Early societies used commodities (grains, shells, metal) as money. Standardized metal coinage made values portable and durable.

States stamped coins to certify weight and purity, building trust in trade.

• Coins enabled taxation, armies, and long‑distance commerce
• Debasement (reducing precious metal content) was an early form of inflation

Receipts for stored metal evolved into banknotes and deposits; banks intermediated payments and credit.

Gold/silver convertibility anchored trust but constrained policy.

• Banknotes represented claims on metal reserves
• Crises drove the creation of central banks as lenders of last resort

Under the classical gold standard and later Bretton Woods, exchange rates were fixed to gold or the USD (convertible to gold).

In 1971, convertibility ended; modern fiat currencies are backed by law, taxation, and central bank credibility, not metal.

• Fixed regimes improved stability but limited domestic policy
• Post‑1971 floating rates reflect market supply/demand and policy expectations

Cards, ACH/SEPA, SWIFT, and RTGS systems digitized fiat settlement, enabling e‑commerce and globalized trade.

Digital ledgers at banks became the dominant form of money.

• Instant rails (Faster Payments, PIX, UPI) expand access
• Compliance frameworks (KYC/AML) govern onboarding and flows

Bitcoin introduced a scarce digital asset on a public ledger without a central issuer. Ethereum added smart contracts and decentralized applications.

Stablecoins track fiat on‑chain for faster settlement; CBDCs explore central bank digital forms of money.

• 24/7 markets, self‑custody, and global access
• New risks: key management, smart‑contract bugs, de‑pegs

Central banks (e.g., Federal Reserve, ECB, BoJ) issue fiat, set policy rates, manage reserves, and supervise payment systems.

• Goals: price stability, employment, financial stability
• Tools: policy rates, QE/QT, FX interventions, reserve requirements

ISO is the International Organization for Standardization — an independent, non‑governmental body that publishes global standards.

ISO 4217 defines three‑letter currency codes (USD, EUR, JPY) and special ‘X‑codes’ (XAU gold, XAG silver).

• Ensures unambiguous pricing, accounting, and messaging
• Used by banks, card networks, and accounting systems worldwide

The BIS facilitates cooperation among central banks; the IMF supports balance‑of‑payments stability and publishes FX data and the SDR basket.

• Crisis backstops, best‑practice frameworks
• Surveillance and transparency across jurisdictions

SWIFT, SEPA/ACH, RTGS, card networks, and on‑chain settlement (L1/L2) move value domestically and cross‑border.

• Cut‑off times, fees, and message standards matter
• Oracles/benchmarks provide pricing; latency affects quotes

• Unit of account for prices, wages, taxes, and contracts
• Medium of exchange in retail, wholesale, and cross‑border trade
• Store of value for savings and pensions, influenced by inflation and rates
• Policy instrument: monetary policy stabilizes inflation and employment
• Settlement via bank ledgers, card networks, and domestic rails

• Bitcoin as a scarce, bearer‑style digital asset; high volatility
• Stablecoins for fast settlement/remittances and on‑chain finance
• Smart contracts (DeFi/NFTs) enable programmable money use‑cases
• 24/7 trading across CEX/DEX venues; custody is a core choice

Fiat currencies are issued by central banks (ISO 4217 codes).

Crypto assets are protocol‑native (BTC, ETH), trade 24/7, and have protocol‑defined decimals.

Stablecoins track a reference (usually USD) via reserves or mechanisms; peg can vary in stress.

• Fiat (ISO 4217)

  USD, EUR, JPY, GBP… legal tender governed by national authorities.
• Crypto (L1)

  BTC, ETH, SOL… base units satoshi/wei/lamport define precision.
• Stablecoins

  USDT, USDC, DAI… designed to track $1 but may de‑peg temporarily.

Direction matters: A/B ≠ B/A. To convert the opposite way, invert the price: B/A = 1 ÷ (A/B).

Use mid for reference, but actual trades execute at bid/ask and include fees.

• Example

  EUR/USD = 1.10 ⇒ USD/EUR = 1/1.10 = 0.9091
• Precision

  Keep enough decimals when inverting to avoid rounding error.
• Executability

  Mid is indicative only; executions occur at bid/ask with spread.

FX OTC is highly liquid during overlapping sessions; weekends are closed for banks.

Crypto trades 24/7 globally. Spreads widen in low‑liquidity periods or high volatility.

• Majors vs Exotics

  Majors (EUR/USD, USD/JPY) have tight spreads; exotics are wider.
• Event Risk

  Macro data releases and protocol events cause fast repricing.
• Risk Controls

  Use limit orders and slippage limits for better execution.

No central exchange. Dealers quote two‑way prices; EBS/Reuters aggregate.

Spreads depend on pair, size, and relationship (retail vs institutional).

• Majors can be 1–5 bps in institutional flows.
• Retail markups and card networks add fees on top of spreads.
• Settlement via SWIFT/SEPA/ACH; funding and cut‑off times matter.

Centralized exchanges (CEX) use order books with maker/taker fees.

Decentralized exchanges (DEX) use AMMs; price impact depends on pool depth.

• 24/7 trading; network fees apply for on‑chain settlement.
• Slippage rises with large orders or shallow liquidity.
• Oracles provide reference prices; latency and manipulation risk exist.

Bank wires, SEPA, ACH, Faster Payments, and card networks move fiat.

L1/L2 networks and bridges move crypto; confirm finality and fees.

• Funding/withdrawal fees can dominate small transfers.
• Always compare the all‑in effective rate, not just the headline price.
• Compliance (KYC/AML) affects availability and limits.

Inputs

• Quoted EUR/USD 1.1000 (invert for USD→EUR = 0.9091)
• Card FX fee 2.5%
• No extra network fee

Computation

0.9091 × (1 − 0.025) = 0.8869 → 100 USD ≈ 88.69 EUR

Banks quote EUR/USD; converting USD→EUR uses the inverse and fees.

Inputs

• BTC/USD mid 62,500
• Taker fee 0.10%
• Slippage 0.05%

Computation

62,500 × (1 − 0.001 − 0.0005) = 62,406.25 USD per BTC

Aggregating venues or using maker orders can reduce the all‑in cost.

The mid is the average of the best bid and best ask across venues. It is a reference benchmark and usually not directly executable.

Different spreads, fees, liquidity sources, update cadences, and execution quality lead to slightly different quotes.

The difference between expected and executed price caused by market impact, latency, and order book depth.

Major FX pairs update many times per second during trading hours; crypto markets update 24/7. UI refresh depends on the selected data source.

They aim to maintain a peg but can deviate during market stress. Assess issuer quality, reserves, attestation, and on‑chain liquidity.

ISO 4217 defines minor units for fiat (e.g., JPY 0, KWD 3). Crypto decimals come from protocol design (e.g., BTC 8, ETH 18).

XAU is an ISO 4217 code used as a pseudo‑currency to quote gold per troy ounce. It behaves like a currency in conversion tables.