Money is any verifiable account or item which normally is accepted as payment for products and services purchased and repayment of various debts, including taxes, in a certain country or socio-cultural context. It is usually used to buy, sell, exchange and transfer things with the help of banks, money transmitters and other monetary institutions. This in essence makes money the most important part of a human being’s existence since it is required for all other activities, such as food, shelter and clothing. While money was considered as something that could be hoarded and saved for a later time, it has now become a part of daily life and is widely used. In fact, money circulates through our entire society.
There are two types of money: checks and coins. Checks are transactions in which the document containing the transaction is drawn on some specified bank. For instance, to withdraw money from your checking account, you have to present your checkbook along with the bank’s address and logo. On the other hand, to pay bills and purchase goods, you can use your debit card. Coins, on the other hand, are actual coins that are issued by the government through the process of coin minting.
Though money acts as a functional unit of exchange, there are several factors that affect its exchange rate. One is the value of the nation which, besides being proportional to the GDP of a country, also depends on other factors like trading partners, gold reserves and foreign exchange reserve. Another factor that affects the currency value is the political structure of that nation. For instance, a country with a stable economic system and friendly trade policies with other countries will be able to trade efficiently and will enjoy a stronger currency. However, a country that is experiencing a prolonged recession and is struggling to adjust to external trade barriers will have an adverse impact on its currency. Economic indicators like gross domestic product growth, unemployment and inflation also affect the exchange rate.
The major international currencies traded on the FOREX are the US dollar, the Euro, the Japanese yen, the British pound, the Swiss franc, and the Australian dollar. The list of currencies is quite long, since there are numerous nations that make up the European Union. A different system of currency exchange is practiced in Asia, where the most common currency is the Singaporean dollar. A number of commodities are also traded on the FOREX including foreign exchange traded bonds, U.S. Treasuries, U.K. Pound Sterling, and Australia’s dollar.
Several recent developments have resulted in the development of new currencies. An increasing number of countries are introducing their own Cryptocurrency which are backed by a digital ledger called block chain. This makes it possible to conduct online transactions in the same way as with conventional money systems. Several digital currencies are being considered as a potential replacement for the traditional money systems. They include Dash, Lox, MySpace Cash, Counterfeitbox, Quicken Cash, and Epoch.
Digital certificates are a kind of pre-mined digital asset like shares or play money that can be exchanged for cash. The certificates are issued by companies in association with their clients. Their use-value is considerably lower compared to conventional money. They provide a means for the transfer of value for future transactions between buyers and sellers without the use of credit cards, money orders, or trades.