders are professionals investing for themselves or for institutional clients that include banks and large corporations the foreign exchange market has no physical address trading is entirely electronic and goes on 24 hours a day to accommodate traders in every time zone 16for the rest of us currency exchange typically is done at an airport kiosk or a bank before we go on a trip or while traveling consumer advocates say that travelers get the best value by exchanging cash at a bank or at an in network atm other options may have higher fees and unattractive exchange rates 