Claim: Amsterdam was the place for diamonds.

Amsterdam -LRB- -LSB- ˈæmstərdæm , _ ˌæmstərˈdæm -RSB- -LSB- ɑmstərˈdɑm -RSB- -RRB- is the capital and most populous municipality of the Kingdom of the Netherlands . Its status as the capital is mandated by the Constitution of the Netherlands , although it is not the seat of the government , which is The Hague . Amsterdam has a population of 851,373 within the city proper , 1,351,587 in the urban area , and 2,410,960 in the Amsterdam metropolitan area . The city is located in the province of North Holland in the west of the country . The metropolitan area comprises much of the northern part of the Randstad , one of the larger conurbations in Europe , with a population of approximately 7 million .   Amsterdam 's name derives from Amstelredamme , indicative of the city 's origin around a dam in the river Amstel . Originating as a small fishing village in the late 12th century , Amsterdam became one of the most important ports in the world during the Dutch Golden Age -LRB- 17th century -RRB- , a result of its innovative developments in trade . During that time , the city was the leading centre for finance and diamonds . In the 19th and 20th centuries the city expanded , and many new neighborhoods and suburbs were planned and built . The 17th-century canals of Amsterdam and the 19 -- 20th century Defence Line of Amsterdam are on the UNESCO World Heritage List . Since the annexation of municipality Sloten in 1921 by the municipality of Amsterdam , the oldest historic part of the city lies in Sloten -LRB- 9th century -RRB- .   As the commercial capital of the Netherlands and one of the top financial centres in Europe , Amsterdam is considered an alpha world city by the Globalization and World Cities -LRB- GaWC -RRB- study group . The city is also the cultural capital of the Netherlands . Many large Dutch institutions have their headquarters there , and seven of the world 's 500 largest companies , including Philips and ING , are based in the city . In 2012 , Amsterdam was ranked the second best city to live in by the Economist Intelligence Unit -LRB- EIU -RRB- and 12th globally on quality of living for environment and infrastructure by Mercer . The city was ranked 3rd in innovation by Australian innovation agency 2thinknow in their Innovation Cities Index 2009 . The Amsterdam seaport to this day remains the second in the country , and the fifth largest seaport in Europe .   Famous Amsterdam residents include the diarist Anne Frank , artists Rembrandt van Rijn and Vincent van Gogh , and philosopher Baruch Spinoza .   The Amsterdam Stock Exchange , the oldest stock exchange in the world , is located in the city center . Amsterdam 's main attractions , including its historic canals , the Rijksmuseum , the Van Gogh Museum , Stedelijk Museum , Hermitage Amsterdam , Anne Frank House , Amsterdam Museum , its red-light district , and its many cannabis coffee shops draw more than 5 million international visitors annually .