If you are a complete newbie as we all were at some point, you might be wondering why tabs found on trading platforms have two currencies listed. These are what you call currency pairs and what they represent is the value of one currency in relation to another currency. It’s really not that complicated.
So, say as an American anytime you travel to Canada and you exchange your money, there is some value there that you are getting some exchange rate for. So, when you exchange your US dollars you are not getting that same number of canadian dollars back because you are getting back the value in relation to canadian dollars.
So that is the value of the US dollar relative to the canadian dollar. And, that would be represented on cryptocurrency trading platforms as USD and CAN and as a currency pair. So typically when you visit website of cryptocurrency plaforms or something, you see the value of Bitcoin, it’s implied that that is relative to the US dollar. So on a cryptocurrency site, you’ll see the value of Bitcoin listed and that would be in relation to the US dollar.
The nice thing about this is you can easily change it to other currency pairs like the euro and things like that. Another great place to see it is on the homepage of the Bitcoin exchange. You can see the currency pair Bitcoin/US Dollar which is the same as what was discussed – value in relation to value.
You can also see other one of the other major ones: Bitcoin to the euro and also how the cryptocurrencies are related to one another. So what are these called? The first currency listed is called the base currency and the second currency listed is called the counter currency.
So when if you were to see something like BTC/USD10,000, that means that the currency pair: bitcoin is the base currency, US Dollars is the counter currency and it means that one bitcoin can be exchanged for 10,000 US dollars. So, it is the value of Bitcoin relative to the US dollar.