Cryptocurrency is a digital currency that can be bought and sold online, but the essence of the matter is not that simple. Cryptocurrencies have many different qualities compared to conventional money. Firstly, it does not correlate with any central organization, like a bank. When you transfer your money from one bank to another, there is no necessity for an intermediate agent. The transfer is peer-to-peer, and this results in the elimination of the processing fees required by the agents. With decentralization, everyone can spend or transfer their money freely.
To explain the origin of cryptocurrencies, first America’s economic state at that time must be reviewed. In 2008 the economic crisis revealed itself in America, and it affected the whole world. Dr.Güven and Şahinöz said that, in two years, America printed 3.5 trillion dollars for solving the newly emerged crisis (2018,p.34). With this argument, people realized that a centralized organization is capable of doing whatever it pleases, and the public suffers from its consequences. Cryptocurrencies were a solution to these problems.
Cryptocurrencies have settled in our lives, but who is their creator? In 2009, a revolutionary article named “Bitcoin: a Peer-to-Peer Electronic Cash System” was published by the author named Satoshi Nakamoto. Dr. Güven and Şahinöz claimed that some people thought Satoshi Nakamoto was a nickname formed by four high technology companies; Samsung, Toshiba, Nakamichi, and Motorola (2018, p.156). However, these were only predictions without proof. Satoshi Nakamoto’s nickname could belong to a group or an individual, the truth remains untold.
Each cryptocurrency is called a coin. Many coins on the market can be used for purchasing in markets. Bitcoin is the most popular coin because it is the first coin in the market. It can be supplied by using different methods compared to conventional money and its supply method is the blockchain system. Briefly, this system is constituted by blocks linked to each other, coded with a hash function. The people who try to solve these functions embedded in the blocks are called miners. The miner who finds this encrypted code is rewarded with some Bitcoin. This process called mining supplies Bitcoin.
There are also coins other than Bitcoin, and each is a different digital project. They have different aims and working principles. For instance, Tether claims it saves a dollar for each Tether, providing people to stay in the market stabilized. Ethereum has smart contracts, and it allows users to code their programs. IOTA is a project about the internet of things and smart objects. Ripple was introduced to the market as an alternative to SWIFT, which provides international money transfers with high agent fees. Additionally, another disadvantage of the SWIFT system is its speed of processing. It may take several days to transfer the desired amount of money to another country. Ripple claims to solve these problems and provide a simpler, faster, and cheaper system for international money transfers. There are many coins like these, which are innovative and, they get more and more investors every day due to their advantages.
To conclude, cryptocurrencies are alternate money units, and they developed as a consequence of the wrong monetary policies of states. The market volume is growing gradually, but cryptocurrencies leave behind many questions. For instance, what should governments do and regulate? In my opinion, governments should collect their taxes. Furthermore, they should not restrict anything about the operation of this new system, as the restriction does not fit in the decentralized structure of the cryptocurrency concept. There are many controversies; in fact, cryptocurrencies gained public acceptance. For instance, Elon Musk, known commonly as a wealthy investor, acknowledged this new money unit. Jiang said it is assumed that Elon Musk holds copious amounts of cryptocurrencies, e.g., Bitcoin and Dogecoin (2022, p.454-458). In the end, is this a revolution or a fallacy? Time will show, but its effects are already clearly visible.
