Currency is a system for storing and exchanging value. It is also a unit of account. This allows businesses to keep track of their assets and determine profits and losses. A currency is also fungible, meaning that it does not have to be revalued for every transaction. It is also durable and easy to carry.
Currency conversion is important for governments, companies, and investors. They need to know how to pay for items and services, and they need to be able to easily transfer money from one country to another. For example, an American wine importer needs to pay French winemakers in euros. He must also pay Australian wine suppliers in Australian dollars. However, the Chilean vineyards need payment in pesos. In such a case, he will instruct his bank to pay the suppliers using their local currencies.
Currency is an accepted means of exchange and is usually issued by a government. In the modern world, currency has replaced bartering as the primary medium of exchange. However, in the 21st century, currency has taken on a new form: virtual currencies. These virtual currencies have no physical representation, and are created and traded electronically.
Currency was first used as a medium of exchange by the Mesopotamian civilization. It was used to pay soldiers. It was backed by a government authority, making its value stable and more difficult for individuals to manipulate. This stable value made it easier for people to come to consensus on what a certain currency was worth. Its introduction helped facilitate large-scale transfers. Even before the World War II, countries began printing large denominations of money. Some of these are still in circulation.
The use of money changed the power structure of society. People were now able to obtain wealth through trade, providing a service, or even purchasing political or military power. This made society more democratic and took power away from the noble families. It also lowered living standards. The advent of money also altered the world order. Traditionally, governments printed paper money to finance wars and maintain a standing army.
Currency was created to make trade and exchange more efficient. Before the invention of money, goods and services were exchanged by barter. This made it difficult to determine their relative value and to track the evolution of value. With the advent of money, the economy began to develop and become more efficient. It made it possible to exchange goods and services among nations.