For a quick background on myself, I am a former currencies trader, and nearly everything that follows are things that I learned from others in the industry, most of them who made far more money than I ever did. You will probably never be taught this in economics class
Let’s start with the base unit of money, the dollar. In the past a currency used to be a tangible thing—a gold coin, a goat, etc, and many people today blame the shift away from the gold standard as the fundamental change in the nature of the monetary system, but they are wrong. The fundamental change is not that it’s not backed by a hard-asset (this credit system of money has been around for thousands of years), but that it has entirely been removed from the physical world and exists in the unconstrained digital world. Today, money is nothing more than a computer input on a complicated excel spreadsheet.