Cryptocurrency Investing For Dummies

Chapter 15

Dealing with the Dollar and Other Fiat Currencies

IN THIS CHAPTER

Introducing the U.S. dollar as the world’s reserve currency

Understanding major world currencies

Exploring the forex market versus the cryptocurrency market

Calling typical currencies “fiat” isn’t something I was used to before cryptocurrencies became a thing. I simply used to call them “currencies.” If I wanted to get specific, I’d talk about “major currencies” like the U.S. dollar, the euro, and the Japanese yen or “exotic currencies” like the Mexican peso and the Iranian rial.

Currency trading, also known as the foreign exchange market (forex), is the art of predicting the future value of fiat currencies against one another. Technically, a fiat currency is a legal tender that your local government supports through the central bank. The advent of cryptocurrencies has worried some fiat currency issuers (that is, central banks). Some believe that the cryptocurrencies may replace fiat currencies in the future. But for now, one of the ways to get your hands on cryptocurrencies is to exchange your fiat currencies for them. That’s why understanding the basic movements in the world’s fiat currencies may come ...