View source for Cryptocurrency

{{short description|Encrypted medium of digital exchange}}
{{Use dmy dates|date=May 2021}}
[[File:BTC_Logo.svg|thumb|183x183px|A logo for [[Bitcoin]], the first decentralized cryptocurrency]]
A '''cryptocurrency''', '''crypto-currency''', or '''crypto''' is a [[digital asset]] designed to work as a [[medium of exchange]] wherein individual coin ownership records are stored in a [[ledger]] existing in a form of a computerized [[database]] using [[strong cryptography]] to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership.<ref name="crypto currency">{{Cite news |last=Andy Greenberg |date=20 April 2011 |title=Crypto Currency |work=Forbes |url=https://www.forbes.com/forbes/2011/0509/technology-psilocybin-bitcoins-gavin-andresen-crypto-currency.html |url-status=live |access-date=8 August 2014 |archive-url=https://web.archive.org/web/20140831001109/http://www.forbes.com/forbes/2011/0509/technology-psilocybin-bitcoins-gavin-andresen-crypto-currency.html |archive-date=31 August 2014}}</ref><ref name="reuterspricing">{{Cite news |last=Polansek |first=Tom |date=2 May 2016 |title=CME, ICE prepare pricing data that could boost bitcoin |work=[[Reuters]] |url=https://www.reuters.com/article/us-cme-group-bitcoin-idUSKCN0XT1G1 |access-date=3 May 2016}}</ref> It typically does not exist in physical form (like paper money) and is typically not issued by a central authority. Cryptocurrencies typically use [[Decentralization|decentralized control]] as opposed to centralized [[digital currency]] and [[central bank]]ing systems.<ref>{{Cite web |last=Allison |first=Ian |date=8 September 2015 |title=If Banks Want Benefits of Blockchains, They Must Go Permissionless |url=http://www.ibtimes.co.uk/nick-szabo-if-banks-want-benefits-blockchains-they-must-go-permissionless-1518874 |url-status=live |archive-url=https://web.archive.org/web/20150912031654/http://www.ibtimes.co.uk/nick-szabo-if-banks-want-benefits-blockchains-they-must-go-permissionless-1518874 |archive-date=12 September 2015 |access-date=15 September 2015 |website=International Business Times}}</ref> 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.<ref>{{Cite web |last=Matteo D'Agnolo |title=All you need to know about Bitcoin |url=http://economictimes.indiatimes.com/news/international/business/all-you-need-to-know-about-bitcoin/articleshow/48910867.cms |url-status=live |archive-url=https://web.archive.org/web/20151026140555/http://economictimes.indiatimes.com/news/international/business/all-you-need-to-know-about-bitcoin/articleshow/48910867.cms |archive-date=26 October 2015 |website=timesofindia-economictimes}}</ref>

[[Bitcoin]], first released as open-source software in 2009, is the first decentralized cryptocurrency.<ref>{{Cite web |last=Sagona-Stophel |first=Katherine |title=Bitcoin 101 white paper |url=http://www.trssllc.com/wp-content/uploads/2013/05/White_Paper_Bitcoin_101.pdf |archive-url=https://web.archive.org/web/20160813163512/http://www.trssllc.com/wp-content/uploads/2013/05/White_Paper_Bitcoin_101.pdf |archive-date=13 August 2016 |access-date=11 July 2016}}</ref> Since the release of bitcoin, [[List of cryptocurrencies|other cryptocurrencies]] have been created.

==History==
In 1983, the American cryptographer [[David Chaum]] conceived an anonymous cryptographic [[electronic money]] called [[ecash]].<ref>{{Cite web |title=Archived copy |url=http://www.hit.bme.hu/~buttyan/courses/BMEVIHIM219/2009/Chaum.BlindSigForPayment.1982.PDF |url-status=live |archive-url=https://web.archive.org/web/20141218034712/http://www.hit.bme.hu/%7Ebuttyan/courses/BMEVIHIM219/2009/Chaum.BlindSigForPayment.1982.PDF |archive-date=18 December 2014 |access-date=26 October 2014}}</ref><ref>{{Cite web |title=Archived copy |url=http://blog.koehntopp.de/uploads/chaum_fiat_naor_ecash.pdf |url-status=live |archive-url=https://web.archive.org/web/20110903023027/http://blog.koehntopp.de/uploads/chaum_fiat_naor_ecash.pdf |archive-date=3 September 2011 |access-date=10 October 2012}}</ref> Later, in 1995, he implemented it through [[Digicash]],<ref>{{Cite web |last=Pitta |first=Julie |title=Requiem for a Bright Idea |url=https://www.forbes.com/forbes/1999/1101/6411390a.html |url-status=live |archive-url=https://web.archive.org/web/20170830214226/https://www.forbes.com/forbes/1999/1101/6411390a.html |archive-date=30 August 2017 |access-date=11 January 2018}}</ref> an early form of cryptographic electronic payments which required user software in order to withdraw notes from a bank and designate specific encrypted keys before it can be sent to a recipient. This allowed the digital currency to be untraceable by the issuing bank, the government, or any third party.

In 1996, the [[National Security Agency]] published a paper entitled ''How to Make a Mint: the Cryptography of Anonymous Electronic Cash'', describing a Cryptocurrency system, first publishing it in an MIT mailing list<ref>{{Cite web |title=How To Make A Mint: The Cryptography of Anonymous Electronic Cash |url=http://groups.csail.mit.edu/mac/classes/6.805/articles/money/nsamint/nsamint.htm |url-status=live |archive-url=https://web.archive.org/web/20171026230354/http://groups.csail.mit.edu/mac/classes/6.805/articles/money/nsamint/nsamint.htm |archive-date=26 October 2017 |access-date=11 January 2018 |website=groups.csail.mit.edu}}</ref> and later in 1997, in ''The American Law Review'' (Vol. 46, Issue 4).<ref>{{Cite journal |last1=Law |first1=Laurie |last2=Sabett |first2=Susan |last3=Solinas |first3=Jerry |date=11 January 1997 |title=How to Make a Mint: The Cryptography of Anonymous Electronic Cash |url=http://digitalcommons.wcl.american.edu/aulr/vol46/iss4/6/ |url-status=live |journal=American University Law Review |volume=46 |issue=4 |archive-url=https://web.archive.org/web/20180112043050/http://digitalcommons.wcl.american.edu/aulr/vol46/iss4/6/ |archive-date=12 January 2018 |access-date=11 January 2018}}</ref>

In 1998, [[Wei Dai]] published a description of "b-money", characterized as an anonymous, distributed electronic cash system.<ref>{{Cite web |last=Wei Dai |year=1998 |title=B-Money |url=http://www.weidai.com/bmoney.txt |url-status=live |archive-url=https://www.webcitation.org/62ArKBIqT?url=http://www.weidai.com/bmoney.txt |archive-date=4 October 2011}}</ref> Shortly thereafter, [[Nick Szabo]] described [[bit gold]].<ref>{{Cite magazine |title=Bitcoin: The Cryptoanarchists' Answer to Cash |url=https://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/0 |magazine=IEEE Spectrum |archive-url=https://web.archive.org/web/20120604063739/https://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/0 |archive-date=4 June 2012 |quote=Around the same time, Nick Szabo, a computer scientist who now blogs about law and the history of money, was one of the first to imagine a new digital currency from the ground up. Although many consider his scheme, which he calls "bit gold", to be a precursor to Bitcoin |url-status=live}}</ref> Like [[bitcoin]] and other cryptocurrencies that would follow it, bit gold (not to be confused with the later gold-based exchange, BitGold) was described as an electronic currency system which required users to complete a [[proof of work]] function with solutions being cryptographically put together and published.

In 2009, the first decentralized cryptocurrency, bitcoin, was created by presumably pseudonymous developer [[Satoshi Nakamoto]]. It used [[SHA-256]], a cryptographic hash function, in its [[proof-of-work]] scheme.<ref name="primer" /><ref>[http://www.pcworld.com/article/2039184/bitcoin-developer-talks-regulation-open-source-and-the-elusive-satoshi-nakamoto.html Bitcoin developer chats about regulation, open source, and the elusive Satoshi Nakamoto] {{webarchive|url=https://web.archive.org/web/20141003104345/http://www.pcworld.com/article/2039184/bitcoin-developer-talks-regulation-open-source-and-the-elusive-satoshi-nakamoto.html |date=3 October 2014 }}, PCWorld, 26 May 2013</ref> In April 2011, [[Namecoin]] was created as an attempt at forming a decentralized [[domain name system|DNS]], which would make [[internet censorship]] very difficult. Soon after, in October 2011, [[Litecoin]] was released. It used [[scrypt]] as its hash function instead of SHA-256. Another notable cryptocurrency, [[Peercoin]] used a proof-of-work/[[proof-of-stake]] hybrid.<ref name="ars1">[https://arstechnica.com/business/2013/05/wary-of-bitcoin-a-guide-to-some-other-cryptocurrencies/ Wary of Bitcoin? A guide to some other cryptocurrencies] {{webarchive|url=https://web.archive.org/web/20140116040533/http://arstechnica.com/business/2013/05/wary-of-bitcoin-a-guide-to-some-other-cryptocurrencies/ |date=16 January 2014 }}, ars technica, 26 May 2013</ref>

On 6 August 2014, the UK announced its [[HM Treasury|Treasury]] had been commissioned a study of cryptocurrencies, and what role, if any, they could play in the UK economy. The study was also to report on whether regulation should be considered.<ref name="Crypto currencyUK">{{Cite news |title=UK launches initiative to explore potential of virtual currencies |publisher=The UK News |url=http://www.theuknews.com/index.php/sid/224504231 |url-status=live |access-date=8 August 2014 |archive-url=https://web.archive.org/web/20141110202812/http://www.theuknews.com/index.php/sid/224504231 |archive-date=10 November 2014}}</ref>

==Formal definition==
According to Jan Lansky, a cryptocurrency is a system that meets six conditions:<ref>{{Cite journal |last=Lansky |first=Jan |date=January 2018 |title=Possible State Approaches to Cryptocurrencies |url=http://si-journal.org/index.php/JSI/article/viewFile/335/325 |url-status=live |journal=Journal of Systems Integration |volume=9/1 |pages=19–31 |doi=10.20470/jsi.v9i1.335 |archive-url=https://web.archive.org/web/20180212005102/http://si-journal.org/index.php/JSI/article/viewFile/335/325 |archive-date=12 February 2018 |access-date=11 February 2018 |doi-access=free}}</ref>
# The system does not require a central authority; its state is maintained through distributed consensus.
# The system keeps an overview of cryptocurrency units and their ownership.
# The system defines whether new cryptocurrency units can be created. If new cryptocurrency units can be created, the system defines the circumstances of their origin and how to determine the ownership of these new units.
# Ownership of cryptocurrency units can be proved exclusively [[cryptographically]].
# The system allows transactions to be performed in which ownership of the cryptographic units is changed. A transaction statement can only be issued by an entity proving the current ownership of these units.
# If two different instructions for changing the ownership of the same cryptographic units are [[simultaneously]] entered, the system performs at most one of them.
In March 2018, the word ''cryptocurrency'' was added to the ''[[Merriam-Webster Dictionary]]''.<ref>{{Cite web |date=March 2018 |title=The Dictionary Just Got a Whole Lot Bigger |url=https://www.merriam-webster.com/words-at-play/new-words-in-the-dictionary-march-2018 |url-status=live |archive-url=https://web.archive.org/web/20180305144056/https://www.merriam-webster.com/words-at-play/new-words-in-the-dictionary-march-2018 |archive-date=5 March 2018 |access-date=5 March 2018 |website=Merriam-Webster}}</ref>

===Altcoins===
Tokens, cryptocurrencies, and other types of digital assets that are not bitcoin are collectively known as alternative cryptocurrencies,<ref>{{cite web|url=https://www.wsj.com/articles/want-to-keep-up-with-bitcoin-enthusiasts-learn-the-lingo-1517394601|title=Want to Keep Up With Bitcoin Enthusiasts? Learn the Lingo|access-date=25 October 2020|last=Yang|first=Stephanie|date=31 January 2018|work=The Wall Street Journal}}</ref><ref>{{cite web|url=https://www.bloomberg.com/news/articles/2017-05-24/cryptocurrency-mania-goes-beyond-bitcoin-as-altcoins-lead-gains|title= Cryptocurrency Mania Goes Beyond Bitcoin| access-date=25 October 2020|last=Katz|first=Lily|date=24 May 2017|work=Bloomberg}}</ref><ref>{{cite web|url=https://www.cnbc.com/2017/12/05/bitcoin-is-not-a-bubble-other-cryptocurrencies-are-glint-co-founder.html|title=Bitcoin is not a bubble but other cryptocurrencies are 'cannibalizing themselves,' fintech exec says|access-date=25 October 2020|last=Browne|first=Ryan|date=5 December 2017|work=CNBC}}</ref> typically shortened to "altcoins" or "alt coins".<ref>{{cite web|url=https://www.bloomberg.com/news/articles/2018-01-15/these-digital-coins-soar-or-fall-with-bitcoin-quicktake-q-a|title=These Digital Coins Soar (or Fall) With Bitcoin|access-date=25 October 2020|last=Kharif|first=Olga|date=15 January 2018|work=Bloomberg}}</ref><ref>{{cite web|url=https://news.bloomberglaw.com/banking-law/bitcoin-on-the-brink-of-fresh-2020-high-following-paypal-embrace|title=Bitcoin Surges to Highest Since July 2019 After PayPal Embrace|access-date=25 October 2020|last=Hajric|first=Vildana|date=21 October 2020|work=Bloomberg Law}}</ref> Paul Vigna of ''The Wall Street Journal'' also described altcoins as "alternative versions of bitcoin"<ref>{{cite web|url=https://www.wsj.com/articles/which-digital-currency-will-be-the-next-bitcoin-1513679400|title=Which Digital Currency Will Be the Next Bitcoin?|access-date=25 October 2020|last=Vigna|first=Paul|date=19 December 2017|work=The Wall Street Journal}}</ref> given its role as the model protocol for altcoin designers. The term is commonly used to describe coins and tokens created after bitcoin. The list of such cryptocurrencies can be found in the [[List of cryptocurrencies]] article.

Altcoins often have underlying differences with bitcoin. For example, [[Litecoin]] aims to process a block every 2.5 minutes, rather than bitcoin's 10 minutes which allows Litecoin to confirm transactions faster than bitcoin.<ref>{{cite news |first= Ian |last=Steadman|date=2013-05-11|url=https://arstechnica.com/business/2013/05/wary-of-bitcoin-a-guide-to-some-other-cryptocurrencies/ |title=Wary of Bitcoin? A guide to some other cryptocurrencies |work=Ars Technica |access-date=2014-01-19}}</ref> Another example is [[Ethereum]], which has smart contract functionality that allows decentralized applications to be run on its blockchain.<ref>{{cite web |last1=Popper |first1=Nathaniel |title=Understanding Ethereum, Bitcoin's Virtual Cousin (Published 2017) |url=https://www.nytimes.com/2017/10/01/technology/what-is-ethereum.html |website=The New York Times |date=1 October 2017}}</ref> Ethereum is the most-actively used blockchain in the world according to Bloomberg News<ref>{{cite web |title=Ethereum Upgrade Adds to Crypto Mania Sparked by Bitcoin's Surge |url=https://www.bloomberg.com/news/articles/2020-11-25/ethereum-upgrade-adds-to-crypto-mania-sparked-by-bitcoin-s-surge |website=Bloomberg.com |language=en |date=25 November 2020}}</ref> and has the largest "following" of any altcoins according to the New York Times.<ref>{{cite web|url=https://www.nytimes.com/2016/03/28/business/dealbook/ethereum-a-virtual-currency-enables-transactions-that-rival-bitcoins.html|title=Ethereum, a Virtual Currency, Enables Transactions That Rival Bitcoin's|access-date=25 October 2020|last=Popper|first=Nathaniel|date=27 March 2016|work=The New York Times}}</ref>

Significant rallies across altcoin markets are often referred to as an "altseason".<ref>{{cite web|url=https://www.bloomberg.com/news/articles/2019-08-28/technicals-show-alt-coin-season-is-near-amid-bitcoin-mega-gains|title=Bitcoin's Surge Means Smaller Rivals May Be Due for Rallies|access-date=25 October 2020|last=Hajric|first=Vildana|date=28 August 2019|work=Bloomberg}}</ref><ref>{{cite web|url=https://www.bloomberg.com/news/articles/2020-07-08/tiktok-takes-on-crypto-with-dogecoin-soaring-40-in-24-hours|title=TikTok Takes on Crypto With Dogecoin Soaring 40% in 24 Hours|access-date=25 October 2020|last=Saad|first=Amena|date=8 July 2020|work=Bloomberg}}</ref>

===Crypto token===
A [[blockchain]] account can provide functions other than making payments, for example in [[decentralized application]]s or [[smart contract]]s. (Units of) [[fungible]] tokens are sometimes referred to as crypto tokens (or cryptotokens). These terms are usually reserved for other fungible tokens than the main cryptocurrency of the blockchain, that is, usually, for fungible tokens issued within a smart contract running on top of a blockchain such as Ethereum.<ref>{{Cite book|last=Casey, Michael, 1967-|url=https://www.worldcat.org/oclc/1059331326|title=The impact of blockchain technology on finance : a catalyst for change|date=16 July 2018|isbn=978-1-912179-15-2|location=London, UK|oclc=1059331326}}</ref> There are also [[non-fungible token]]s.

==Architecture==
Decentralized cryptocurrency is produced by the entire cryptocurrency system collectively, at a rate which is defined when the system is created and which is publicly known. In centralized banking and economic systems such as the [[Federal Reserve System]], corporate boards or governments control the supply of currency by printing units of [[fiat money]] or demanding additions to digital banking ledgers. In the case of decentralized cryptocurrency, companies or governments cannot produce new units, and have not so far provided backing for other firms, banks or corporate entities which hold asset value measured in it. The underlying technical system upon which decentralized cryptocurrencies are based was created by the group or individual known as [[Satoshi Nakamoto]].<ref name="te20151031">{{Cite journal |date=31 October 2015 |title=Blockchains: The great chain of being sure about things |url=https://www.economist.com/news/briefing/21677228-technology-behind-bitcoin-lets-people-who-do-not-know-or-trust-each-other-build-dependable |url-status=live |journal=[[The Economist]] |archive-url=https://web.archive.org/web/20160703000844/http://www.economist.com/news/briefing/21677228-technology-behind-bitcoin-lets-people-who-do-not-know-or-trust-each-other-build-dependable |archive-date=3 July 2016 |access-date=18 June 2016}}</ref>

{{As of|May 2018}}, over 1,800 cryptocurrency specifications existed.<ref name="FT05142018">{{Cite news |last=Badkar |first=Mamta |date=14 May 2018 |title=Fed's Bullard: Cryptocurrencies creating 'non-uniform' currency in US |work=Financial Times |url=https://www.ft.com/content/29dcb760-5787-11e8-b8b2-d6ceb45fa9d0 |url-status=live |access-date=14 May 2018 |archive-url=https://web.archive.org/web/20180515183618/https://www.ft.com/content/29dcb760-5787-11e8-b8b2-d6ceb45fa9d0 |archive-date=15 May 2018}}</ref> Within a cryptocurrency system, the safety, integrity and balance of [[ledger]]s is maintained by a community of mutually distrustful parties referred to as [[Bitcoin network#Mining|miners]]: who use their computers to help validate and timestamp transactions, adding them to the ledger in accordance with a particular timestamping scheme.<ref name="primer">{{Cite web |last=Jerry Brito and Andrea Castillo |year=2013 |title=Bitcoin: A Primer for Policymakers |url=http://mercatus.org/sites/default/files/Brito_BitcoinPrimer.pdf |url-status=live |archive-url=https://web.archive.org/web/20130921060724/http://mercatus.org/sites/default/files/Brito_BitcoinPrimer.pdf |archive-date=21 September 2013 |access-date=22 October 2013 |website=Mercatus Center |publisher=George Mason University}}</ref>

Most cryptocurrencies are designed to gradually decrease the production of that currency, placing a cap on the total amount of that currency that will ever be in circulation.<ref>"[http://www.americanbanker.com/bankthink/how-cryptocurrencies-could-upend-banks-monetary-role-1057597-1.html?zkPrintable=1&nopagination=1 How Cryptocurrencies Could Upend Banks' Monetary Role]". {{webarchive |url= https://web.archive.org/web/20130927084451/http://www.americanbanker.com/bankthink/how-cryptocurrencies-could-upend-banks-monetary-role-1057597-1.html?zkPrintable=1&nopagination=1 |date=27 September 2013 }}, ''American Banker''. 26 May 2013</ref> Compared with ordinary currencies held by financial institutions or kept as [[cash]] on hand, cryptocurrencies can be more difficult for [[Search and seizure|seizure]] by law enforcement.<ref name="crypto currency" />

===Blockchain===
The validity of each cryptocurrency's coins is provided by a [[blockchain]]. A blockchain is a continuously growing list of [[Record (computer science)|records]], called ''blocks'', which are linked and secured using [[cryptography]].<ref name="te20151031" /><ref name="cryptocurrencytech">{{Cite book |last1=Narayanan |first1=Arvind |title=Bitcoin and cryptocurrency technologies: a comprehensive introduction |last2=Bonneau |first2=Joseph |last3=Felten |first3=Edward |last4=Miller |first4=Andrew |last5=Goldfeder |first5=Steven |date=2016 |publisher=Princeton University Press |isbn=978-0-691-17169-2 |location=Princeton}}</ref> Each block typically contains a [[Cryptographic hash function|hash]] pointer as a link to a previous block,<ref name="cryptocurrencytech" /> a [[Trusted timestamping|timestamp]] and transaction data.<ref name="IPblockchain">{{Cite web |title=Blockchain |url=http://www.investopedia.com/terms/b/blockchain.asp |url-status=live |archive-url=https://web.archive.org/web/20160323045814/http://www.investopedia.com/terms/b/blockchain.asp |archive-date=23 March 2016 |access-date=19 March 2016 |website=Investopedia |quote=Based on the Bitcoin protocol, the blockchain database is shared by all nodes participating in a system.}}</ref> By design, blockchains are inherently resistant to modification of the data. It is "an open, [[distributed ledger]] that can record transactions between two parties efficiently and in a verifiable and permanent way".<ref name="hbr201701">{{Cite news |last1=Iansiti |first1=Marco |last2=Lakhani |first2=Karim R. |date=January 2017 |title=The Truth About Blockchain |work=[[Harvard Business Review]] |publisher=[[Harvard University]] |url=https://hbr.org/2017/01/the-truth-about-blockchain |url-status=live |access-date=17 January 2017 |archive-url=https://web.archive.org/web/20170118052537/https://hbr.org/2017/01/the-truth-about-blockchain |archive-date=18 January 2017 |quote=The technology at the heart of bitcoin and other virtual currencies, blockchain is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.}}</ref> For use as a distributed ledger, a blockchain is typically managed by a [[peer-to-peer]] network collectively adhering to a protocol for validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks, which requires collusion of the network majority.

Blockchains are [[secure by design]] and are an example of a distributed computing system with high [[Byzantine fault tolerance]]. [[Decentralized]] consensus has therefore been achieved with a blockchain.<ref name="decapp">{{Cite book |last=Raval |first=Siraj |url={{google books|fvywDAAAQBAJ|plainurl=yes}} |title=Decentralized Applications: Harnessing Bitcoin's Blockchain Technology |publisher=O'Reilly Media, Inc. |year=2016 |isbn=978-1-4919-2452-5|pages=[{{google books|fvywDAAAQBAJ|page=1|plainurl=yes}} 1]–[{{google books |chapter=What Is a Decentralized Application? |oclc=968277125 |access-date=6 November 2016 |chapter-url={{google books|fvywDAAAQBAJ|page=1|plainurl=yes}} |via=Google Books |fvywDAAAQBAJ |plainurl=yes}} 2]}}</ref>

=== 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 organisation or body responsible for developing the cryptocurrency blockchain network technology or those that are enticed to host a node to receive rewards from hosting the node network.<ref>S. Park, S. Im, Y. Seol and J. Paek, "Nodes in the Bitcoin Network: Comparative Measurement Study and Survey," in IEEE Access, vol. 7, pp. 57009-57022, 2019, doi: 10.1109/ACCESS.2019.2914098.</ref>

====Timestamping====
Cryptocurrencies use various timestamping schemes to "prove" the validity of transactions added to the blockchain ledger without the need for a trusted third party.

The first timestamping scheme invented was the proof-of-work scheme. The most widely used proof-of-work schemes are based on SHA-256 and [[scrypt]].<ref name="ars1" />

Some other hashing algorithms that are used for proof-of-work include [[CryptoNote#Egalitarian proof of work|CryptoNight]], [[BLAKE (hash function)|Blake]], [[SHA-3]], and [[Dash (cryptocurrency)#X11|X11]].

The 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. It is different from proof-of-work systems that run difficult hashing algorithms to validate electronic transactions. The scheme is largely dependent on the coin, and there's currently no standard form of it. Some cryptocurrencies use a combined proof-of-work and proof-of-stake scheme.<ref name="ars1" />

===Mining===
[[File:Оборудование HashCoins.jpg|thumb|Hashcoin [[Bitcoin network#Mining|mine]] ]]
In cryptocurrency networks, ''mining'' is a validation of transactions. For this effort, successful miners obtain new cryptocurrency as a reward. The reward decreases [[#Transaction fees|transaction fees]] by creating a complementary incentive to contribute to the processing power of the network. The rate of generating hashes, which validate any transaction, has been increased by the use of specialized machines such as [[Field-programmable gate array|FPGA]]s and [[Application-specific integrated circuit|ASIC]]s running complex hashing algorithms like SHA-256 and scrypt.<ref name=computer201709>{{Cite magazine|title=The Evolution of Bitcoin Hardware|date=2017-09-01|magazine=Computer|url=https://www.computer.org/csdl/magazine/co/2017/09/mco2017090058/13rRUwghdcJ|last=Bedford Taylor|first=Michael}}</ref> This arms race for cheaper-yet-efficient machines has existed since the day the first cryptocurrency, bitcoin, was introduced in 2009.<ref name=computer201709 /> With more people venturing into the world of virtual currency, generating hashes for this validation has become far more complex over the years, with miners having to invest large sums of money on employing multiple high performance ASICs. Thus the value of the currency obtained for finding a hash often does not justify the amount of money spent on setting up the machines, the cooling facilities to overcome the heat they produce, and the electricity required to run them.<ref>{{Cite news |last=Hern |first=Alex |date=17 January 2018 |title=Bitcoin's energy usage is huge – we can't afford to ignore it |work=The Guardian |url=https://www.theguardian.com/technology/2018/jan/17/bitcoin-electricity-usage-huge-climate-cryptocurrency |url-status=live |access-date=23 January 2018 |archive-url=https://web.archive.org/web/20180123061505/https://www.theguardian.com/technology/2018/jan/17/bitcoin-electricity-usage-huge-climate-cryptocurrency |archive-date=23 January 2018}}</ref> Favorite regions for mining are those with cheap electricity or a cold climate. {{as of|2019|7}}, bitcoin's electricity consumption is estimated to about 7 gigawatts, 0.2% of the global total, or equivalent to that of Switzerland.<ref>{{Cite web |last=Baraniuk |first=Chris |date=3 July 2019 |title=Bitcoin's global energy use 'equals Switzerland' |url=https://www.bbc.com/news/technology-48853230 |access-date=2 February 2020 |website=BBC News}}</ref>

Some [[Mining pool|miners pool resources]], sharing their [[computer performance|processing power]] over a network to split the reward equally, according to the amount of work they contributed to the probability of finding a [[blockchain (database)|block]]. A "share" is awarded to members of the mining pool who present a valid partial proof-of-work.

{{As of|2018|02}}, the Chinese Government halted trading of virtual currency, banned initial coin offerings and shut down mining. Some Chinese miners have since relocated to Canada.<ref>{{Cite web |date=2 February 2018 |title=China's Crypto Crackdown Sends Miners Scurrying to Chilly Canada |url=https://www.bloomberg.com/news/articles/2018-02-02/china-crypto-exodus-leads-to-cheap-clean-power-in-chilly-canada |url-status=live |archive-url=https://web.archive.org/web/20180304090651/https://www.bloomberg.com/news/articles/2018-02-02/china-crypto-exodus-leads-to-cheap-clean-power-in-chilly-canada |archive-date=4 March 2018 |access-date=3 March 2018 |publisher=Bloomberg L.P.}}</ref> One company is operating data centers for mining operations at Canadian oil and gas field sites, due to low gas prices.<ref>{{Cite web |date=26 January 2018 |title=Cryptocurrency mining operation launched by Iron Bridge Resources |url=http://www.worldoil.com/news/2018/1/26/cryptocurrency-mining-operation-launched-by-iron-bridge-resources |url-status=live |archive-url=https://web.archive.org/web/20180130091353/http://www.worldoil.com/news/2018/1/26/cryptocurrency-mining-operation-launched-by-iron-bridge-resources |archive-date=30 January 2018 |website=World Oil}}</ref>  In June 2018, [[Hydro-Québec|Hydro Quebec]] proposed to the provincial government to allocate 500 MW to crypto companies for mining.<ref>{{Cite web |title=Bitcoin and crypto currencies trending up today - Crypto Currency Daily Roundup June 25 - Market Exclusive |url=https://marketexclusive.com/bitcoin-major-currencies-today-crypto-currency-daily-roundup-june-25/2018/06/ |access-date=27 June 2018 |website=marketexclusive.com}}</ref> According to a February 2018 report from ''Fortune'',<ref>{{Cite news |title=Iceland Expects to Use More Electricity Mining Bitcoin Than Powering Homes This Year |work=Fortune |url=http://fortune.com/2018/02/13/iceland-bitcoin-mining-electricity/ |url-status=live |access-date=25 March 2018 |archive-url=https://web.archive.org/web/20180420081336/http://fortune.com/2018/02/13/iceland-bitcoin-mining-electricity/ |archive-date=20 April 2018}}</ref> Iceland has become a haven for cryptocurrency miners in part because of its cheap electricity.

In March 2018, the city of [[Plattsburgh (city), New York|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.<ref>{{Cite web |date=16 March 2018 |title=Bitcoin Mining Banned for First Time in Upstate New York Town |url=https://www.bloomberg.com/news/articles/2018-03-16/bitcoin-mining-banned-for-first-time-in-upstate-new-york-town |url-status=live |archive-url=https://web.archive.org/web/20180320170609/https://www.bloomberg.com/news/articles/2018-03-16/bitcoin-mining-banned-for-first-time-in-upstate-new-york-town |archive-date=20 March 2018 |access-date=20 March 2018 |publisher=Bloomberg L.P.}}</ref>

====GPU price rise====
An increase in cryptocurrency mining increased the demand for [[graphics cards]] (GPU) in 2017.<ref>{{Cite web |title=Bitcoin mania is hurting PC gamers by pushing up GPU prices |url=https://www.theverge.com/2018/1/30/16949550/bitcoin-graphics-cards-pc-prices-surge |url-status=live |archive-url=https://web.archive.org/web/20180202070911/https://www.theverge.com/2018/1/30/16949550/bitcoin-graphics-cards-pc-prices-surge |archive-date=2 February 2018 |access-date=2 February 2018}}</ref> (The computing power of GPUs makes them well-suited to generating hashes.) Popular favorites of cryptocurrency miners such as Nvidia's [[GTX 1060]] and [[GTX 1070]] graphics cards, as well as AMD's RX 570 and RX 580 GPUs, doubled or tripled in price{{snd}} or were out of stock.<ref>{{Cite web |title=Graphics card shortage leads retailers to take unusual measures |url=https://www.polygon.com/2018/1/26/16936984/graphics-card-gpu-prices-nvidia-amd-cryptocurrency-mining-stores |url-status=live |archive-url=https://web.archive.org/web/20180202190305/https://www.polygon.com/2018/1/26/16936984/graphics-card-gpu-prices-nvidia-amd-cryptocurrency-mining-stores |archive-date=2 February 2018 |access-date=2 February 2018}}</ref> A GTX 1070 Ti which was released at a price of $450 sold for as much as $1100. Another popular card GTX 1060's 6 GB model was released at an MSRP of $250, sold for almost $500. RX 570 and RX 580 cards from [[AMD]] were out of stock for almost a year. Miners regularly buy up the entire stock of new GPU's as soon as they are available.<ref>{{Cite web |title=AMD, Nvidia must do more to stop cryptominers from causing PC gaming card shortages, price gouging |url=https://www.cnbc.com/2018/01/22/amd-nvidia-must-do-more-to-stop-cryptominers-from-causing-shortages.html |url-status=live |archive-url=https://web.archive.org/web/20180202094859/https://www.cnbc.com/2018/01/22/amd-nvidia-must-do-more-to-stop-cryptominers-from-causing-shortages.html |archive-date=2 February 2018 |access-date=2 February 2018}}</ref>

Nvidia has asked retailers to do what they can when it comes to selling GPUs to gamers instead of miners. "Gamers come first for [[Nvidia]]," said Boris Böhles, PR manager for [[Nvidia]] in the German region.<ref>{{Cite web |title=Nvidia suggests retailers put gamers over cryptocurrency miners in graphics card craze |url=https://www.polygon.com/2018/1/23/16921356/nvidia-graphics-cards-sold-out-cryptocurrency-miners |url-status=live |archive-url=https://web.archive.org/web/20180202190249/https://www.polygon.com/2018/1/23/16921356/nvidia-graphics-cards-sold-out-cryptocurrency-miners |archive-date=2 February 2018 |access-date=2 February 2018}}</ref>

===Wallets===
[[File:A paper printable Bitcoin wallet consisting of one bitcoin address for receiving and the corresponding private key for spending.png|thumb|An example paper printable bitcoin wallet consisting of one bitcoin address for receiving and the corresponding private key for spending]]
A [[cryptocurrency wallet]] stores the [[Public-key cryptography|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 from using paper wallets which are traditional public, private or seed keys written on paper to using hardware wallets which are dedicated hardware to securely store your wallet information, using a digital wallet which is a computer with a software hosting your wallet information, hosting your wallet using an exchange where cryptocurrency is traded. or by storing your wallet information on a digital medium such as plaintext.<ref>Jokić, Stevo & Cvetković, Aleksandar Sandro & Adamović, Saša & Ristić, Nenad & Spalević, Petar. (2019). Comparative analysis of cryptocurrency wallets vs traditional wallets. Ekonomika. 65. 10.5937/ekonomika1903065J.</ref>

===Anonymity===
Bitcoin is pseudonymous rather than anonymous in that the cryptocurrency within a wallet is not tied to people, but rather to one or more specific keys (or "addresses").<ref>{{Cite web |last=Lee |first=Justina |date=13 September 2018 |title=Mystery of the $2 Billion Bitcoin Whale That Fueled a Selloff |url=https://www.bloomberg.com/news/articles/2018-09-13/mystery-of-the-2-billion-bitcoin-whale-that-fueled-a-selloff |url-status=live |archive-url=https://web.archive.org/web/20181219093844/https://www.bloomberg.com/news/articles/2018-09-13/mystery-of-the-2-billion-bitcoin-whale-that-fueled-a-selloff |archive-date=19 December 2018 |website=Bloomberg}}</ref> Thereby, bitcoin owners are not identifiable, but all transactions are publicly available in the blockchain. Still, [[cryptocurrency exchanges]] are often required by law to collect the personal information of their users.{{Citation needed|reason=Which specific countries/sub-national political units and which specific laws with personal info collection requirements should be identified|date=August 2019}}

Additions such as [[Zerocoin]], Zerocash and [[CryptoNote]] have been suggested, which would allow for additional [[anonymity]] and fungibility.<ref>{{Cite web |title=What You Need To Know About Zero Knowledge |url=https://techcrunch.com/2015/02/07/what-you-need-to-know-about-zero-knowledge/ |url-status=live |archive-url=https://web.archive.org/web/20190220124117/https://techcrunch.com/2015/02/07/what-you-need-to-know-about-zero-knowledge/ |archive-date=20 February 2019 |access-date=19 December 2018 |website=TechCrunch}}</ref><ref>{{Cite news |last=Greenberg |first=Andy |date=25 January 2017 |title=Monero, the Drug Dealer's Cryptocurrency of Choice, Is on Fire |work=Wired |url=https://www.wired.com/2017/01/monero-drug-dealers-cryptocurrency-choice-fire/ |url-status=live |access-date=19 December 2018 |archive-url=https://web.archive.org/web/20181210020727/https://www.wired.com/2017/01/monero-drug-dealers-cryptocurrency-choice-fire/ |archive-date=10 December 2018 |issn=1059-1028}}</ref>

==Economics==
Cryptocurrencies are used primarily outside existing banking and governmental institutions and are exchanged over the Internet.

===Block rewards===
Proof-of-work cryptocurrencies, such as bitcoin, offer block rewards incentives for miners. There has been an implicit belief that whether miners are paid by block rewards or transaction fees does not affect the security of the blockchain, but a study suggests that this may not be the case under certain circumstances.<ref>{{Cite web |title=On the Instability of Bitcoin Without the Block Reward |url=https://www.cs.princeton.edu/~arvindn/publications/mining_CCS.pdf |access-date=5 May 2020}}</ref>

The rewards paid to miners increase the supply of the cryptocurrency. By making sure that verifying transactions is a costly business, the integrity of the network can be preserved as long as benevolent nodes control a majority of computing power. The verification algorithm requires a lot of processing power, and thus electricity in order to make verification costly enough to accurately validate public blockchain. Not only do miners have to factor in the costs associated with expensive equipment necessary to stand a chance of solving a hash problem, they further must consider the significant amount of electrical power in search of the solution. Generally, the block rewards outweigh electricity and equipment costs, but this may not always be the case.<ref>{{Cite web |title=Price Fluctuations and the Use of Bitcoin: An Empirical Inquiry |url=https://www.ecb.europa.eu/pub/conferences/shared/pdf/retpaym_150604/polasik_paper.pdf |access-date=5 May 2020}}</ref>

The current value, not the long-term value, of the cryptocurrency supports the reward scheme to incentivize miners to engage in costly mining activities. Some sources claim that the current bitcoin design is very inefficient, generating a welfare loss of 1.4% relative to an efficient cash system. The main source for this inefficiency is the large mining cost, which is estimated to be US$360 Million per year. This translates into users being willing to accept a cash system with an inflation rate of 230% before being better off using bitcoin as a means of payment. However, the efficiency of the bitcoin system can be significantly improved by optimizing the rate of coin creation and minimizing transaction fees. Another potential improvement is to eliminate inefficient mining activities by changing the consensus protocol altogether.<ref>{{Cite web |title=The Economics of Cryptocurrencies – Bitcoin and Beyond |url=https://www.bis.org/events/eopix_1810/chiu_paper.pdf |access-date=5 May 2020}}</ref>

===Transaction fees===
Transaction fees for cryptocurrency depend mainly on the [[supply and demand|supply]] of network capacity at the time, versus the [[supply and demand|demand]] from the currency holder for a faster transaction.{{Citation needed|date=February 2020}} The currency holder can choose a specific transaction fee, while network entities process transactions in order of highest offered fee to lowest.{{Citation needed|date=February 2020}} Cryptocurrency exchanges can simplify the process for currency holders by offering priority alternatives and thereby determine which fee will likely cause the transaction to be processed in the requested time.{{Citation needed|date=February 2020}}

For [[ether (cryptocurrency)|ether]], transaction fees differ by computational complexity, bandwidth use, and storage needs, while bitcoin transaction fees differ by transaction size and whether the transaction uses [[SegWit]]. In September 2018, the median transaction fee for ether corresponded to $0.017,<ref>{{Cite web |title=Archived copy |url=https://ethgasstation.info/ |url-status=live |archive-url=https://web.archive.org/web/20181026064457/https://ethgasstation.info/ |archive-date=26 October 2018 |access-date=25 October 2018}}</ref> while for bitcoin it corresponded to $0.55.<ref>{{Cite web |title=Archived copy |url=https://bitinfocharts.com/comparison/bitcoin-transactionfees.html |url-status=live |archive-url=https://web.archive.org/web/20181019113209/https://bitinfocharts.com/comparison/bitcoin-transactionfees.html |archive-date=19 October 2018 |access-date=25 October 2018}}</ref>

Some cryptocurrencies have no transaction fees, and instead rely on client-side proof-of-work as the transaction prioritization and anti-spam mechanism.<ref name="scalabilityOfBitcoinAndNano">{{Citation |title=Scalability of the Bitcoin and Nano protocols: a comparative analysis |date=2018 |url=http://www.diva-portal.org/smash/get/diva2:1229650/FULLTEXT02.pdf |publisher=Blekinge Institute of Technology |language=en-US |access-date=2019-12-18}}</ref><ref name="”comparativeAnalysis”">{{Citation |last1=Pervez |first1=Huma |title=2018 12th International Conference on Open Source Systems and Technologies (ICOSST) |date=2018-12-19 |pages=27–34 |chapter=A Comparative Analysis of DAG-Based Blockchain Architectures |publisher=IEEE |language=en-US |doi=10.1109/ICOSST.2018.8632193 |isbn=978-1-5386-9564-7 |last2=Muneeb |first2=Muhammad |last3=Irfan |first3=Muhammad Usama |last4=Haq |first4=Irfan Ul |s2cid=59601449}}</ref><ref name="blockchainCompared">{{Citation |last1=Bencic |first1=Federico Matteo |title=2018 IEEE 38th International Conference on Distributed Computing Systems (ICDCS) |date=2018-04-26 |pages=1569–1570 |chapter=Distributed Ledger Technology: Blockchain Compared to Directed Acyclic Graph |publisher=University of Zagreb |language=en-US |arxiv=1804.10013 |doi=10.1109/ICDCS.2018.00171 |isbn=978-1-5386-6871-9 |last2=Podnar Zarko |first2=Ivana |s2cid=13741873}}</ref>

===Exchanges===
[[Cryptocurrency exchange]]s allow customers to trade cryptocurrencies for other assets, such as conventional [[fiat money]], or to trade between different digital currencies.

===Atomic swaps===
Atomic swaps are a mechanism where one cryptocurrency can be exchanged directly for another cryptocurrency, without the need for a trusted third party such as an exchange.

===ATMs===
[[File:Bitcoin Teller SIBOS Boston 2014 2.jpg|upright|thumb|[[Bitcoin ATM]] ]]
Jordan Kelley, founder of [[Bitcoin ATM|Robocoin]], launched the first [[bitcoin ATM]] in the United States on 20 February 2014. The kiosk installed in Austin, Texas, is similar to bank ATMs but has scanners to read government-issued identification such as a driver's license or a passport to confirm users' identities.<ref>[https://www.reuters.com/article/2014/02/18/us-bitcoin-robocoin-idUSBREA1H05F20140218 First U.S. Bitcoin ATMs to open soon in Seattle, Austin] {{webarchive|url=https://web.archive.org/web/20151019092802/http://www.reuters.com/article/2014/02/18/us-bitcoin-robocoin-idUSBREA1H05F20140218 |date=19 October 2015 }}, Reuters, 18 February 2014</ref>

===Initial coin offerings===
An [[initial coin offering]] (ICO) is a controversial means of raising funds for a new cryptocurrency venture. An ICO may be used by startups with the intention of avoiding regulation. However, securities regulators in many jurisdictions, including in the U.S., and Canada, have indicated that if a coin or token is an "investment contract" (e.g., under the Howey test, i.e., an investment of money with a reasonable expectation of profit based significantly on the entrepreneurial or managerial efforts of others), it is a security and is subject to securities regulation. In an ICO campaign, a percentage of the cryptocurrency (usually in the form of "tokens") is sold to early backers of the project in exchange for legal tender or other cryptocurrencies, often bitcoin or ether.<ref>{{Cite web |last=Commission |first=Ontario Securities |title=CSA Staff Notice 46-307 Cryptocurrency Offerings |url=http://www.osc.gov.on.ca/en/SecuritiesLaw_csa_20170824_cryptocurrency-offerings.htm |url-status=live |archive-url=https://web.archive.org/web/20170929101456/http://www.osc.gov.on.ca/en/SecuritiesLaw_csa_20170824_cryptocurrency-offerings.htm |archive-date=29 September 2017 |access-date=20 January 2018 |website=Ontario Securities Commission}}</ref><ref>{{Cite web |title=SEC Issues Investigative Report Concluding DAO Tokens, a Digital Asset, Were Securities |url=https://www.sec.gov/news/press-release/2017-131 |url-status=live |archive-url=https://web.archive.org/web/20171010022343/https://www.sec.gov/news/press-release/2017-131 |archive-date=10 October 2017 |access-date=20 January 2018 |website=sec.gov}}</ref><ref>{{Cite web |title=Company Halts ICO After SEC Raises Registration Concerns |url=https://www.sec.gov/news/press-release/2017-227 |url-status=live |archive-url=https://web.archive.org/web/20180119192823/https://www.sec.gov/news/press-release/2017-227 |archive-date=19 January 2018 |access-date=20 January 2018 |website=sec.gov}}</ref>

According to [[PricewaterhouseCoopers]], four of the 10 biggest proposed initial coin offerings have used [[Switzerland]] as a base, where they are frequently registered as non-profit foundations. The Swiss regulatory agency [[Swiss Financial Market Supervisory Authority|FINMA]] stated that it would take a "balanced approach" to ICO projects and would allow "legitimate innovators to navigate the regulatory landscape and so launch their projects in a way consistent with national laws protecting investors and the integrity of the financial system." In response to numerous requests by industry representatives, a legislative ICO working group began to issue legal guidelines in 2018, which are intended to remove uncertainty from cryptocurrency offerings and to establish sustainable business practices.<ref>R Atkins (Feb. 2018). [https://www.ft.com/content/52820f90-1307-11e8-940e-08320fc2a277 Switzerland sets out guidelines to support initial coin offerings] {{Webarchive|url=https://web.archive.org/web/20180527201759/https://www.ft.com/content/52820f90-1307-11e8-940e-08320fc2a277 |date=27 May 2018 }}. ''Financial Times''. Retrieved 26 May 2018.</ref>

== Trends ==
The crypto currency market cap has historically thus far been dominated by Bitcoin holding at least 50% of the market cap value where altcoins have increased and decreased in market cap value in relation to Bitcoin. Bitcoin's value is largely determined by speculation among other technological limiting factors known as block chain rewards coded into the architecture technology of Bitcoin itself. The Cryptocurrency market cap follows a trend known as the "halving", which is when the block rewards received from Bitcoin are halved due to technological mandated limited factors instilled into Bitcoin which in turn limits the supply of Bitcoin. As the date reaches near of an halving (twice thus far historically) the cryptocurrency market cap increases, followed by a downtrend.<ref>{{Cite journal|last=Meynkhard|first=Artur|date=15 November 2019|title=Fair market value of bitcoin: halving effect|url=https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/12700/IMFI_2019_04_Meynkhard.pdf|journal=Investment Management and Financial Innovations|volume=16| issue = 4|pages=85|via=Businessperspectives}}</ref><ref>{{Cite web|last=Fitzpatrick|first=Luke|title=Bitcoin Halving: A New Class Of Bitcoin Millionaires May Emerge|url=https://www.forbes.com/sites/lukefitzpatrick/2020/04/27/bitcoin-halving-a-new-class-of-bitcoin-millionaires-may-emerge/|access-date=2021-04-25|website=Forbes|language=en}}</ref>

==Legality==
The legal status of cryptocurrencies varies substantially from country to country and is still undefined or changing in many of them. At least one study has shown that broad generalizations about the use of bitcoin in illicit finance are significantly overstated and that blockchain analysis is an effective crime fighting and intelligence gathering tool.<ref>{{cite web |last1=Ehrlich |first1=Steven |title=Janet Yellen, Bitcoin And Crypto Fearmongers Get Pushback From Former CIA Director |url=https://www.forbes.com/sites/stevenehrlich/2021/04/13/janet-yellen-bitcoin-and-crypto-fearmongers-get-pushback-from-former-cia-director/?sh=1741bd89bb7a |website=Forbes |language=en}}</ref> While some countries have explicitly allowed their use and trade,<ref>{{Cite news |last=Kharpal |first=Arjun |date=12 April 2017 |title=Bitcoin value rises over $1 billion as Japan, Russia move to legitimize cryptocurrency |publisher=CNBC |url=https://www.cnbc.com/2017/04/12/bitcoin-price-rises-japan-russia-regulation.html |url-status=live |access-date=19 March 2018 |archive-url=https://web.archive.org/web/20180319214207/https://www.cnbc.com/2017/04/12/bitcoin-price-rises-japan-russia-regulation.html |archive-date=19 March 2018}}</ref> others have banned or restricted it. According to the [[Library of Congress]], an "absolute ban" on trading or using cryptocurrencies applies in eight countries: Algeria, Bolivia, Egypt, Iraq, Morocco, Nepal, Pakistan, and the United Arab Emirates. An "implicit ban" applies in another 15 countries, which include Bahrain, Bangladesh, China, Colombia, the Dominican Republic, Indonesia, Iran, Kuwait, Lesotho, Lithuania, Macau, Oman, Qatar, Saudi Arabia and Taiwan.<ref name="RCAWJune2018LOC">{{Cite web |date=June 2018 |title=Regulation of Cryptocurrency Around the World |url=https://www.loc.gov/law/help/cryptocurrency/cryptocurrency-world-survey.pdf |url-status=live |archive-url=https://web.archive.org/web/20180814071440/https://www.loc.gov/law/help/cryptocurrency/cryptocurrency-world-survey.pdf |archive-date=14 August 2018 |access-date=15 August 2018 |website=Library of Congress |publisher=The Law Library of Congress, Global Legal Research Center |pages=4–5}}</ref> In the United States and Canada, state and provincial securities regulators, coordinated through the [[North American Securities Administrators Association]], are investigating "bitcoin scams" and [[Initial coin offering|ICOs]] in 40 jurisdictions.<ref name="WaPo52118">{{Cite news |last=Fung |first=Brian |date=21 May 2018 |title=State regulators unveil nationwide crackdown on suspicious cryptocurrency investment schemes |work=The Washington Post |url=https://www.washingtonpost.com/news/the-switch/wp/2018/05/21/state-regulators-unveil-nationwide-crackdown-on-suspicious-cryptocurrency-investment-schemes/ |url-status=live |access-date=27 May 2018 |archive-url=https://web.archive.org/web/20180527081727/https://www.washingtonpost.com/news/the-switch/wp/2018/05/21/state-regulators-unveil-nationwide-crackdown-on-suspicious-cryptocurrency-investment-schemes/ |archive-date=27 May 2018}}</ref>

Various government agencies, departments, and courts have classified bitcoin differently. [[China Central Bank]] banned the handling of bitcoins by financial institutions in [[China]] in early 2014.

In Russia, though cryptocurrencies are legal, it is illegal to actually purchase goods with any currency other than the [[Russian ruble]].<ref>[https://www.forbes.com/sites/kashmirhill/2014/01/31/bitcoins-legality-around-the-world/ Bitcoin's Legality Around The World] {{webarchive|url=https://web.archive.org/web/20170916060759/https://www.forbes.com/sites/kashmirhill/2014/01/31/bitcoins-legality-around-the-world/ |date=16 September 2017 }}, Forbes, 31 January 2014</ref> Regulations and bans that apply to bitcoin probably extend to similar cryptocurrency systems.<ref>{{Cite journal |last=Tasca |first=Paolo |date=7 September 2015 |title=Digital Currencies: Principles, Trends, Opportunities, and Risks |publisher=Social Science Research Network |ssrn=2657598}}</ref>

Cryptocurrencies are a potential tool to evade economic sanctions for example against [[Russia]],  [[Iran]], or [[Venezuela]]. Russia also secretly supported Venezuela with the creation of the [[Petro (cryptocurrency)|petro]] (El Petro), a national cryptocurrency initiated by the [[Nicolás Maduro|Maduro]] government to obtain valuable oil revenues by circumventing US sanctions.{{citation needed|date=September 2019}}

In August 2018, the [[Bank of Thailand]] announced its plans to create its own cryptocurrency, the Central Bank Digital Currency (CBDC).<ref>{{Cite news |last=Thompson |first=Luke |date=24 August 2018 |title=Bank of Thailand to launch its own crypto-currency |work=Asia Times |url=https://asiatimes.com/article/bank-of-thailand-to-launch-its-own-crypto-currency/amp/ |access-date=27 August 2018 }}</ref>

===Advertising bans===
Cryptocurrency advertisements have been temporarily banned on [[Facebook]],<ref name="wiredface">{{Cite news |last=Matsakis |first=Louise |date=30 January 2018 |title=Cryptocurrency scams are just straight-up trolling at this point |work=[[Wired (magazine)|Wired]] |url=https://www.wired.com/story/cryptocurrency-scams-ico-trolling/ |url-status=live |access-date=2 April 2018 |archive-url=https://web.archive.org/web/20180401171434/https://www.wired.com/story/cryptocurrency-scams-ico-trolling/ |archive-date=1 April 2018}}</ref> [[Google]], [[Twitter]],<ref name="ToISW">{{Cite news |last=Weinglass |first=Simona |date=28 March 2018 |title=European Union bans binary options, strictly regulates CFDs |work=[[The Times of Israel]] |url=https://www.timesofisrael.com/european-union-bans-binary-options-strictly-regulates-cfds/ |url-status=live |access-date=2 April 2018 |archive-url=https://web.archive.org/web/20180401084746/https://www.timesofisrael.com/european-union-bans-binary-options-strictly-regulates-cfds/ |archive-date=1 April 2018}}</ref> [[Bing (search engine)|Bing]],<ref name="bing51418">{{Cite web |last=Alsoszatai-Petheo |first=Melissa |date=14 May 2018 |title=Bing Ads to disallow cryptocurrency advertising |url=https://advertise.bingads.microsoft.com/en-us/blog/post/may-2018/bing-ads-to-disallow-cryptocurrency-advertising?feed=blogposts |url-status=live |archive-url=https://web.archive.org/web/20180517152920/https://advertise.bingads.microsoft.com/en-us/blog/post/may-2018/bing-ads-to-disallow-cryptocurrency-advertising?feed=blogposts |archive-date=17 May 2018 |access-date=16 May 2018 |publisher=Microsoft}}</ref> [[Snapchat]], [[LinkedIn]] and [[MailChimp]].<ref name="3key">{{Cite news |last=French |first=Jordan |date=2 April 2018 |title=3 Key Factors Behind Bitcoin's Current Slide |publisher=theStreet.com |url=https://www.thestreet.com/story/14541510/1/whats-behind-bitcoin-price-slump.html |url-status=live |access-date=2 April 2018 |archive-url=https://web.archive.org/web/20180403051718/https://www.thestreet.com/story/14541510/1/whats-behind-bitcoin-price-slump.html |archive-date=3 April 2018 |ref='}}</ref> Chinese internet platforms [[Baidu]], [[Tencent]], and [[Weibo (company)|Weibo]] have also prohibited bitcoin advertisements.  The Japanese platform [[Line Corporation|Line]] and the Russian platform [[Yandex]] have similar prohibitions.<ref>{{Cite news |last=Wilson |first=Thomas |date=28 March 2018 |title=Twitter and LinkedIn ban cryptocurrency adverts – leaving regulators behind |work=Independent |agency=[[Reuters]] |url=https://www.independent.co.uk/news/business/analysis-and-features/twitter-ban-cryptocurrency-adverts-regulators-bitcoin-facebook-social-media-a8277176.html |url-status=live |access-date=3 April 2018 |archive-url=https://web.archive.org/web/20180404074502/https://www.independent.co.uk/news/business/analysis-and-features/twitter-ban-cryptocurrency-adverts-regulators-bitcoin-facebook-social-media-a8277176.html |archive-date=4 April 2018}}</ref>

===U.S. tax status===
On 25 March 2014, the United States [[Internal Revenue Service]] (IRS) ruled that bitcoin will be treated as property for tax purposes. This means bitcoin will be subject to [[capital gains tax]].<ref name="taxstatus">{{Cite news |last=Rushe |first=Dominic |date=25 March 2014 |title=Bitcoin to be treated as property instead of currency by IRS |work=The Guardian |url=https://www.theguardian.com/technology/2014/mar/25/bitcoin-property-currency-irs-rules |url-status=live |access-date=8 February 2018 |archive-url=https://web.archive.org/web/20160601151330/https://www.theguardian.com/technology/2014/mar/25/bitcoin-property-currency-irs-rules |archive-date=1 June 2016}}</ref>
In a paper published by researchers from Oxford and Warwick, it was shown that bitcoin has some characteristics more like the precious metals market than traditional currencies, hence in agreement with the IRS decision even if based on different reasons.<ref>[https://arxiv.org/abs/1411.1924 On the Complexity and Behaviour of Cryptocurrencies Compared to Other Markets], 7 November 2014</ref>

In July 2019, the IRS started sending letters to cryptocurrency owners warning them to amend their returns and pay taxes.<ref>{{Cite web|url=https://www.irs.gov/newsroom/irs-has-begun-sending-letters-to-virtual-currency-owners-advising-them-to-pay-back-taxes-file-amended-returns-part-of-agencys-larger-efforts|title=IRS has begun sending letters to virtual currency owners advising them to pay back taxes, file amended returns; part of agency's larger efforts &#124; Internal Revenue Service|website=www.irs.gov}}</ref>

===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,<ref>{{Cite journal |last1=Iwamura |first1=Mitsuru |last2=Kitamura |first2=Yukinobu |last3=Matsumoto |first3=Tsutomu |date=28 February 2014 |title=Is Bitcoin the Only Cryptocurrency in the Town? Economics of Cryptocurrency and Friedrich A. Hayek |doi=10.2139/ssrn.2405790 |ssrn=2405790 |hdl-access=free |hdl=10086/26493 |s2cid=154268460}}</ref> so have concerns that such an unregulated person to person global economy that cryptocurrencies offer may become a threat to society. Concerns abound that altcoins may become tools for anonymous web criminals.<ref name=":1">ALI, S, T; CLARKE, D; MCCORRY, P;
Bitcoin: Perils of an Unregulated Global P2P Currency
[By S. T Ali, D. Clarke, P. McCorry
Newcastle upon Tyne: Newcastle University: Computing Science, 2015.
(Newcastle University, Computing Science, Technical Report Series, No. CS-TR-1470)</ref>

Cryptocurrency networks display a lack of regulation that has been criticized as enabling criminals who seek to evade taxes and [[Money laundering|launder money]]. Money laundering issues [[FinCEN Files|are also present in regular bank transfers]], however with bank-to-bank wire transfers for instance, the account holder must at least [[Wire transfer#Security|provide a proven identity]].

Transactions that occur through the use and exchange of these altcoins are independent from formal banking systems, and therefore can make tax evasion simpler for individuals. Since charting taxable income is based upon what a recipient reports to the revenue service, it becomes extremely difficult to account for transactions made using existing cryptocurrencies, a mode of exchange that is complex and difficult to track.<ref name=":1" />

Systems of anonymity that most cryptocurrencies offer can also serve as a simpler means to launder money. Rather than laundering money through an intricate net of financial actors and offshore bank accounts, laundering money through altcoins can be achieved through anonymous transactions.<ref name=":1" />

===Loss, theft, and fraud===
In February 2014 the world's largest bitcoin exchange, [[Mt. Gox]], declared [[bankruptcy]]. The company stated that it had lost nearly $473 million of their customers' bitcoins likely due to theft. This was equivalent to approximately 750,000 bitcoins, or about 7% of all the bitcoins in existence. The price of a bitcoin fell from a high of about $1,160 in December to under $400 in February.<ref>[https://www.bloomberg.com/news/2014-02-28/mt-gox-exchange-files-for-bankruptcy.html Mt. Gox Seeks Bankruptcy After $480 Million Bitcoin Loss] {{webarchive|url=https://web.archive.org/web/20150112234804/http://www.bloomberg.com/news/2014-02-28/mt-gox-exchange-files-for-bankruptcy.html |date=12 January 2015 }}, Carter Dougherty and Grace Huang, Bloomberg News, 28 February 2014</ref>

Two members of the Silk Road Task Force—a multi-agency federal task force that carried out the U.S. investigation of [[Silk Road (marketplace)|Silk Road]]—seized bitcoins for their own use in the course of the investigation.<ref name="Jeong">Sarah Jeong, [https://motherboard.vice.com/en_us/article/8q845p/dea-agent-who-faked-a-murder-and-took-bitcoins-from-silk-road-explains-himself DEA Agent Who Faked a Murder and Took Bitcoins from Silk Road Explains Himself] {{webarchive|url=https://web.archive.org/web/20171229113002/https://motherboard.vice.com/en_us/article/8q845p/dea-agent-who-faked-a-murder-and-took-bitcoins-from-silk-road-explains-himself |date=29 December 2017 }}, ''Motherboard'', Vice (25 October 2015).</ref> [[Drug Enforcement Administration|DEA]] agent Carl Mark Force IV, who attempted to extort Silk Road founder [[Ross Ulbricht]] ("Dread Pirate Roberts"), pleaded guilty to money laundering, [[obstruction of justice]], and extortion under color of official right, and was sentenced to 6.5 years in federal prison.<ref name="Jeong" /> [[United States Secret Service|U.S. Secret Service]] agent Shaun Bridges pleaded guilty to crimes relating to his diversion of $800,000 worth of bitcoins to his personal account during the investigation, and also separately pleaded guilty to money laundering in connection with another cryptocurrency theft; he was sentenced to nearly eight years in federal prison.<ref>Nate Raymond, [https://www.reuters.com/article/us-usa-cyber-silkroad/ex-agent-in-silk-road-probe-gets-more-prison-time-for-bitcoin-theft-idUSKBN1D804H Ex-agent in Silk Road probe gets more prison time for bitcoin theft] {{webarchive|url=https://web.archive.org/web/20171229112652/https://www.reuters.com/article/us-usa-cyber-silkroad/ex-agent-in-silk-road-probe-gets-more-prison-time-for-bitcoin-theft-idUSKBN1D804H |date=29 December 2017 }}, Reuters (7 November 2017).</ref>

Homero Josh Garza, who founded the cryptocurrency startups GAW Miners and ZenMiner in 2014, acknowledged in a [[plea agreement]] that the companies were part of a [[pyramid scheme]], and pleaded guilty to [[wire fraud]] in 2015. The U.S. [[Securities and Exchange Commission]] separately brought a civil enforcement action against Garza, who was eventually ordered to pay a judgment of $9.1 million plus $700,000 in interest. The SEC's complaint stated that Garza, through his companies, had fraudulently sold "investment contracts representing shares in the profits they claimed would be generated" from mining.<ref>Cyris Farivar, [https://arstechnica.com/tech-policy/2017/10/bitcoin-fraudster-hit-with-9-1m-civil-judgment-on-top-of-criminal-guilty-plea/ GAW Miners founder owes nearly $10 million to SEC over Bitcoin fraud] {{webarchive|url=https://web.archive.org/web/20171229112405/https://arstechnica.com/tech-policy/2017/10/bitcoin-fraudster-hit-with-9-1m-civil-judgment-on-top-of-criminal-guilty-plea/ |date=29 December 2017 }}, ''Ars Technica'' (5 October 2017).</ref>

On 21 November 2017, the [[Tether (cryptocurrency)|Tether cryptocurrency]] announced they were hacked, losing $31 million in USDT from their primary wallet.<ref>{{Cite news |last=Russell |first=Jon |title=Tether, a startup that works with bitcoin exchanges, claims a hacker stole&nbsp;$31M |work=TechCrunch |url=https://techcrunch.com/2017/11/20/tether-claims-a-hacker-stole-31m/ |url-status=live |access-date=22 November 2017 |archive-url=https://web.archive.org/web/20171121105158/https://techcrunch.com/2017/11/20/tether-claims-a-hacker-stole-31m/ |archive-date=21 November 2017}}</ref> The company has 'tagged' the stolen currency, hoping to 'lock' them in the hacker's wallet (making them unspendable). Tether indicates that it is building a new core for its primary wallet in response to the attack in order to prevent the stolen coins from being used.

In May 2018, [[Bitcoin Gold]] (and two other cryptocurrencies) were hit by a successful 51% hashing attack by an unknown actor, in which exchanges lost estimated $18m.<ref>{{Cite web |last=Cimpanu |first=Catalin |date=4 September 2018 |title=Bitcoin Gold delisted from major cryptocurrency exchange after refusing to pay hack damages |url=https://www.zdnet.com/article/bitcoin-gold-delisted-from-major-cryptocurrency-exchange-after-refusing-to-pay-hack-damages/ |website=ZDNet |language=en}}</ref> In June 2018, Korean exchange [[Coinrail hack|Coinrail was hacked]], losing US$37 million worth of altcoin. Fear surrounding the hack was blamed for a $42-billion cryptocurrency market selloff.<ref>{{Citation |last=Eric Lam, Jiyeun Lee, and Jordan Robertson |title=Cryptocurrencies Lose $42 Billion After South Korean Bourse Hack |date=10 June 2018 |url=https://www.bloomberg.com/news/articles/2018-06-10/bitcoin-tumbles-most-in-two-weeks-amid-south-korea-exchange-hack |archive-url=https://web.archive.org/web/20180612005144/https://www.bloomberg.com/news/articles/2018-06-10/bitcoin-tumbles-most-in-two-weeks-amid-south-korea-exchange-hack |publisher=[[Bloomberg News]] |access-date=12 June 2018 |archive-date=12 June 2018 |url-status=live}}</ref> On 9 July 2018 the exchange Bancor had $23.5 million in cryptocurrency stolen.<ref name="Bancorhack">{{Cite news |last=Roberts |first=Jeff John |date=9 July 2018 |title=Another Crypto Fail: Hackers Steal $23.5 Million from Token Service Bancor |work=Fortune |url=http://fortune.com/2018/07/09/bancor-hack/ |url-status=live |access-date=10 July 2018 |archive-url=https://web.archive.org/web/20180710013104/http://fortune.com/2018/07/09/bancor-hack/ |archive-date=10 July 2018}}</ref>

The French regulator [[Autorité des marchés financiers (France)|Autorité des marchés financiers]] (AMF) lists 15 websites of companies that solicit investment in cryptocurrency without being authorised to do so in France.<ref>{{Cite web |date=15 March 2018 |title=News releases AMF: 2018 |url=http://www.amf-france.org/en_US/Actualites/Communiques-de-presse/AMF/annee-2018?docId=workspace%3A%2F%2FSpacesStore%2F3f85fe88-fc1f-45b8-a55e-0bc5aeb298ce |url-status=live |archive-url=https://web.archive.org/web/20180511013141/http://www.amf-france.org/en_US/Actualites/Communiques-de-presse/AMF/annee-2018?docId=workspace%3A%2F%2FSpacesStore%2F3f85fe88-fc1f-45b8-a55e-0bc5aeb298ce |archive-date=11 May 2018 |access-date=10 May 2018 |website=The Autorité des marchés financiers (AMF)}}</ref>

===Darknet markets===
Properties of cryptocurrencies gave them popularity in applications such as a safe haven in banking crises and means of payment, which also led to the cryptocurrency use in controversial settings in the form of [[darknet market|online black markets]], such as [[Silk Road (marketplace)|Silk Road]].<ref name=":1" /> The original Silk Road was shut down in October 2013 and there have been two more versions in use since then. In the year following the initial shutdown of Silk Road, the number of prominent dark markets increased from four to twelve, while the amount of drug listings increased from 18,000 to 32,000.<ref name=":1" />

Darknet markets present challenges in regard to legality. Cryptocurrency used in dark markets are not clearly or legally classified in almost all parts of the world. In the U.S., bitcoins are labelled as "virtual assets".{{citation needed|date=November 2019}} This type of ambiguous classification puts pressure on law enforcement agencies around the world to adapt to the shifting drug trade of dark markets.<ref name=":2">{{Cite journal |last=Raeesi |first=Reza |date=23 April 2015 |title=The Silk Road, Bitcoins and the Global Prohibition Regime on the International Trade in Illicit Drugs: Can this Storm Be Weathered? |url=http://gjis.journals.yorku.ca/index.php/gjis/article/view/38935 |url-status=live |journal=Glendon Journal of International Studies / Revue d'Études Internationales de Glendon |volume=8 |issue=1–2 |issn=2291-3920 |archive-url=https://web.archive.org/web/20151222084405/http://gjis.journals.yorku.ca/index.php/gjis/article/view/38935 |archive-date=22 December 2015}}</ref>{{unreliable source?|date=November 2019}}

==Reception==

=== Speculation, fraud and adoption ===
Cryptocurrencies have been compared to [[Ponzi schemes]], [[pyramid scheme]]s<ref>{{Cite web |last=Polgar |first=David |title=Cryptocurrency is a giant multi-level marketing scheme |url=https://qz.com/1217460/cryptocurrency-is-a-giant-multi-level-marketing-scheme/ |url-status=live |archive-url=https://web.archive.org/web/20180301150230/https://qz.com/1217460/cryptocurrency-is-a-giant-multi-level-marketing-scheme/ |archive-date=1 March 2018 |access-date=2 March 2018 |website=Quartz |publisher=Quartz Media LLC}}</ref> and [[economic bubble]]s,<ref>[https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3090405 Analysis of Cryptocurrency Bubbles] {{webarchive|url=https://web.archive.org/web/20180124144431/https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3090405 |date=24 January 2018 }}. ''Bitcoins and Bank Runs: Analysis of Market Imperfections and Investor Hysterics.'' Social Science Research Network (SSRN). Retrieved 24 December 2017.</ref> such as [[housing market bubble]]s.<ref>{{Citation |last=McCrum |first=Dan |title=Bitcoin's place in the long history of pyramid schemes |date=10 November 2015 |url=https://www.ft.com/content/1877c388-8797-11e5-90de-f44762bf9896 |work=Financial Times |archive-url=https://web.archive.org/web/20170323054631/https://www.ft.com/content/1877c388-8797-11e5-90de-f44762bf9896 |archive-date=23 March 2017 |url-status=live}}</ref> [[Howard Marks (investor)|Howard Marks]] of [[Oaktree Capital Management]] stated in 2017 that digital currencies were "nothing but an unfounded fad (or perhaps even a pyramid scheme), based on a willingness to ascribe value to something that has little or none beyond what people will pay for it", and compared them to the [[tulip mania]] (1637), [[South Sea Bubble]] (1720), and [[dot-com bubble]] (1999).<ref>{{Citation |last=Kim |first=Tae |title=Billionaire investor Marks, who called the dotcom bubble, says bitcoin is a 'pyramid scheme' |date=27 July 2017 |url=https://www.cnbc.com/2017/07/26/billionaire-investor-marks-who-called-the-dotcom-bubble-says-bitcoin-is-a-pyramid-scheme.html |archive-url=https://web.archive.org/web/20170905042046/https://www.cnbc.com/2017/07/26/billionaire-investor-marks-who-called-the-dotcom-bubble-says-bitcoin-is-a-pyramid-scheme.html |publisher=CNBC |archive-date=5 September 2017 |url-status=live}}</ref> ''[[The New Yorker]]'' has explained the debate based on interviews with blockchain founders in an article about the “argument over whether Bitcoin, Ethereum, and the blockchain are transforming the world”.<ref>{{Cite web |last=Paumgarten |first=Nick |date=15 October 2018 |title=The Prophets of Cryptocurrency Survey the Boom and Bust |url=https://www.newyorker.com/magazine/2018/10/22/the-prophets-of-cryptocurrency-survey-the-boom-and-bust |access-date=20 August 2019 |work=The New Yorker}}</ref>

While cryptocurrencies are digital currencies that are managed through advanced encryption techniques, many governments have taken a cautious approach toward them, fearing their lack of central control and the effects they could have on financial security.<ref>[http://www.meetup.com/BitcoinDC/events/176047462/?oc=evam Cryptocurrency and Global Financial Security Panel at Georgetown Diplomacy Conf] {{webarchive|url=https://web.archive.org/web/20140815121121/http://www.meetup.com/BitcoinDC/events/176047462/?oc=evam |date=15 August 2014 }}, MeetUp, 11 April 2014</ref> Regulators in several countries have warned against cryptocurrency and some have taken concrete regulatory measures to dissuade users.<ref>{{Cite web |last=Schwartzkopff |first=Frances |date=17 December 2013 |title=Bitcoins Spark Regulatory Crackdown as Denmark Drafts Rules |url=https://www.bloomberg.com/news/2013-12-17/bitcoin-rules-drafted-in-denmark-as-regulator-warns-against-use.html |url-status=live |archive-url=https://web.archive.org/web/20131229064125/http://www.bloomberg.com/news/2013-12-17/bitcoin-rules-drafted-in-denmark-as-regulator-warns-against-use.html |archive-date=29 December 2013 |access-date=29 December 2013 |publisher=Bloomberg}}</ref> Additionally, many banks do not offer services for cryptocurrencies and can refuse to offer services to virtual-currency companies.<ref>{{Cite web |last=Sidel |first=Robin |date=22 December 2013 |title=Banks Mostly Avoid Providing Bitcoin Services. Lenders Don't Share Investors' Enthusiasm for the Virtual-Currency Craze |url=https://www.wsj.com/news/articles/SB10001424052702304202204579252850121034702 |url-status=live |archive-url=https://web.archive.org/web/20151119021729/http://www.wsj.com/news/articles/SB10001424052702304202204579252850121034702 |archive-date=19 November 2015 |access-date=29 December 2013 |website=The Wall Street Journal}}</ref> Gareth Murphy, a senior central banking officer has stated "widespread use [of cryptocurrency] would also make it more difficult for statistical agencies to gather data on economic activity, which are used by governments to steer the economy". He cautioned that virtual currencies pose a new challenge to central banks' control over the important functions of monetary and exchange rate policy.<ref>[http://www.rte.ie/news/business/2014/0703/628309-bitfin-conference/ decentralized currencies impact on central banks] {{webarchive|url=https://web.archive.org/web/20160304081304/http://www.rte.ie/news/business/2014/0703/628309-bitfin-conference/ |date=4 March 2016 }}, RTÉ News, 3 April 2014</ref> While traditional financial products have strong consumer protections in place, there is no intermediary with the power to limit consumer losses if bitcoins are lost or stolen.<ref>[https://www.forbes.com/sites/timothylee/2013/04/03/four-reason-you-shouldnt-buy-bitcoins/ Four Reasons You Shouldn't Buy Bitcoins] {{webarchive|url=https://web.archive.org/web/20170823075106/https://www.forbes.com/sites/timothylee/2013/04/03/four-reason-you-shouldnt-buy-bitcoins/ |date=23 August 2017 }}, Forbes, 3 April 2013</ref> One of the features cryptocurrency lacks in comparison to credit cards, for example, is consumer protection against fraud, such as [[chargeback]]s.

Some companies such as [[NCR Corporation]], which partnered with Flexa and [[Gemini (company)|Gemini]], have started integrating them in their [[POS system]]s and retailers that have such POS systems (like Starbucks, Wholefoods, Nordstroms, ...) hence offer the possibility of paying with them.<ref>[https://www.forbes.com/sites/darrynpollock/2020/01/29/will-2020-be-the-year-cryptocurrency-and-blockchain-becomes-operational/ Will 2020 Be The Year Cryptocurrency And Blockchain Becomes Operational?]</ref><ref>[https://medium.com/flexa/enabling-the-next-wave-of-mainstream-cryptocurrency-adoption-d5c613c9c3d Enabling the next wave of mainstream cryptocurrency adoption at NRF 2020]</ref>

The cryptocurrency community refers to pre-mining, hidden launches, [[Initial coin offering|ICO]] or extreme rewards for the altcoin founders as a deceptive practice.<ref>{{Cite web|date=August 2013|title=Scamcoins|url=http://altcoins.com/scamcoins|url-status=live|archive-url=https://web.archive.org/web/20140201051133/http://altcoins.com/scamcoins|archive-date=1 February 2014}}</ref> It can also be used as an inherent part of a cryptocurrency's design.<ref>{{Cite news|last=Bradbury|first=Danny|date=25 June 2013|title=Bitcoin's successors: from Litecoin to Freicoin and onwards|work=The Guardian|url=https://www.theguardian.com/technology/2013/jun/25/bitcoin-successors-litecoin-freicoin|url-status=live|access-date=11 January 2014|archive-url=https://web.archive.org/web/20140110172029/http://www.theguardian.com/technology/2013/jun/25/bitcoin-successors-litecoin-freicoin|archive-date=10 January 2014}}</ref> Pre-mining means currency is generated by the currency's founders prior to being released to the public.<ref>{{Cite news|last=Morris|first=David Z|date=24 December 2013|title=Beyond bitcoin: Inside the cryptocurrency ecosystem|work=Fortune|url=http://fortune.com/2013/12/24/beyond-bitcoin-inside-the-cryptocurrency-ecosystem/|url-status=live|access-date=27 January 2018|archive-url=https://web.archive.org/web/20180127202338/http://fortune.com/2013/12/24/beyond-bitcoin-inside-the-cryptocurrency-ecosystem/|archive-date=27 January 2018}}</ref>

[[Paul Krugman]], winner of the [[Nobel Memorial Prize in Economic Sciences]], has repeated numerous times that it is a bubble that will not last<ref>{{Cite web|title=PAUL KRUGMAN: Bitcoin is a more obvious bubble than housing was|url=http://www.businessinsider.com/paul-krugman-says-bitcoin-is-a-bubble-2017-12|url-status=live|archive-url=https://web.archive.org/web/20180317102110/http://www.businessinsider.com/paul-krugman-says-bitcoin-is-a-bubble-2017-12|archive-date=17 March 2018|access-date=16 March 2018}}</ref> and links it to [[Tulip mania]].<ref>{{Cite web|last=Krugman|first=Paul|date=26 March 2018|title=Opinion - Bubble, Bubble, Fraud and Trouble|url=https://www.nytimes.com/2018/01/29/opinion/bitcoin-bubble-fraud.html|url-status=live|archive-url=https://web.archive.org/web/20180604124251/https://www.nytimes.com/2018/01/29/opinion/bitcoin-bubble-fraud.html|archive-date=4 June 2018|access-date=17 March 2018|website=The New York Times}}</ref> American business magnate [[Warren Buffett]] thinks that cryptocurrency will come to a bad ending.<ref>{{Cite web|title=Warren Buffett: Cryptocurrency will come to a bad ending|url=https://www.cnbc.com/video/2018/01/10/warren-buffett-cryptocurrency-will-come-to-a-bad-ending.html|url-status=live|archive-url=https://web.archive.org/web/20180319084715/https://www.cnbc.com/video/2018/01/10/warren-buffett-cryptocurrency-will-come-to-a-bad-ending.html|archive-date=19 March 2018|access-date=18 March 2018|publisher=CNBC}}</ref> In October 2017, [[BlackRock]] CEO [[Laurence D. Fink]] called bitcoin an 'index of [[money laundering]]'.<ref>{{Cite web|last=Imbert|first=Fred|date=13 October 2017|title=BlackRock CEO Larry Fink calls bitcoin an 'index of money laundering'|url=https://www.cnbc.com/2017/10/13/blackrock-ceo-larry-fink-calls-bitcoin-an-index-of-money-laundering.html|url-status=live|archive-url=https://web.archive.org/web/20171030202248/https://www.cnbc.com/2017/10/13/blackrock-ceo-larry-fink-calls-bitcoin-an-index-of-money-laundering.html|archive-date=30 October 2017|access-date=19 November 2017}}</ref> "Bitcoin just shows you how much demand for money laundering there is in the world," he said.

=== Economic freedom ===
Cryptocurrency presents major strides in economic growth and freedom to individuals such as in developing nations as well as those under economic sanctions. The crypto market is known to be easier to access than traditional banks due to less regulations and allows citizens to bypass governments and regulations to mine for cryptocurrency rewards to utilise, trade, and convert for common goods to survive.<ref>{{Cite web|date=2021-05-21|title=Iran uses crypto mining to lessen impact of sanctions, study finds|url=https://www.reuters.com/technology/iran-uses-crypto-mining-lessen-impact-sanctions-study-finds-2021-05-21/|access-date=2021-05-28|website=Reuters}}</ref> In countries with high inflation where fiat currency is no longer available to easily utilise to survive, many have turned to cryptocurrency working through online job boards to bypass strict regulations and achieve economic freedom.<ref>{{Cite web|last=Gladstein|first=Alex|date=28 December 2018|title=Why Bitcoin Matters for Freedom|url=https://time.com/5486673/bitcoin-venezuela-authoritarian/|url-status=live|access-date=25 April 2021|website=TIME}}</ref>

=== Environmental impact ===
Cryptocurrency mining consumes significant quantities of electricity and has a large associated [[carbon footprint]].<ref>{{Cite journal|last=Foteinis|first=Spyros|date=2018-02-07|title=Bitcoin's alarming carbon footprint|url=https://www.nature.com/articles/d41586-018-01625-x|journal=Nature|language=en|volume=554|issue=7691|pages=169|doi=10.1038/d41586-018-01625-x|bibcode=2018Natur.554..169F|doi-access=free}}</ref> In 2017, bitcoin mining was estimated to consume 948MW, equivalent to countries the scale of [[Angola]] or [[Panama]], respectively ranked 102nd and 103rd in the world. Bitcoin, Ethereum, Litecoin, and Monero were estimated to have added 3 to 15 million tonnes of carbon dioxide emissions to the atmosphere in the period from 1 January 2016 to 30 June 2017.<ref>{{Cite journal|last1=Krause|first1=Max J.|last2=Tolaymat|first2=Thabet|date=November 2018|title=Quantification of energy and carbon costs for mining cryptocurrencies|url=https://www.nature.com/articles/s41893-018-0152-7|journal=Nature Sustainability|language=en|volume=1|issue=11|pages=711–718|doi=10.1038/s41893-018-0152-7|s2cid=169170289|issn=2398-9629}}</ref> By November 2018, Bitcoin was estimated to have an annual energy consumption of 45.8TWh, generating 22.0 to 22.9 million tonnes of carbon dioxide, rivalling nations like [[Jordan]] and [[Sri Lanka]].<ref>{{Cite journal|last1=Stoll|first1=Christian|last2=Klaaßen|first2=Lena|last3=Gallersdörfer|first3=Ulrich|date=2019-07-17|title=The Carbon Footprint of Bitcoin|url=https://www.cell.com/joule/abstract/S2542-4351(19)30255-7|journal=Joule|language=en|volume=3|issue=7|pages=1647–1661|doi=10.1016/j.joule.2019.05.012|issn=2542-4785|doi-access=free}}</ref>

=== Technological limitations ===
There are also purely technical elements to consider. For example, technological advancement in cryptocurrencies such as bitcoin result in high up-front costs to miners in the form of specialized [[computer hardware|hardware]] and [[software]].<ref>[https://theweek.com/article/index/242753/want-to-make-money-off-bitcoin-mining-hint-dont-mine Want to make money off Bitcoin mining? Hint: Don't mine] {{webarchive|url=https://web.archive.org/web/20140505181855/http://theweek.com/article/index/242753/want-to-make-money-off-bitcoin-mining-hint-dont-mine |date=5 May 2014 }}, ''The Week'', 15 April 2013</ref> Cryptocurrency transactions are normally irreversible after a number of blocks confirm the transaction. Additionally, cryptocurrency private keys can be permanently lost from local storage due to malware, data loss or the destruction of the physical media. This precludes the cryptocurrency from being spent, resulting in its effective removal from the markets.<ref>[http://c4ss.org/content/25638 Keeping Your Cryptocurrency Safe] {{webarchive|url=https://web.archive.org/web/20140712235229/http://c4ss.org/content/25638 |date=12 July 2014 }}, Center for a Stateless Society, 1 April 2014</ref>

===Academic studies===
In September 2015, the establishment of the [[peer-reviewed]] [[academic journal]] ''[[Ledger (journal)|Ledger]]'' ({{ISSN|2379-5980}}) was announced. It covers studies of cryptocurrencies and related technologies, and is published by the [[University of Pittsburgh]].<ref>{{Cite web |title=Introducing Ledger, the First Bitcoin-Only Academic Journal |url=http://motherboard.vice.com/read/introducing-ledger-the-first-bitcoin-only-academic-journal |url-status=live |archive-url=https://web.archive.org/web/20170110172807/http://motherboard.vice.com/read/introducing-ledger-the-first-bitcoin-only-academic-journal |archive-date=10 January 2017 |website=Motherboard}}</ref>

The journal encourages authors to [[Digital signature|digitally sign]] a [[Hash function|file hash]] of submitted papers, which will then be [[Trusted timestamping|timestamped]] into the bitcoin [[Blockchain (database)|blockchain]]. Authors are also asked to include a personal bitcoin address in the first page of their papers.<ref>{{Cite web |title=Editorial Policies |url=http://ledgerjournal.org/ojs/index.php/ledger/about/editorialPolicies#custom-0 |url-status=dead |archive-url=https://web.archive.org/web/20161223135741/http://www.ledgerjournal.org/ojs/index.php/ledger/about/editorialPolicies#custom-0 |archive-date=23 December 2016 |access-date=24 September 2015 |website=ledgerjournal.org}}</ref><ref>{{Cite journal |year=2015 |title=How to Write and Format an Article for Ledger |url=http://ledger.pitt.edu/ojs/public/journals/1/AuthorGuide.pdf |url-status=live |journal=[[Ledger (journal)|Ledger]] |doi=10.5195/LEDGER.2015.1|archive-url=https://web.archive.org/web/20150922190603/http://ledger.pitt.edu/ojs/public/journals/1/AuthorGuide.pdf |archive-date=22 September 2015}}</ref>

===Aid agencies===
A number of [[Aid agency|aid agencies]] have started accepting donations in cryptocurrencies, including the [[American Red Cross]], [[UNICEF]],<ref name="ibtimesunicef">{{Cite news |last=Mendoza |first=Ron |date=14 October 2019 |title=UNICEF Blockchain Fund: First UN Organization To Accept Cryptocurrency Donations |work=IB Times] |url=https://www.ibtimes.com/unicef-blockchain-fund-first-un-organization-accept-cryptocurrency-donations-2845332 |access-date=14 October 2019}}</ref> and the [[UN World Food Program]].

Cryptocurrencies make tracking [[donation]]s easier and have the potential to allow donors to see how their money is used ([[financial transparency]]).

Christopher Fabian, principal adviser at UNICEF Innovation said that UNICEF would uphold existing donor protocols, meaning that those making donations online would have to pass rigorous checks before they were allowed to deposit funds to UNICEF.<ref>{{Cite web|url=https://www.unicef.org/press-releases/unicef-launches-cryptocurrency-fund|title=UNICEF launches Cryptocurrency Fund|website=www.unicef.org}}</ref><ref>{{Cite web|url=http://www.theguardian.com/global-development/2019/oct/09/unicef-now-accepting-donations-through-bitcoin-and-ether|title=Unicef now accepting donations through bitcoin and ether|date=9 October 2019|website=the Guardian}}</ref>

==References==
{{Reflist}}

==Further reading==
* <!--<ref name=psmagA>-->{{Cite web |last=Chayka |first=Kyle |date=2 July 2013 |title=What Comes After Bitcoin? |url=https://psmag.com/economics/what-comes-after-bitcoin-future-of-cryptocurrency-61660 |access-date=18 January 2014 |website=Pacific Standard}}<!--</ref>-->
* <!--<ref name=psmagB>-->{{Cite journal |last1=Guadamuz |first1=Andres |last2=Marsden |first2=Chris |year=2015 |title=Blockchains and Bitcoin: Regulatory responses to cryptocurrencies |url=http://sro.sussex.ac.uk/id/eprint/58872/1/bitcoin.pdf |journal=First Monday |volume=20 |issue=12 |doi=10.5210/fm.v20i12.6198 |s2cid=811921}}<!--</ref>-->

==External links==
* {{Commons category-inline|Cryptocurrency}}

[[Category:Cryptocurrencies| ]]
[[Category:Financial technology]]
[[Category:Decentralization]]
[[Category:Uberisation]]
[[Category:Applications of cryptography]]