The history of the United States dollar, as well as how it compares with other world currency rates, dates back to over 200 years and could take hundreds of pages of articles to go through everything. However, in this short article, the aim is to give a comprehensive summary in such a way that anyone would get the big picture just by reading it.

The history of the dollar cannot be complete without first going back to where it all began. That being said, its origin can be traced as far back as a time before the U.S. gained its independence. In its early days, it first came to be as what is known as the ‘colonial script’, which can be exchanged in return for an equivalent amount of goods and/ or services. And according to history experts, the issuance of dollar in the form of coins and currency had been authorised by the Continental Congress; this was even before independence was declared.

At that time, the term ‘dollar’ was known to be commonly used to refer to the Spanish colonial eight-real coin, which is the Spanish dollar. Before the dollar was wildly accepted by the Congress on the 8th of August, 1786, there were several proposals for other names to be considered. However, the issue was soon raised again to make changes to the currency and it was during the time when Alexander Hamilton was the Secretary of Treasury that the Congress acted in what is known as the Coinage Act of 1792, which established the dollar as the basic unit of account for the United States.

The word “dollar” is a derivative of Low Saxon “daler”, an abbreviation for “Joachimsdaler”. The Joachimsdaler is the name given to the coins minted from silver which was mined from a location near Joachimstal, a town in the Ore Mountains of northwestern Bohemia.

Now, in comparison to all the other major currencies, dollars are one of the strongest and most wildly used currencies around today. In fact, it is believed to be the most held reserve currency in global reserves. As far as world currency rates and foreign exchange trading is concerned, the US dollar is the most traded currency followed by the euro, the Japanese yen and the British pound. In combination with the other 3, the U.S. dollar forms what is often referred to as the basket of currencies which is used to calculate the value of IMF Special Drawing Rights, with a 11.3% weighting (the 3rd greatest) as of 2011.