A currency is a medium of exchange which facilitates trade in goods and services. Currencies may be comprised of tangible assets (precious metals or universally required commodities), or intangible assets like time, cash or electronically stored information.
While goods and services can be bartered directly, currencies eliminate the difficulties involved in finding bartering partners by allowing entities to trade indirectly.
Fiat currencies are the most established form of currency. These are issued and regulated by a government monetary authority or a central bank. These currencies may use physical currency (cash) only, or they may use a combination of cash and electronically stored information.
Community currencies are currencies which serve as a medium of trade within a specific community. This may be a physical community (a municipality or region, for example) or an ideological community (a political or social movement, for example).
Cryptocurrencies are currencies which are comprised entirely of electronically stored information and make use of encryption and (typically) blockchain technologies to prevent the duplication of currency units.
Precious metals like gold and silver are one of the most widely accepted forms of currency and have served as currency for thousands of years due to the natural limit to their availability and their physical properties.
Other naturally occurring materials which have been used as currency include cowrie shells and beads.
Highly liquid commodities – goods for which there is a strong or universal demand – are also used as currency because the ability to trade them for other goods and services quickly and easily makes them a viable trade medium.
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