We all know forex as a flourishing sector with explosive expansion in recent years. With a daily trading volume of billions of dollars and over 400 thousand people employed throughout its many sectors, this global marketplace where national currencies are traded against one another has surpassed the stock market as the world’s largest financial market. These figures offer a picture of a strong and wealthy sector with a steady upward tendency.
Things weren’t always like this, though. We can observe how far the foreign exchange market has progressed since its humble origins by looking back in time; and so thrived best forex brokers in the market. There were numerous elements that contributed to its expansion, but technology was without a doubt the most essential component in its success. Few individuals can recall how the forex market looked before the internet and how transactions were conducted back then. Forex has evolved into the thriving industry it is now as a result of technical developments.
But, throughout time, how has technology influenced forex trading and what benefits has it brought to the table? In the next portions of this essay, we’ll go over all of this and more.
Trading is an age-old story.
Before we go into the details of the relationship between technology and the growth of the forex sector, it’s helpful to go back in time and understand a few fundamentals about trading.
Trading has been practiced since the dawn of time. Since the birth of civilization, people have been exchanging commodities and assets, long before the notion of money was ever conceived. Bartering was used to conduct trade – individuals would swap products and services for other goods and services, and this practice lasted for centuries.
The bartering system, on the other hand, wasn’t the most efficient because it had numerous drawbacks and limits. To begin with, exchanging one product for another was a time-consuming procedure due to the difficulty of transporting and storing commodities. Second, because there was no measurement system in existence, there was the difficulty of creating a common measure of value. Also, for people to exchange commodities, a double coincidence of desires was required.
All of these stumbling blocks led to the creation of commodity money, which made trade considerably simpler. People began utilizing commodity money as a means of exchange instead of lugging large loads of commodities to make a deal.
Making the switch to contemporary currency
Although the introduction of several types of currencies considerably enhanced the trading system, they looked very different from the currencies we know today. People used a variety of things to pay for goods and services before coins and subsequently paper money were invented, including animal teeth and skins, weapons, stones, salt, and exotic feathers.
Because there were no conventional currencies, establishing value was difficult, and these things were far from ideal as a means of trade. The Greeks made the major break when they developed the first gold and silver coinage. This marked the start of modern trade, as standardized currencies made the process easier and removed prior constraints.
However, gold coins were also large and heavy, indicating that there was still potential for improvement. When the Chinese switched from coins to paper money around 700 B.C., they devised a solution. The rest of the world took a bit to catch up, but eventually, all governments began printing paper money. In today’s globe, there are 180 distinct types of official currencies that may be exchanged on the currency market.