The Intriguing Origins of the Dollar Symbol and Its Global Impact

The dollar sign ($) is one of the most recognized currency symbols in the world. But where did this familiar emblem come from?

It’s believed to have originated from shorthand for the Spanish peso, PS, which was eventually abbreviated to P^s, until the “S” remained and the “P” became a vertical line through it.

Let’s take a look at the history of the symbol and the importance of the dollar in the global economy.

Spanish Peso

“The name dollar has its origins in the ‘Thaler,’ a large silver coin circulating across the Holy Roman Empire of the 16th century and then as ‘dollar’ in the Spanish Empire,” says Stefan Eich, assistant professor of government at Georgetown University. “The dollar first became a symbol of Spanish imperial might and then eventually of American power and identity.”

In the 1700s, the Spanish Empire controlled much of North America. As such, the Spanish peso was the primary currency during the time. Its formal name was the Spanish peso de ocho reales, “the silver piece of eight.”

Over time, “PS” became the shorthand way to write the currency, primarily done by merchants and travelers. This gave way to the “P^s” discussed above, and eventually the dollar symbol as we know it today.

By the time the first U.S. dollar paper was issued in 1875, the ‘$’ symbol was ubiquitous and included on the paper note.

Other Theories

While the Spanish peso explanation is the most widely accepted origin, there have been other theories aiming to explain how the dollar symbol came about. Here are a few of the most common:

U.S. initials: In her book, “Atlas Shrugged,” Ayn Rand claimed that the dollar sign stood for the “U” and the “S” in the United States, with the bottom of the “U” eventually being removed and becoming the two vertical lines we often see through the “S.” There’s not much evidence to support this, particularly since the $ already existed by the time the United States was created.

Pillars of Hercules: Another common theory is the “Pillars of Hercules.” Greek mythology has it that Hercules cut a way through a mountain that existed between Spain and Morocco, creating two “pillars” from the mountain promontories. These pillars wrapped by a loose scroll in a subtle “S” are part of the Spanish coat of arms and have appeared on Spanish coins.

Portuguese cifrão: Cifrão is a symbol that was used on the currency of Portugal and its colonies, and looks like a dollar sign with two vertical lines. However, it appears to function as a decimal rather than a currency symbol on the coins, but may have influenced future currency symbols.

Dollar, Power, Capitalism, and Trust

The dollar sign is more than just a symbol of currency. It has come to represent monetary power, stability, and capitalism. The U.S. started to be an economic powerhouse in the 1800s and continued its path to dominance in global affairs through the 20th century.

As its wealth and power grew, $ became a symbol that represented wealth and financial ambition. “As the international reserve currency of the world, the U.S. dollar has, of course, been a global symbol of American might, at least since Bretton Woods,” says Eich.

In 1944, the Bretton Woods Agreement set the U.S. dollar as the world’s reserve currency, cementing its importance.

Since then, the U.S. dollar has become a haven for investors based on the strength of the U.S. economy and the trust in American institutions. People have admired and disdained it, depending on their views of capitalism.

“The dollar remains the language of global finance, but also an embodiment of the promises of the American way of life, often in all its material crassness as a naked celebration of greed. This also always contained a promise of emancipatory freedom embodied in the American dream,” says Eich.

Currency Branding

Currency branding plays a more critical role than simply being pleasing to the eye. It is used as a means to convey financial strength and legitimacy.

“In an important sense, money itself is after all a circulating symbol,” says Eich. “What matters instead is who guarantees the symbol, and it is usually (though not always) the state as the political power that enforces the symbol.”

“Without the power of the state,” Eich adds, “the dollar symbol remains mute, or rather its trust remains contested.”

This has been particularly evident with new digital currencies that tend to replicate traditional currencies. Consider the bitcoin symbol (₿) and how closely it resembles the dollar symbol. This is not just a coincidence. It relies on how people perceive the dollar (strength, stability, wealth) to influence how they see bitcoin.

“One of the odder features of cryptocurrencies is their tendency to mimic the symbolism of the kind of physical money it claimed to be displacing,” says Eich. “Crypto has, for the most part, mainly tried to appropriate the existing symbolic repertoire instead of adding to it.”

The Bottom Line

The dollar symbol has grown from shorthand for the Spanish peso to becoming one of the most recognized, trusted, and dominant visual identifiers in history.

While its importance has been part of global economics for decades, its influence continues to shape modern finance as seen in cryptocurrencies and fintech.

“The dollar today stands for the might of the American empire,” says Eich. “Indeed, it might be the most visible and lasting dimension of American power today. In an important sense, the American empire is the dollar empire.”