CHAPTER 2

A Short History of Money, Exchange Rates and Bitcoin

From the gold standard to blockchains

Opening question

“Why did fixed exchange rates break down, and why did someone invent bitcoin?”

In this chapter

Why the history of money matters to an investor
The classical gold standard and how it fixed exchange rates
Bretton Woods: the dollar–gold system and why it ended in 1971
Floating rates and the major currency crises from Europe to Mexico and Asia
The euro, the renminbi and the rise of Asian currencies, including the dong
The bitcoin white paper, the genesis block and the halving schedule
Ethereum, smart contracts and the token booms
Crypto booms, busts and the arrival of institutions and regulation

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This chapter is in the full book

Chapter 1 is free to read online. The full text of chapter 2 — with its tables, figures, worked examples and practice lab — is available in the complete edition of Forex and Crypto Investing: From Theory to Practice (Volume 3, NXW Investment Library).

Read Chapter 1 free Get the full book — [email protected]

Sections of this chapter

2.1 Why history matters to an investor

2.2 Commodity money and the classical gold standard

2.3 Bretton Woods: the dollar at the centre

2.4 Floating rates and managed currencies

2.5 Currency crises

2.6 Currency unions and the rise of Asian currencies

2.7 Bitcoin: money without a central bank

2.8 Ethereum, smart contracts and tokens

2.9 Booms, busts and the arrival of institutions

← Chapter 1: What Are Currencies and Crypto-Assets?Chapter 3: How Exchange Rates Are Determined →