What Is Cryptocurrency?
Also known as: Crypto, Crypto Asset, Digital Currency, Virtual Currency
In short
A cryptocurrency is a digital asset secured by cryptography, usually recorded on a distributed ledger such as a blockchain, that can be transferred peer to peer without a central authority; the first example is Bitcoin.
Bitcoin was defined in a technical paper published in 2008 by a person or group using the pseudonym Satoshi Nakamoto and began operating in 2009. In the traditional system, banks keep the record of who owns how much money, whereas with cryptocurrencies these records are on a ledger jointly maintained by thousands of computers. Ownership is proven by the user's private key; transactions are authorized with digital signatures and confirmed through consensus mechanisms.
Thousands of different cryptocurrencies have emerged since Bitcoin. Platforms such as Ethereum laid the groundwork for decentralized applications through smart contracts, while stablecoins pegged their value to an asset such as the dollar. Assets that have their own blockchain are usually called coins, and those that run on another blockchain are called tokens.
Cryptocurrencies carry significant risks such as high price volatility, fraud and cyberattack risks, irreversible transactions and changing regulations. In Turkey, the use of crypto assets in payments has been prohibited since 2021; with Law No. 7518, which entered into force in 2024, crypto asset service providers have been made subject to the authorization and supervision of the Capital Markets Board (SPK).
Last updated: · This content is for information purposes only and is not investment advice.