User:Tun39057/Cryptocurrency

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A cryptocurrency, crypto-currency, crypto, or coin is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it.

Despite their name, cryptocurrencies are not  necessarily  considered to be currencies in the traditional sense and while varying  categorical  treatments have been applied to them, including classification as commodities, securities, as well as currencies, cryptocurrencies are generally viewed as a distinct asset class in practice.

Cryptocurrency does not exist in physical form (like paper money) and is typically not issued by a central authority. Cryptocurrencies typically use decentralized control as opposed to a central bank digital currency (CBDC). When a cryptocurrency is minted or created prior to issuance or issued by a single issuer, it is generally considered centralized. When implemented with decentralized control, each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database. Traditional asset classes like currencies, commodities, and stocks, as well as macroeconomic factors, have modest exposures to cryptocurrency returns.

'''Over the last few years, cryptocurrency prices have risen and then fallen. Crypto marketplaces do not guarantee that an investor is completing a purchase or trade at the optimal price. As a result, many investors take advantage of this by using arbitrage to find the difference in price across several markets.'''

The first decentralized cryptocurrency was Bitcoin, which first released as open-source software in 2009.

History
See also: History of Bitcoin

In 1983, the American cryptographer David Chaum conceived an anonymous cryptographic electronic money called ecash. '''Later, in 1995, he implemented it through Digicash, an early form of cryptographic electronic payments. Digicash required user software in order to withdraw notes from a bank and designate specific encrypted keys before it can be sent to a recipient.'''

In 2009, the first decentralized cryptocurrency, Bitcoin, was created by presumably pseudonymous developer Satoshi Nakamoto. Soon after, in October 2011, Litecoin was released which used scrypt as its hash function instead of SHA-256.

On August 6, 2014, the UK announced its Treasury had commissioned a study of cryptocurrencies, and what role, if any, they could play in the UK economy.

Altcoins
Further information: List of cryptocurrencies

The term is commonly used to describe coins and tokens created after Bitcoin. Another example is Ethereum, which has smart contract functionality that allows decentralized applications to be run on its blockchain. Ethereum was the most used blockchain in 2020, according to Bloomberg News. In 2016, it had the largest "following" of any altcoin, according to the New York Times.

Stablecoins
Stablecoins are altcoins that are designed to maintain a stable level of purchasing power.

Blockchain
A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography.

Nodes
In the world of cryptocurrency, a node is a computer that connects to a cryptocurrency network. The node supports the  relevant  cryptocurrency's network through either; relaying transactions, validation or hosting a copy of the blockchain. '''In terms of relaying transactions each network computer (node) has a copy of the blockchain of the cryptocurrency it supports. When a transaction is made, the node creating the transaction broadcasts details of the transaction using encryption to other nodes throughout the node network so that the transaction (and every other transaction) is known.'''

Node owners are either volunteers, those hosted by the organization or body responsible for developing the cryptocurrency blockchain network technology, or those who are enticed to host a node to receive rewards from hosting the node network.

Timestamping
'''Another method is called the proof-of-stake scheme. Proof-of-stake''' is a method of securing a cryptocurrency network and achieving distributed consensus through requesting users to show ownership of a certain amount of currency.

Mining
This arms race for cheaper-yet-efficient machines has existed since the first cryptocurrency, Bitcoin was introduced in 2009.

In June 2018, Hydro Quebec proposed to the provincial government to allocate 500 Megawatts of power 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.

In March 2018, the city of Plattsburgh in upstate New York put an 18-month moratorium on all cryptocurrency mining in an effort to preserve natural resources and the "character and direction" of the city.

Wallets
Main article: Cryptocurrency wallet

A cryptocurrency wallet stores the public and private "keys" (address) or seed which can be used to receive or spend the cryptocurrency. With the private key, it is possible to write in the public ledger, effectively spending the associated cryptocurrency. With the public key, it is possible for others to send currency to the wallet.

'''There exist multiple methods of storing keys or seed in a wallet. These methods range from using paper wallets (which are public, private or seed keys written on paper), to using hardware wallets (which are dedicated hardware to store your wallet information), to a digital wallet (which is a computer with a software hosting your wallet information), to hosting your wallet using an exchange where cryptocurrency is traded, or by storing your wallet information on a digital medium such as plaintext.'''

Databases
'''There are also centralized databases outside of the blockchain that store crypto market data. The main difference between these databases and the blockchain is that a database is controlled by an administrator, while the blockchain is decentralized. The administrator manages the data and controls when the public can view it. Compared to the blockchain, databases also perform fast as there is no verification process. Four of the most popular cryptocurrency market databases are Coinmarketcap, Coingecko, BraveNewCoin and Cryptocompare.'''

Transaction fees
In September 2018, the median transaction fee for Ether corresponded to $0.017, while for Bitcoin it corresponded to $0.55.

Some cryptocurrencies have no transaction fees, and instead rely on client-side proof-of-work as the transaction prioritization and anti-spam mechanism.

ATMs
Jordan Kelley, founder of Robocoin, launched the first Bitcoin ATM in the United States on February 20, 2014.

Price trends
The "market cap" of any coin is calculated by multiplying the price by the number of coins in circulation. As the date reaches near of a halving (twice thus far historically) the cryptocurrency market cap increases, followed by a downtrend.

Increasing Regulation
On June 10, 2021, The Basel Committee on Banking Supervision proposed that banks that held cryptocurrency assets must set aside capital to cover all potential losses.

United States
On July 8, 2021, Senator Elizabeth Warren, who is part of the Senate Banking Committee, wrote to the chairman of the SEC and demanded that it provide answers on cryptocurrency regulation by July 28, 2021, due to the increase in cryptocurrency exchange use and the danger this poses to consumers. On February 17, 2022, the Justice department named Eun Young Choi as the first director of a National Cryptocurrency Enforcement Team to aid in identification of and dealing with misuse of cryptocurrencies and other digital assets.

China
On May 18, 2021, China banned financial institutions and payment companies from being able to provide cryptocurrency transaction related services.

In September 2021, the Chinese government declared all cryptocurrency transactions of any kind illegal, completing its crackdown on cryptocurrency.

United Kingdom
In the United Kingdom, as of January 10, 2021, all cryptocurrency firms, such as exchanges, advisors and professionals that have either a presence, market product or provide services within the UK market must register with the Financial Conduct Authority. Additionally, on June 27, 2021, the financial watchdog demanded that Binance, the world's largest cryptocurrency exchange, cease all regulated activities in the UK. ''' Some commentators[who?] believe this is a sign of what is to come in terms of stringent regulation of the UK cryptocurrency market. '''

South Korea
This legislation requires all digital asset managers, providers and exchanges to be registered with the Korea Financial Intelligence Unit in order to operate in South Korea. It also requires that the CEO and board members of the exchanges have not been convicted of any crimes and that the exchange holds sufficient levels of deposit insurance to cover losses arising from hacks.

Turkey
Turkey's central bank, the Central Bank of the Republic of Turkey, banned the use of cryptocurrencies and crypto assets for making purchases from April 30, 2021, on the ground that the use of cryptocurrencies for such payments poses significant transaction risks.

El Salvador
On June 9, 2021, El Salvador announced that it will adopt Bitcoin as legal tender, the first country to do so.

India
At present, India neither prohibits nor allows investment in the cryptocurrency market. In 2020, the Supreme Court of India had  specifically  lifted the ban on cryptocurrency, which was imposed by the Reserve Bank of India.

Advertising bans
Cryptocurrency advertisements have been temporarily banned on  Facebook , Google, Twitter, Bing, Snapchat, LinkedIn and MailChimp.

U.S. tax status
On March 25, 2014, the United States Internal Revenue Service (IRS) ruled that Bitcoin will be treated as property for tax purposes. '''Therefore virtual currencies are to be considered commodities subject to capital gains tax. Bitcoin is therefore subject to capital gains tax. '''

The legal concern of an unregulated global economy
As the popularity  of  and demand for online currencies has increased since the inception of Bitcoin in 2009, so have concerns that such an unregulated person to person global economy that cryptocurrencies offer may become a threat to society.

Loss, theft, and fraud
Main article: Cryptocurrency and crime

On November 21, 2017, Tether announced that it had been hacked, losing $31 million in USDT from its core treasury wallet.

In January 2018, Japanese exchange Coincheck reported that hackers had stolen $530M worth of cryptocurrencies.

On July 9, 2018 the exchange Bancor, whose code and fundraising had been subjects of controversy, had $23.5 million in cryptocurrency stolen.

Speculation, fraud, and adoption
See also: Cryptocurrency bubble, Cryptocurrency and crime, and Criminal activity on Bitcoin's network

In 2014, a senior banking officer Gareth Murphy suggested that the widespread adoption of cryptocurrencies may lead to too much money being obfuscated, blinding economists who would use such information to better steer the economy.

Non Fungible Tokens (NFTs)
'''Non-fungible tokens are digital assets that represent art, collectibles, gaming, etc. Like crypto, their data is stored on the blockchain. Typically, NFTs are bought and traded using cryptocurrency. The Ethereum blockchain was the first place where NFTs were implemented but now many other blockchains have created their own versions of NFTs. The popularity of NFTs has increased since 2021.'''

Banks
As the first big Wall Street bank to embrace cryptocurrencies, Morgan Stanley announced on March 17, 2021 that they will be offering access to Bitcoin funds for their wealthy clients through three funds which enable Bitcoin ownership for investors with an aggressive risk tolerance. BNY Mellon on February 11, 2021 announced that it would begin offering cryptocurrency services to its clients.

Environmental impact
See also: Bitcoin § Energy consumption and carbon footprint, and Environmental impact of cryptocurrencies

Proof-of-work blockchains such as Bitcoin, Ethereum, Litecoin, and Monero were estimated to have added 3 to 15 million tonnes of CO2 emissions to the atmosphere in the period from January 1, 2016 to June 30, 2017. XRP is the world's most energy efficient cryptocurrency, using 0.0079 kilowatt-hours of electricity per transaction.