fiat currencies</strong></a>. Banknotes are generally kept in physical locations, such as safes or <strong>wallets</strong>. Cryptocurrencies, on the other hand, are contained solely in a <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-blockchain/">blockchain./nCryptocurrency holders possess keys that unlock their blockchain addresses which hold their cryptocurrency assets. Software-based <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-hot-wallet/">hot wallets</strong></strong></a> or physical <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-cold-wallet/">cold wallets</strong></a> represent the custodian of cryptocurrency. They are known as <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-digital-asset-custodian/">Digital Asset Custodians</strong></a> and are secured by cryptocurrency exchange platforms.</p>\n<p><strong>Cryptocurrency custodian solutions</strong> are systems designed with enhanced security and storage functionality. The recipients of these services are typically institutional clients who have significant crypto holdings. Custodians can use a <strong>combination of hot and cold cryptocurrency storage tools</strong>.</p>\n<p>While the cryptocurrency custodian industry is relatively new, it is already seeing increasingly growing competition. Some established solution providers hold a large market share. However, new solutions are being developed and small <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-defi/">decentralized finance (DeFi)</strong></a> organizations, like BitGo and Coinbase Custody, are gaining traction.</p>","level":"medium","meta_title":"What is Custodian? Definition & Meaning | Crypto Wiki","meta_description":"Custodian meaning: Custodian - a business responsible for the safekeeping of financial assets in its custody on behalf of an individual or an institution.","meta_keywords":null,"language":"en","created_at":"2022-03-01T09:31:34.000000Z","updated_at":"2022-05-13T14:32:23.000000Z","preview_url":"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-custodian"},"prevSection":{"id":224,"original_id":null,"author_id":41,"translator_id":null,"title":"What is Currency?","slug":"what-is-currency","section":"C","keyword":"Currency","status":"published","definition":"a financial medium of exchange that is used to define value.","content":"<p><strong>Currency</strong> is an exchange medium. It’s used to define value by referencing a specific geographical location whose authorities are responsible for its maintenance. A currency is defined as monetary assets, either physical or digital, that are in circulation or used for exchange. It can also be defined as the money system used by people in a certain nation.</p>\n<p>Physical currency usually takes the form of paper or coin money and is used for business procedures. For example, the US uses dollar bills, quarter, nickel, dime, and penny coins, while some European Union nations use the euro banknotes and euro coins of varying values.</p>\n<p>Currency can act as a nation or a union’s monetary system, as well as a medium of exchange. In the crypto space, currencies can be categorized into two groups – <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-cryptocurrency/">cryptocurrencies and <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-fiat/">fiat currencies</strong></a>.</p>\n<h2>Cryptocurrencies</h2>\n<p><strong>Cryptocurrencies</strong> are digital currencies. They are developed using <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-blockchain/">blockchain technology, and their security measures are reinforced by <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-cryptography/">cryptographic tools. It is nearly impossible to create counterfeit cryptocurrencies.</p>\n<p>The blockchain technology used in crypto development is <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-decentralization/">decentralized. Blockchain acts as a <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-distributed-ledger/">distributed ledger</strong></a> that is supported by a network of computer nodes scattered around the world.</p>\n<h2>Fiat Currencies</h2>\n<p><strong>Fiat currencies</strong>, or fiat money, are government-issued currencies that are usually physical and are not backed by other commodities. Fiat currencies typically act as legal tender and are <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-centralized/">centralized, as is the case for EUR, GBP, and USD, among others. Central banks that regulate the amount of printed money have a significant influence on the overall economy.</p>","level":"easy","meta_title":"What is Currency? Definition & Meaning | Crypto Wiki","meta_description":"Currency meaning: Currency - a financial medium of exchange that is used to define value.","meta_keywords":null,"language":"en","created_at":"2022-03-01T09:11:54.000000Z","updated_at":"2022-05-13T14:32:23.000000Z","preview_url":"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-currency"},"currentChapter":"C","currentSection":"what-is-currency-crisis","chapterTitle":"C","readingLevel":"medium"},"url":"/crypto/learn/crypto-terms/what-is-currency-crisis","version":"cdd198d50cbe5c9c21c9329d7c096ffc"}" class="container-fluid d-flex crypto-book p-0"> Crypto Terms: Letter C
What is Currency Crisis?
Currency Crisis MEANING:
Currency Crisis -
a financial emergency event caused by the fiat currency of a state losing its value, leading to reduced investments in the state’s assets.
Let's find out Currency Crisis meaning, definition in crypto,
what is Currency Crisis,
and all other detailed facts.
A currency crisis is an event caused by concerns over a country’s central bank’s ability to keep the currency stable with sufficient foreign exchange reserves. In some instances, the term ‘currency crisis’ may be used interchangeably with ‘financial crisis’.
A speculative attack occurs in foreign exchange markets when a currency that is trying to maintain a pegged exchange rate is suddenly attacked by speculators. A shortage of foreign currency reserves to purchase enough domestic currency can lead to the pegged value dropping significantly.
If a currency is devalued, people influenced by the situation may panic-sell it at rates that are far lower than acceptable. This leads to further depreciation of the currency.
Currency crises cause significant damage to small-scale open economies or less stable countries. Governments have to take the responsibility for fending off speculative attacks. In this case, the currency reserves or foreign reserves must meet the excess demand for the currency experiencing the crisis.
There are numerous causes for currency crises. Some of the most prominent are inflation, credit unbalancing, debt rise, and political troubles. The high volatility of currency exchange rates in the national economy can also influence a currency crisis.
There have been several instances of financial crises throughout history, including:
- The Great Depression (1929-1939) – following the Wall Street crash in 1929, a financial crisis started, leading to unemployment levels of 25%;
- The 1997 Asian Crisis – caused by speculative capital flows, it led to massive credit and debt accumulation in Thailand, later affecting all of East Asia;
- The 2007-08 Global Financial Crisis – the first global-scale financial crisis of the 21st century that is considered to be one of the worst economic crashes in history. It started in the US after the investment bank Lehman Brothers declared bankruptcy.
Bitcoin (BTC), the world’s first cryptocurrency, was founded in November 2008 and officially launched in January 2009. It was created by an unknown entity going by the pseudonym Satoshi Nakamoto. The goal was to create a fully decentralized digital currency that would not be controlled by central banks.
In 2010, the value of one BTC was below a dollar. In November 2021, over a decade since its inception, Bitcoin reached its peak at around $69,000 per coin. It is considered to be the biggest cryptocurrency in the world by market capitalization.
Although, unlike fiat money which is more prone to currency crises, cryptocurrencies are decentralized and highly volatile. However, the volatility of crypto makes some investors feel wary.
