Cryptocurrency is an all-digital, encrypted, virtual currency that can be used in barter transactions. For some, it is the currency of the future.
Today, cryptocurrencies are a phenomenon that has been heard by many people and has attracted a lot of attention from heads of state to giant companies. Cryptography is used to verify and securely execute swap transactions. It has no physical counterpart.
In fact, money spent and transferred with debit and credit cards are also virtual currencies, because as a result of these transactions, only system data changes. Cryptocurrency also has the same principle of working. However, there is a decentralized system that is not managed by any authority or government, which makes the system more secure.
What is Cryptology?
Cryptology is a science of encryption. It is the encryption of data according to a system. Cryptocurrencies are transferred through the creation and decryption of passwords on the medium. Algorithms such as hash functions are used.
History of Cryptocurrencies
Since the 90s, the leap era of technology, many attempts have been made to create a digital currency. Systems such as Flooz, Beenz, and DigiCash have been developed, but these attempts have failed due to fraud, financial difficulties, and internal conflicts. All these studies developed the idea of a reliable, third-hand approach.
The first cryptocurrency, Bitcoin, was developed in early 2009 by the person or people who came up with the code name Satoshi Nakamoto. Although it is said to have been developed by Satoshi Nakamato, it was shared as open source software by an unknown person(s). This network runs on a platform with a similar concept to file sharing platforms with end-to-end encryption.
Security of Cryptocurrencies
One of the most important problems with payment systems is the possibility of spending the same money twice. The traditional method used to avoid this is to put a central intermediary (banks) keeping track of transactions made. However, this method means the intervention of an authority that can control all capital. This reduces reliability.
However, in a decentralized, in other words, distributed network -like Bitcoin – every part of the system must approve in order for the transaction to take place. These transactions are made through the blockchain, so every transaction can be seen by everyone.
All transfer transactions are made with the wallet addresses of the sender and receiver and the amount to be sent. The exchange or shipment transaction must be verified by the sender and then confirmed by the system. Confirmation can only be performed by miners by solving a cryptographic puzzle. Once a transaction is confirmed, it cannot be reversed. The biggest risks for cryptocurrencies are the possibility of hacking and attack.
How is cryptocurrency produced? What is cryptocurrency mining?
The production of cryptocurrencies is carried out through a distributed system like themselves. So it is user based. Cryptocurrencies have a production limit, so the more cryptocurrencies produced, the more difficult the transactions that need to be solved to produce cryptocurrencies.
The production process is done by mining, even if there is no physical mining, operations based on solving mathematical problems are made. In other words, if you have the processing power and internet connection, you can undertake the mining task without being assigned by someone.
Is Cryptocurrency Legal?
The legality of cryptocurrencies varies from country to country. Some countries expressly allow its use and trade, while the legal status of others is still unclear or volatile. Some countries have banned or limited the use of cryptocurrencies.
“Is Bitcoin legal?” Questions like these are asked by many people. Currently, there are no laws or restrictions on the use of Bitcoin by the government of the Republic of Turkey, so you are unlikely to be penalized for holding, buying or selling Bitcoin or other cryptocurrencies in your wallet.
Is Mining Legal?
Bitcoin or cryptocurrency mining is not a crime. There is no illegal situation.
Is Your Earnings From Cryptocurrencies Taxable?
If regular money inflows are detected in your account, tax may be charged on your earnings. If your earnings are questioned by the Ministry of Finance, you can state that you have obtained this income from cryptocurrency exchange or mining, and if necessary, you can verify these transactions using your account statements.
What are the Advantages of Cryptocurrencies?
Since it is not dependent on any central bank, it is not affected by the economic situation of the countries.
It is not possible to freeze or confiscate the account.