Cryptocurrencies o
Cryptocurrency
is a digital asset designed to work as a medium of exchange that uses
strong cryptocurrencies to secure financial transactions, control the
process of creating additional units, and verify asset transfers.
The
most well-known crypto currency is BITCOIN, apart from bitcoin there
are still thousands of cryptocurrencies, including ETHERIUM, LITECOIN,
RIPPLE, STELLAR, DOGECOIN, CARDANO, TETHER MONERO TRON, DIGIBET SUSHI
SWAP BINANCE and others. Cryptocurrencies use decentralized control as opposed to centralized DIGITAL CURRENCY and central banking systems.
Multiple cryptocurrency logos.
The
decentralized control of each cryptocurrency works through distributed
ledger technology, usually BLOCKCHAIN, which serves as a database of
public financial transactions. BITCOIN , first released as open source software in 2009, is generally considered to be the first decentralized digital currency. since
the release of bitcoin, more than 4,000 altcoins (alternative variants
of bitcoin, or other cryptocurrencies) have been created.
History
In 1983, American cryptographer David Chaum used cryptographic electronic money called e-cash. Then,
in 1995, he implemented it via digcash, an early form of cryptographic
electronic payment that required the user's software to pull a note from
a bank and designate a specific encrypted key before it could be sent
to a recipient. This makes the digital currency untraceable to any issuing bank, government or third party.
In 1996, the NSA published a paper entitled How to Make a Mint: the Cryptography of Anonymous Electronic Cash , describing the cryptocurrency system first published on the MIT mailing list and later, in 1997, in The American Law Review (Vol. 46, Issue 4) .
In 1998, Wei Dai published a description of "b-money", which characterized it as a distributed electronic cash system. shortly thereafter, Nick Szabo described bit gold. ] like BITCOIN
and other cryptocurrencies that would follow it, bit gold is described
as an electronic currency system that requires users to complete a proof
of work function with a solution that is cryptographically aggregated
and published. A reusable proof-of-work currency system was later created by Hal Finney following the work of Dai and Szabo.
The first decentralized cryptocurrency, bitcoin, was created and held in 2009 by developer SATOSHI NAKAMOTO . it uses SHA-256, a cryptographic hash function, as a proof-of-work scheme. In
April 2011, Namecoin was formed as an attempt to establish a
decentralized DNS, which would make internet censorship very difficult. Soon after, in October 2011, LITECOIN /LTC
was released. it was the first successful cryptocurrency to use scrypt as the SHA-256 hash function. Another well-known cryptocurrency, Peercoin was the first to use the proof-of-work/proof-of-stake hybrid.
The
UK announced the Treasury tasked with conducting a study of
cryptocurrencies, and what role, if any, they could play in the UK
economy. This study also reports whether regulation should be considered.
Formal definition
According to Jan Lansky, cryptocurrency is a system that fulfills six conditions:
- The system does not need a central authority, the state is managed by a distributed consensus.
- The system keeps an overview of cryptocurrency units and their holdings.
- The system determines whether new cryptocurrency units can be created. If
new cryptocurrency units can be created, the system defines their
original state and how to determine the ownership of these new units.
- Ownership of units of cryptocurrency can be proved exclusively cryptographically.
- This system allows transactions to be carried out where the ownership of the cryptographic unit is changed. Transaction statements can only be issued by entities that attest to current ownership of these units.
- If
two different instructions to change the ownership of the same
cryptographic unit are entered simultaneously, the system performs at
most one of them.
In March 2018, the word cryptocurrency was added to the Merriam-Webster Dictionary.
Altcoin
The term altcoin has various similar definitions. Stephanie Yang in THE WALLSTREET JOURNAL defines altcoins as "alternative digital currencies," while Paul Vigna, also in The Wall Street Journal , describes altcoins as alternative versions of bitcoin . Aaron Hankins of MarketWatch refers to cryptocurrencies other than bitcoin as altcoins.
token crypto
Block
chain accounts can provide functions other than making payments, for
example in decentralized applications or smart contracts. In these cases, units or coins are sometimes referred to as crypto tokens.
Architecture
Decentralized
cryptocurrencies are produced by all cryptocurrency systems
collectively, at a rate defined when the system was created and which is
publicly known. In centralized banking and economic systems such as the FEDERAL RESERVE
SYSTEM, corporate or government boards control the supply of currency
by printing units of fiat money or requesting additions to a digital
banking ledger. In the
case of decentralized digital currencies, companies or governments
cannot generate new units, and so far do not provide support for other
companies, banks or corporate entities that have the value of assets
measured in them. The
fundamental technical system underlying decentralized cryptocurrencies
was created by a group or individual known as SATOSHI NAKAMOTO
As of May 2018, more than 1,800 digital currency specifications are available. In
cryptocurrency systems, the security, integrity and balance of ledgers
are maintained by a community of distrustful parties known as miners:
who use their computers to help validate and time transactions, adding
them to the ledger according to a specific timestamp scheme.
Most
cryptocurrencies are designed to reduce currency production gradually,
limiting the total amount of currency that will be in circulation. Compared
to typical currency held by financial institutions or held as cash,
cryptocurrencies can be more difficult for law enforcement to
confiscate. This difficulty stems from utilizing cryptographic technology.
Block chain
The validity of each cryptocurrency is provided by BLOCKCHAIN. The blockchain is a constantly growing list of records, called blocks, that are linked and secured using CRYPTO CURENCYEach block usually contains a hash pointer as a link to the previous block, timestamp and transaction data. By design, blockchains are inherently resistant to data modification. It
is “an open, distributed ledger that can record transactions between
two parties efficiently and in a verifiable and permanent way” For use
as a distributed ledger, block chains are typically managed by a PEER TO
PEER network collectively following protocols for validating blocks.
new. Once recorded, the
data in a given block cannot be retroactively modified without changes
to all subsequent blocks, requiring the collusion of the majority of the
network.
The block chain is secure by design and is an example of a distributed computing system with high Byzantine fault tolerance. Hence, a decentralized consensus has been achieved with the blockchain. solves
the double spending problem without the need for a trusted authority or
central server, assuming no 51% attack (which has worked against some
cryptocurrencies).
Timestamp
Cryptocurrencies
use a variety of TIMESTAMPED schemes to “prove” the validity of
transactions added to the blockchain ledger without the need for a
trusted third party.
The first timestamp schema that came across was the proof-of-work schema. The most widely used proof-of-work schemes are based on SHA-256 and scrypt. Some of the other hashing algorithms used for proof-of-work include CryptoNight, Blake, SHA-3, and X11.
Proof
of stake is a method for securing cryptocurrency networks and achieving
distributed consensus through user requests to demonstrate ownership of
a certain amount of currency. This is different from a proof-of-work system which runs a hard hashing algorithm to validate electronic transactions. This scheme is largely coin dependent, and there is currently no standardized form for it. Some cryptocurrencies use a combined proof-of-work / proof-of-stake scheme.
Mining
In cryptocurrency networks, mining is the validation of transactions. For this effort, successful miners get a new cryptocurrency as a reward. Rewards reduce transaction costs by creating complementary incentives to contribute to network processing power. The
rate of generating hashes, which validate any transaction, has
increased with the use of specialized engines such as FPGAs and ASICs
that run complex hashing algorithms such as SHA-256 and SECREF. The
arms race for these cheaper yet efficient machines has been going on
since the first day the cryptocurrency, bitcoin, was introduced in 2009.
With more and more people jumping into the virtual currency world,
generating hashes for this validation has become much more complex over
the years. year, with miners having to invest large sums of money to deploy multiple high performance ASICs. So
the value of the currency earned for finding hashes often does not
justify the amount of money spent on setting up the machines, cooling
facilities to handle the large amounts of heat they generate, and the
electricity required to run them.
Multiple
miners pool resources, sharing their processing power over the network
to split the prize equally, according to the amount of work they
contribute to the probability of finding a block. A "share" is awarded to members of a mining pool who present valid partial proof of work.
In February 2018, the Chinese Government suspended virtual currency trading, banned initial coin offerings and stopped mining. Some of the Chinese miners have since moved to Canada. One company operates a data center for mining operations on the site of a Canadian oil and gas field, due to low gas prices. In June 2018, Hydro Quebec proposed to the provincial government to allocate 500 MW to crypto companies for mining. According
to a February 2018 report from Fortune, Iceland has become a haven for
cryptocurrency miners in part because of its cheap electricity. Prices
are contained because almost all of the country's energy comes from
renewable sources, prompting more mining companies to consider opening
operations in Iceland
In
March 2018, a city in Upstate New York imposed an 18-month moratorium
on all cryptocurrency mining in an effort to preserve the city's natural
resources and "character and direction."
GPU Price Increase
The
increase in cryptocurrency mining increased the demand for graphics
cards (GPUs) in 2017. Popular favorites of cryptocurrency miners such as
the Nvidia GTX 1060 and GTX 1070 graphics cards, as well as the AMD RX
570 and RX 580 GPUs, are double or triple the price - or out of stock. A
GTX 1070 Ti released for $450 sold for $1100. Another popular GTX 1060
model 6GB card released with an MSRP of $250, selling for nearly $500.
RX 570 and RX 580 cards from AMD were out of stock for almost a year. Miners regularly buy entire stock of new GPUs as soon as they become available..
Nvidia has asked retailers to do what they can when selling GPUs to gamers instead of miners. "Gamers come first for NVIDIA," said Boris Böhles, PR manager for NVIDIA in Germany.
Crypto currency wallet
A
paper example of a printable bitcoin wallet consisting of a single
bitcoin address for receiving and an associated private key for spending
CRYPTO CURRENCY WALLETS store public and private “keys” or “addresses” that can be used to receive or spend cryptocurrency. With a private key, it is possible to write on a public ledger, effectively spending the associated cryptocurrency. With the public key, other people can send currency to the wallet.
anonymity
Bitcoin
is a pseudonym and not anonymous because the cryptocurrency in the
wallet is not tied to a person, but to one or more specific keys (or
"addresses").. As such, the owner of a bitcoin cannot be identified, but
all transactions are publicly available on the chain block. However, cryptocurrency exchanges are often required by law to collect the personal information of their users.
Additions such as Zerocoin, Zerocas h and CryptoNote have been suggested, which will allow for additional anonymity and fungibility.
Compatibility
Most cryptocurrency tokens are fungible and can be exchanged. However, unique non-fungible tokens also exist. Such tokens can serve as in-game assets like CryptoKitties
Economy
Cryptocurrencies are used primarily outside existing banking and government agencies and are exchanged over the Internet.
Transaction Fees
Transaction
fees for cryptocurrencies depend primarily on the supply of network
capacity at the time, rather than demand from currency holders for
faster transactions. Currency
holders can choose specific transaction fees, while network entities
process transactions in order of highest fee offered to lowest. Cryptocurrency
exchanges can simplify the process for currency holders by offering
priority alternatives and thereby determining which fees are likely to
cause transactions to be processed within the requested time.
For
ether, transaction fees vary by computation complexity, bandwidth
usage, and storage requirements, whereas bitcoin transaction fees differ
based on transaction size and whether the transaction is using SegWit. As
of September 2018, the average transaction fee for ether corresponds to
$0.017, [44] while for bitcoin it corresponds to $0.55.
Exchange
Cryptocurrency
exchanges allow customers to trade cryptocurrencies for other assets,
such as conventional fiat money, or to trade between different digital
currencies.
Atomic Substitution
Atomic
swaps are a mechanism whereby one cryptocurrency can be exchanged
directly for another, without the need for a trusted third party such as
an exchange.
ATMs
Jordan
Kelley, founder of Robocoin, launched the first bitcoin ATM in the
United States on February 20, 2014. The kiosk installed in Austin, Texas
is similar to a bank ATM but has a scanner to read government-issued
identification such as a driver's license or passport. to confirm the user's identity.
Initial Coin Offering
Initial coin offerings (ICOs) are a controversial way to raise funds for new cryptocurrency ventures. ICOs can be used by startups with the aim of circumventing regulation. However,
securities regulators in many jurisdictions, including in the US, and
Canada have indicated that if a coin or token is an “investment
contract” (e.g., under the Howey test, i.e., an investment of money with
a reasonable expectation of return based on significant entrepreneurial
effort) or managerial of others), it is a security and subject to
securities regulations. In
an ICO campaign, a percentage of a cryptocurrency (usually in the form
of a "token") is sold to early backers of a project in exchange for a
legal tender or other cryptocurrency, often bitcoin or ether.
According
to PRICE WATER HOUSE COOPERS, four of the 10 largest proposed initial
coin offerings have used SWIZERWALL as a base, where they are often
listed as non-profit foundations. Swiss
regulatory agency FINMA stated that it will take a "balanced approach"
to ICO projects and will enable "legitimate innovators to navigate the
regulatory landscape and launch their projects in a manner consistent
with national legislation protecting investors and the integrity of the
financial system." In response to multiple requests by industry
representatives, a legislative ICO working group began issuing legal
guidelines in 2018, intended to remove uncertainty from cryptocurrency
offerings and to establish sustainable business practices.
Legality
The
legal status of cryptocurrencies varies substantially from country to
country and is still undefined or changing in many of them. While some countries explicitly permit their use and trade, others have banned or restricted it. According
to the LIBRARY OF CONGREE, an "absolute ban" on the trading or use of
cryptocurrencies is in place in eight countries: Algeria, Bolivia,
Egypt, Iraq, Morocco, Nepal, Pakistan and the United Arab Emirates. The
"implicit ban" applies in another 15 countries, including Bahrain,
Bangladesh, China, Colombia, Dominican Republic, Indonesia, Iran,
Kuwait, Lesotho, Lithuania, Macau, Oman, Qatar, Saudi Arabia and Taiwan.
In the United States and Canada, state and provincial securities
regulators
Various government agencies, departments and courts classify bitcoins differently. The Central Bank of China banned the handling of bitcoins by financial institutions in CHINA in early 2014.
In Russia, while cryptocurrency is legal, it is illegal to actually buy things in any currency other than Russian rubles. The regulations and prohibitions that apply to bitcoin may extend to similar cryptocurrency systems.
Cryptocurrencies are a potential tool for circumventing economic sanctions against for example RUSSIA IRAN, or VANEZUELA. In
April 2018, Russian and Iranian economic representatives met to discuss
how to bypass the global SWIFT system through decentralized blockchain
technology. Russia is also
covertly supporting Venezuela with the creation of the petro (El
Petro), a national digital currency initiated by the MADURO government
to derive valuable oil revenues by circumventing US sanctions
In
August 2018, the BANK OF THAILAND announced its plans to create its own
cryptocurrency, the Central Bank Digital Currency (CBDC).
Ads Ban
Bitcoin and other cryptocurrency advertising is temporarily banned on FACEBOOK GOGGLE TWITTER Bing, SNAPCHAT , LINNKID and MailChimp. Chinese internet platforms BAIDU, TENCENT and Weibo have also banned bitcoin ads. The Japanese platform Line and the Russian platform YANDEX have similar bans
Tax Status in America
On
March 25, 2014 the United States INTERNAL REVENUE SERVICE (IRS) decided
that bitcoins would be treated as property for tax purposes. This means that bitcoins will be subject to capital gains tax. different
Legal concerns of an unregulated global economy
As
the popularity and demand for online currencies have increased since
bitcoin's inception in 2009, so too have there been concerns that the
unregulated global economy that cryptocurrencies offer could become a
threat to society. Concerns abound that altcoins can become tools for most web criminals.
The
cryptocurrency network exhibits a lack of regulation that has been
criticized as enabling criminals seeking to evade taxes and launder
money.
The
transactions that occur through the use and exchange of these altcoins
are independent of the formal banking system, and can therefore make tax
evasion easier for individuals. Because
charting taxable income is based on what recipients report to income
services, it becomes very difficult to account for transactions made
using existing cryptocurrencies, a mode of exchange that is complex and
difficult to track.
The anonymity system that most cryptocurrencies offer can also serve as a simpler way to launder money. Rather
than laundering money through a complicated web of offshore financial
actors and bank accounts, laundering money through altcoins can be
achieved through transactions.
Loss, Theft and Fraud
In February 2014, the world's largest bitcoin exchange, Mt. Gox, declared bankrupt. The company states that they have lost nearly $473 million of their customers' bitcoins due to theft. This is equivalent to about 750,000 bitcoins, or about 7% of all bitcoins in existence. The bitcoin price fell from a high of around $1,160 in December to below $400 in February.
Two
members of the Silk Road Task Force — the multi-agency federal task
force conducting the US investigation of the Silk Road — seized bitcoins
for their own use in the course of the investigation. DEA
agent Carl Mark Force IV, who attempted to extort Silk Road founder
Ross Ulbricht ("Dread Pirate Roberts"), pleaded guilty to money
laundering, obstruction of justice, and racketeering under the color of
legal rights, and was sentenced to 6.5 years in federal terms. prison. US
Secret Service agent Shaun Bridges pleaded guilty to crimes relating to
the transfer of $800,000 worth of bitcoins to his personal account
during the investigation, and also separately pleaded guilty to money
laundering in connection with the theft of cryptocurrencies; he was sentenced to nearly eight years in federal prison.
Crypto Currency Trading Company
The first cryptocurrency trading company in Indonesia is called Indodax. Before changing its name to Indodax, Indodax had the name Bitcoin.co.id. Indodax
was founded by Oscar Darmawan and William Sutanto in 2014. As of August
2021, Indodax has 4,153,446 users and has 154 traded cryptocurrencies. Indodax
obtained permits from Bappebti and the Ministry of Communication and
Information to conduct cryptocurrency trading in Indonesia. In 2019 Jeth Soetoyo founded a crypto asset buying and selling company called Pintu. In April 2020 Pintu was launched and attracted a large number of users. Until the end of 2021 Pintu has been downloaded more than 2 million times and has been used by more than 700,000 users. Pintu offers more than 30 types of crypt assets
