Currency is one form of money and it is used every day by people around the world. It enables exchanges to be completed without requiring direct barter or other physical means. It can also be used as a store of value. People save money in order to pay for future purchases and to ensure that the value of their savings remains stable (though inflation can affect this). The amount of currency in circulation should be enough to support ongoing exchanges. Historically, currencies have been backed by something tangible like precious metals or other valuable items, but today most are fiat currencies, not tied to anything real. Historically, paper notes were often issued by government authorities that lacked the specie needed to back them up, which created an inflationary bubble. Inflation erodes the value of savings, which can lead to bankruptcy and civil unrest.
A currency can also act as a unit of account, allowing prices to be compared and making accounting easier. It can also be used as a standard of deferred payment, enabling contracts and loans to be settled at some point in the future.
Unlike the physical cash we carry, money exists in the form of paper bills and coins that are governed by a country’s central bank. Its value derives from the trust that people place in it, although history has shown that too much printed money can be counterproductive by creating hyperinflation (which makes each currency unit worth less and less). The best way to understand currency is to study the history of the world’s most popular currencies and to observe the current global financial landscape.