Currencies & Cryptocurrency

Introduction

Currencies (forex) and cryptocurrency are two very different "alternative" assets. Forex is the largest market on Earth; crypto is a newer, highly volatile technology. This lesson explains both.

The Forex Market

Forex (foreign exchange) is the market where currencies are traded — the largest and most liquid financial market in the world.

• Currencies always trade in pairs (e.g., EUR/USD)
• Driven by interest rates, economics, and geopolitics
• Often traded with high leverage

Currency Risk

If you invest in foreign assets, currency risk matters: exchange-rate moves change the value of your holdings when converted back to your home currency.

You own a US stock, your currency is EUR
If EUR strengthens vs USD, your stock is worth less in EUR

Cryptocurrency

Cryptocurrency is a digital asset using blockchain technology. Examples include Bitcoin and Ethereum.

• Not backed by a government (unlike fiat currency)
• Extremely volatile
• Novel technology with evolving regulation

Crypto Characteristics

• High volatility — prices can swing wildly
• No central issuer — operates on decentralized networks
• Emerging regulation — legal status varies by country
• Security risks — exchanges and wallets can be hacked

A Risk Comparison

Blue-chip stocks:  moderate, long-established risk
Crypto:            very high volatility, speculative

For most investors, crypto belongs only in a small, speculative allocation you can afford to lose — never as a core position.

Summary

• Forex is the largest market; currencies trade in pairs
• Currency risk affects foreign investments
• Crypto is a decentralized, blockchain-based digital asset
• Crypto is extremely volatile with evolving regulation
• Treat volatile assets like crypto as small, speculative allocations

More Learning

This course covered the full instrument toolkit. Continue your Business & Finance track with Stock Market Rules, Fundamental Analysis, and Technical Analysis to learn how to put these instruments to work.