It’s been a long time since people started using money as a basic element of trade and economy. Coins, species and banknotes, which are the main means of exchange of barter and exchange, have been used in the world for a very long time. Although it differs according to geography and several other local factors, money seems to continue to exist always and everywhere. However, technology continues to change and evolve money, as it does in every field. The acceleration of technology in all areas and the widespread use of the internet have brought new applications into our lives by causing changes in the traditional concept of commerce. One of the most recent of these applications is cryptocurrencies, which are thought to change trade and economic systems from top to bottom.
Money is an element that directs the world method and social events by taking place at the basis of almost every system as we know it today. However, in the recent period, especially in the last 2 years, under the rush of digitalization and online systems, money is now leaving its place to its “digital” brothers. “Digital money”, which emerged as a new and alternative means of exchange, barter or trade, today replaces paper money, especially in developed economies, can be stored electronically, and can be easily transferred, giving the economy a different direction.
This change, which is expressed as the 3rd revolution in economic and commercial life, started with the dizzying development of technology and the virtualization of money in the last 20-30 years. The first digital currency idea was introduced in the Netherlands in the late 1980s. The system, which was designed to develop smart cards against gas station and trucker robberies, which were common at that time, and to get the fuel by loading the money on these cards, eventually turned into POS machines as we know them today. The first e-money applications started to be seen in different European and Asian countries in the 1990s. These products, which were card-based and in electronic wallet form including Proton (Belgium), Geldkarte (Germany), Chipnick (Netherlands), Mondex (UK), Moneo (France), Octopus (Hong Kong), Suica (Japan) and EZ-link ( Singapore), were leading the way. The transition from gold to paper money and from there to digital infrastructure money was spreading rapidly around the world as a result of the rapid change in information and communication technologies.
The ever-developing technology of digital currencies, and especially the steps taken in terms of security, have changed the perspectives of both public institutions and private companies in this area over time, and, so to speak, whetted their appetite. Perhaps the first discourse on digital currencies in the public sphere was made by the President of the European Central Bank, Christine Lagarde. In her first speech as chairwoman, Lagarde stated that the bank had plans to direct the special task committee to digital currencies and stated that the European Central Bank should play a pioneering role in using new technologies that could overtake traditional banking systems and procedures. The process of transition to digital money, which accelerated thereafter, gained momentum with the investments of countries in this field. Turkey, on the other hand, has been making serious investments in this field for the last 10 years and continues to work with public and private institutions in both the theoretical and practical aspects of the business. The date of the first step we took officially on a state basis is 2019. In the 11th Development Plan, which is the first development plan of the Presidential Government System, covering the period of 2019-2023 and published in the Official Gazette on July 23, 2019, a decision is included to issue a “Blockchain Based Digital Central Bank Money”.
Today, with the rapid growth in blockchain technology, the development of security systems, and the increasing demand and trend, cryptocurrencies are becoming a fundamental part of our daily lives. It is said that these coins, which are still in their infancy and have a very narrow usage area, will greatly increase their sphere of influence in a short period of time.
So, what does cryptocurrency mean?
Cryptocurrency, which is an issue that is reported on different media channels and occupies the agenda almost every day, has become an indispensable part of our digitalized lives. Crypto is a term that literally means cipher. Cryptology means the science of ciphers, and the expression ‘cryptocurrency’ is derived from the words ‘crypto’ and ‘currency’. Cryptocurrencies are produced on decentralized systems and have certain numbers compared to the money available in the market we know. In fact, in other words, they are digital assets produced entirely with cryptographic technologies against currently used coins and banknotes. The main purpose here is to ensure that the encryption systems are used at the highest level and that the information shared between the two parties is not seen, stolen or controlled by anyone else. The main factor behind this trend towards cryptocurrencies and the increase in demand can be shown as the decrease in confidence in strong currencies (Especially Euro and Dollar) due to the recent economic crises in different parts of the world and people’s orientation to alternative investment tools. The collapses, crises and negative developments in the financial markets have changed the perspective on strong money reserves and accelerated the preference for alternative models. Another attractive point here is that these new digital currencies have fast transfer times, they do not need bank accounts, and real products and services can be purchased with these coins in daily life.
Today, there are many cryptocurrencies in different parts of the world and new ones are added to them every day. Among these currencies, whose numbers are expressed in thousands today, there are strong and weak ones, just like the case in previous financial instruments and systems. According to a research conducted by the famous research institution Weiss Ratings in 2019, some cryptocurrencies are more valuable and stand out than others. Here are some of these coins:
– Bitcoin (BTC): Produced in 2008 by individuals or a group carrying the pseudonym Satoshi Nakamoto, this first digital, crypto currency is today accepted as a decentralized payment instrument and currency with no owner or any other form. Bitcoin, which ranks very high in value compared to others, is not affiliated with any central place, institution or company. It is open to everyone in the world and can be connected to the desired network without any restrictions in terms of security.
– Ethereum (ETH): Considered the second largest and most important cryptocurrency after Bitcoin, Ethereum was first introduced by its founder Vitalik Buterin at the North American Bitcoin Conference. The hallmark of this coin is that it is the first cryptocurrency with a blockchain development platform and can be purchased for relatively low fees.
– Ripple (XRP): Ripple, which has a reputation as the fastest in the crypto money world, is a crypto currency that can transfer money to anywhere in the world with a transaction speed of up to 3 seconds. It originated because it was designed to rival older model international money transfer systems like SWIFT or Western Union.
– Litecoin (LTC): Litecoin is the currency designed by Charlie Lee, a former Google employee and referred to as the silver of this world. Experts consider Bitcoin the “gold” of cryptocurrencies, and Litecoin is considered “silver”. Litecoin is also considered the best cryptocurrency for everyday shopping.
– Binance Coin (BNB): One of the most well-known cryptocurrency exchanges based in Malta. Today it is considered one of the largest crypto exchanges in the world by volume. Binance Coin, which is behind Binance, has made a rapid rise recently, and it is estimated that this rise will continue to accelerate with the breakthroughs that Binance will make in the future.
Cryptocurrencies, which are added to new ones and increasing in number almost every day, are being legally accepted and used by a growing number of countries. Today, only four of the member states of the European Union, Germany, Estonia, Sweden and the United Kingdom, legally accept cryptocurrencies. Countries that consider crypto currency systems illegal are Bangladesh, Bolivia, Ecuador, Kyrgyzstan and Nepal.
Their technology makes the difference
Cryptocurrencies, which have been in our lives for the last 15-20 years, are actually based on a technology called blockchain. The technology where all transactions are made on this system can be expressed as an open registry of all information and data collected on the internet. The operation of the system consists of linking encrypted data together like a chain ring and combining them into immutable blocks. The data attached to this chain can hardly be changed or deleted. The reason for this is that in order to make changes to the data in a chain, one has to go to the very beginning of the chain in question. Although theoretically possible, achieving this is practically impossible. Thanks to this feature, blockchain is considered a very secure system for storing, sharing and transferring data. In addition, the blockchain, which is resistant to cyber attacks, which has increased recently, is controlled and protected at every stage. In order for a cyber attack to be carried out on the blockchain system today, at least 51 percent of the blocks must be changed at the same time. This is considered quite difficult and even almost impossible. In addition, as of now, a computer capable of doing this has not yet been produced.
Another important feature of blockchain is that it has a decentralized verification system. In this respect, it is one of the places where the concept of digital transformation is seen as the most effective.
Blockchain, which can act as a digital record repository, is a valuable technology that can be applied in many different areas, from evidence and registration of real estate, vehicles and valuable assets, to keeping birth, marriage and death certificates, from conducting elections and managing smart contracts to storing, processing and managing financial documents.
Usage areas are expanding
The usage areas of cryptocurrencies, on the other hand, are becoming widespread and increasing day by day depending on the developing technology. The usage areas of these systems, which emerged as an alternative currency, are multiplying exponentially. According to the latest studies, while the number of these coins is increasing; on the other hand, new usage areas are defined in terms of sectors. CoinMarketCap, one of the important platforms for the crypto money market, lists more than 5,600 crypto currency types. The total market volume of these coins is estimated to be around 2.2 trillion dollars.
Cryptocurrencies, which are used more frequently in the banking system today, are starting to be used more frequently and at different points with the change in the perspective of public institutions in this area and the investments and decisions of private companies. The main ones of these sectors are listed as follows:
– Travel: One of the areas where the use of cryptocurrencies is most widespread all over the world is the travel industry. The fact that especially online tourism and travel companies allow the use of these funds, and that air tickets, hotel reservations, car rentals and cruises can be purchased with these money, accelerates the spread of this system.
– Real Estate: The housing and real estate sector is another area where cryptocurrencies are being used most commonly. With the increase in the number of companies that accept payments with cryptocurrencies, it is predicted that investments in this area will increase.
– Education: Education is another area where the potential use of cryptocurrency technology is rapidly increasing. Recently, some universities in Cyprus, Switzerland, the USA and Germany accept cryptocurrencies as education fees on their websites, and some online education institutions receive payments via Bitcoin, which also changes the perspective on this field.
– Automotive: The use of cryptocurrencies in purchases as well as vehicle manufacturers changes a lot in this sector. In particular, the acceptance of cryptocurrencies for Tesla cars owned by Elon Musk, followed by a giant brand like Lamborghini, has strengthened the presence of digital currencies in a very wide sector such as automotive.
– Retail Sales: Retail is also one of the important sectors showing interest in cryptocurrency technology. The first example in this regard is that the website named Overstock.com, which provides services especially in the field of furniture, started accepting Bitcoin and making sales. After this move, many retail sales portals, including major retailers such as Crate and Barrel, Nordstrom and Whole Foods, have started to offer the opportunity to shop with crypto money.
– Gaming Industry: Cryptocurrency technology has created new possibilities for game publishers and developers. Some online games have already started trading with cryptocurrencies. One of the best examples of this practice is Project Big ORB, a game that lets you as a player convert your in-game money into other assets, including cryptocurrencies, and then exchange it for real money.