10 Facts You Should Know About the US Dollar

The US dollar is one of the most influential currencies in the world. In addition to being the most widely used currency globally—as a medium of exchange, a store of value, and an international unit of account—its impact extends far beyond the borders of the United States.

In this article, we explain everything you need to know about the US dollar: its history, its role on the international stage, and many other fascinating facts.

Key Takeaways: 

• The US dollar is used far beyond the United States, either as the official currency or alongside local currencies in many countries and territories worldwide. This widespread adoption reflects its stability and central role in the global economy.
• It is the world's primary reserve currency, accounting for around 58–60% of global foreign exchange reserves, a position it gained after World War II with the Bretton Woods agreements. The euro is far behind at around 20%.
• The dollar dominates the foreign exchange market, being involved in nearly 88% of global Forex transactions, with daily volumes exceeding $6.6 trillion. The most traded pairs include EUR/USD, USD/JPY, and GBP/USD.
• The term “dollar” comes from the European thaler of the 16th century, while the $ symbol is believed to be inspired by Spanish eight-reales coins used in the American colonies. These origins highlight the European historical legacy of the US currency.
• US banknotes are durable and unique: made from a cotton-linen blend, they can be folded over 8,000 times, and their lifespan varies significantly depending on the denomination. The $1 bill, the most widely used, is also the least secure but remains rarely counterfeited.

1. The US Dollar Is Used Far Beyond the United States

The US dollar is not only the official currency of the United States; its use extends far beyond its borders. It is found in several countries, either as the official currency or as a legal tender alongside the local currency.

Countries that currently use the USD as their official currency include:

• The United States, the issuing country since 1972
• Panama, since 1904, alongside the Panamanian balboa
• East Timor, since 2000
• Ecuador, since 2000
• El Salvador, since 2001
• Palau, the Marshall Islands, and the Federated States of Micronesia (under the Compact of Free Association)
• The British Virgin Islands and the Turks and Caicos Islands
• Zimbabwe, alongside other currencies

Several other territories use the US dollar in parallel with their official currency due to their political or administrative status, for example:

• Puerto Rico
• Guam
• The US Virgin Islands
• American Samoa
• Northern Mariana Islands
• Cambodia
• Barbados
• Costa Rica
• Cayman Islands
• Guatemala

Source: List of countries using the US dollar worldwide (Stripe.com)

2. The World’s Primary Reserve Currency

The US dollar accounts for around 58–60% of global foreign exchange reserves, making it the main reference currency for banks, financial institutions, and international trade. It became the dominant reserve currency after World War II, following the Bretton Woods agreements, replacing the British pound.

For comparison, the euro currently ranks second, representing about 20% of global reserves. The USD is by far the world’s leading currency!

Source: The US dollar, the world’s reserve currency (Vie-publique.fr)

3. Most Forex Transactions Involve the USD

The US dollar is the most traded currency on the Forex market. It is included in the vast majority of currency pairs and is involved in approximately 88% of global Forex transactions. In 2022, nearly $6.6 trillion were traded daily.

The most common currency pairs are EUR/USD, USD/JPY, and GBP/USD.

Source: Most traded currencies in the world (Capital.com)

4. The $1 Bill Is the Least Secure

Unlike the $5, $10, $20, or $100 bills, the $1 bill has no security thread or hologram. The reason is simple: adding such features would cost more than the bill’s face value. It costs about 5–6 cents to produce a $1 bill.

However, it is rarely counterfeited, as the potential profit for criminals is extremely low.

5. The Word “Dollar” Comes from the European Thaler

The name “dollar” originates from the thaler, a silver coin from north-west Bohemia in the early 16th century. The thaler quickly spread across Europe and the Western world. Under Empress Maria Theresa of Austria, the coins bore her portrait, enhancing their renown.

Although Austria stopped producing thalers after her death, Spain continued to distribute silver coins in the American colonies. After the 1776 Declaration of Independence, Alexander Hamilton adopted the term “thaler” for the official US currency. Over time, the pronunciation evolved into “dollar.”

6. The Origin of the $ Symbol

The exact origin of the $ symbol is uncertain, but the most likely explanation is that it derives from Spanish eight-reales coins, which were part of the early US monetary system until 1793. These coins featured the Pillars of Hercules wrapped in banners.

The $ symbol is thought to represent the pillars and the winding S-shape of the banners.

7. The Lifespan of US Banknotes

The lifespan of a banknote varies depending on the materials used and how frequently it circulates. On average:

• A $1 bill lasts just over 7 years
• A $100 bill can last nearly 24 years

Source: How long is the lifespan of U.S. paper money? (FederalReserve.gov)

8. US Banknotes Can Be Folded Over 8,000 Times

US banknotes are made from 75% cotton and 25% linen, allowing them to be folded more than 8,000 times without tearing—20 times more than a typical paper note.

9. The World’s Most Expensive Bill

The $1,000 “Grand Watermelon” bill (1890–1893) is highly prized by collectors. Its nickname comes from the shape of the zeros on the reverse, resembling watermelons.

In January 2014, its value was estimated at $3,290,000 (~€2,721,000)—a record that remains unbroken.

Source: The 5 most expensive banknotes in the world (Cnews.fr)

10. The Most Used Bill in the United States

The $1 bill is the most printed and widely used note in the US, crucial for daily transactions. This high circulation shortens its lifespan to just 5–7 years. Its design has barely changed since 1963, making it instantly recognisable.