The Mechanism of Function of Cryptocurrency

Abstract

The article is aimed at researching the mechanism of function of the most popular cryptocurrency Bitcoin and some types of Altcoins. When comparing electronic money and cryptocurrency it is determined that the only common feature is their digital appearance. Electronic money, unlike cryptocurrency, have legal status, statutory issuer, fixed offer, they are regulated by the State and are supervised. The digital currency, in turn, does not have a clearly expressed issuer, is produced by mining, the legal status is not defined in many countries. Today, cryptocurrency uses many different algorithms, such as SHA-256, Scrypt, X11, X13, Cryptonight and others, numbering more than 29 species altogether. Most Altcoins (alternative digital currencies) are only a variation of Bitcoin. When analyzing the demand and supply of cryptocurrencies is determined that the total capitalization of this market at the beginning of 2019 was 134 billion dollars, and the types of digital currency numbered more than 2000. The article analyzes the mechanism of function of the five most popular cryptographic currencies: Bitcoin, Ripple, Ethereum, Bitcoin Cash, Litecoin and the first Ukrainian cryptocurrency – Karbo. It is determined that cryptocurrency develops and does not require the State’s permission as to its emission or legalization – it exists outside the jurisdiction both in Ukraine and in most world countries.

Keywords

• cryptocurrency
• mechanism
• algorithms of cryptocurrency
• Bitcoin
• Altcoin
• miner