A Short Introduction to Currencies

Currencies are units of currency that can be measured in terms of their weight and not weight alone. A currency in this sense is the currency in any shape, though in this usage, normally coins and banknotes are usually used in this context. It is usually traded in pairs.


There are different types of Currencies. One type of currency is the Legal Tender Currencies which includes the Euro, the US dollar, the Japanese yen and the Swiss franc. Another type of currency is the Unites States dollar and the British pound, which are generally recognized as Domestic Currencies. The distinguishing features of these types of currency are that they are normally issued by a political organization as a measure of currency without the need to maintain a reserve for it. In fact there are no legal or governmental associations that issue them and they are accepted as a general medium of trade throughout the world.

As a general rule, Fiat money, the coins and banknotes that are issued by governments are usually backed by the value of the country’s supply of gold, but other than that, they are not backed by anything other than faith. Fiat money usually is not convertible, i.e. it is not like a coupon book, where you can pay with your check for the same item that you could have bought with your credit card, or with your ATM card. For that reason, Fiat money has always been considered as convertible, which means that you could buy or sell it according to the wishes of the national authority that issued the currency.