What is Cryptocurrency?

Cryptocurrency is a virtual, digital and encrypted currency that can be used in barter transactions. It is widely believed that it can be used quite widely in the future.

Today, cryptocurrencies attract a lot of attention from individuals to giant companies. Cryptography is used to verify exchanges and execute this process securely.It has no physical counterpart.

In fact, money spent with credit cards or transferred between bank accounts are also virtual currencies. Only system data changes in this process. Cryptocurrency has similar working logic. However, there is no authority in this system. There is also a different decentralized system that is not managed by the government. This makes the system more secure.

Cryptocurrency

What is cryptology?

Cryptology is a science of encryption. The main principle of a system is the encryption of data. Cryptocurrencies are transferred by creating and decrypting passwords in the environment. A wide variety of algorithms are used. At the beginning of these are Hash functions.

History of Cryptocurrencies

Since the 90s, when technology developed rapidly, many attempts have been made to create a digital currency. Leading systems such as Flooz, Beenz and DigiCash have been developed. However, problems such as fraud, financial difficulties and internal conflicts arose due to problems in these systems. At the end of all this work, the idea of a reliable, third-hand approach was developed.

The first cryptocurrency, Bitcoin, was developed in early 2009 by the person or people using the code name Satoshi Nakamoto. Although it is said to be developed by Satoshi Nakamoto, it was shared as open source software by an unknown person or persons. This network runs on a platform with a method similar to file sharing platforms with end-to-end encryption.

 

Security of cryptocurrencies

One of the most important problems that occur in payment systems is the possibility of spending the same money twice. This can be avoided by using the traditional method, such as installing a central intermediary (banks) that keeps track of transactions made. However, this method reduces reliability because it implies the intervention of an authority that can control all capital.

However, in a decentralized network such as Bitcoin, the transaction cannot take place without the approval of every part of the system. Because these transactions are made through the blockchain, every transaction is publicly visible.

All transfer transactions are carried out by determining the amount to be sent, using the wallet addresses of the sender and the receiver. After the exchange or shipping transaction is verified by the sender, it must be approved by the systemConfirmation is accomplished by miners solving a cryptographic puzzle. Once the transaction has taken place, it cannot be undone. The possibility of hacking and attack is the biggest risk for cryptocurrencies.

 

How is cryptocurrency produced? What is cryptocurrency mining?

Cryptocurrencies produced through a distributed system like themselves are user-based. Cryptocurrency has a production limit. Therefore, as the amount of crypto money produced increases, the transactions that need to be solved to produce crypto money become more difficult.

The production process is done by mining. Even if there is no physical mining, operations based on the solution of mathematical problems are carried out. If you have processor power and internet connection without being assigned by anyone, you can undertake the mining task.

Is cryptocurrency legal?

Cryptocurrencies are legal in some countries, while in others they are prohibited. In some countries, use and trade are expressly permitted, while in others the legal status is still unclear or volatileThe use of cryptocurrencies is prohibited or restricted in some countries.

According to a report by the Law Library of Congress's Directorate of Global Legal Studies, 50 more countries have banned cryptocurrencies. According to the report, Algeria, Bangladesh, China, Egypt, Iraq, Morocco, Nepal, Qatar and Tunisia are among the countries that have banned cryptocurrencies. The broadcast was first reported by Decrypt, which reported on Bitcoin and Ethereum news. The number of countries banning cryptocurrencies appears to have risen significantly. nine countries currently follow a policy that makes crypto illegal.

China, the world's second largest economy, caused the crypto markets to turn upside down with the restriction it implemented earlier this year. While the country has been taking strides against digital assets for years, pressure on financial institutions trading crypto and crypto mining in May and June brought a sharp drop in the prices of cryptocurrencies.

According to data from CoinGecko, the crypto market has reached over $2.5 trillion this year, surpassing $3 trillion this quarter. With explosive growth, more countries are enacting laws aimed at countering money laundering and terrorist financing, in addition to introducing cryptocurrencies into the tax regime, the report said.

The United States, which is still struggling on how best to regulate the market, has both tax law and anti-money laundering and terrorist financing laws, the report pointed out.

 

Cryptocurrency advantages and disadvantages

The fact that the central authority does not have the authority to set the rules in cryptocurrencies is among the most important advantages of cryptocurrencies. Those who have a device that can access the Internet can create a passbook and use their account whenever and wherever they want. Since cryptocurrencies are not under the control of any central bank, international transactions can be made easily, in seconds.

Those who think that traditional markets are low-yielding see cryptocurrency trading, which can be done 24 hours a day, 7 days a week, as a good investment option. Cryptocurrency trading; It attracts the attention of investors with its features such as not requiring a long and complicated registration process, being globally accessible and having no transaction limits.

Due to the complexity of digital currency technology, it is important to be careful before investing and not lack knowledge of cryptocurrency mining (performing certain tasks to obtain cryptocurrency). Investing can be risky due to excessive fluctuations in prices. The fact that cryptocurrencies are not a legal official institution, which is the assurance center, prevents them from being fully accepted and makes it open to cyber attacks. Using reliable crypto money sites ensures keeping the security at a high level. If the wrong wallet address is entered during the supply of crypto money or the same mistake is made while sending, the person to whom the crypto money was sent incorrectly is not detected, and there is a financial loss.