15

Blockchain and Cryptocurrency

identity and official documents. In blockchain technology, data is recorded not only

by a centre or a group of centres but by everyone involved in the system. Blockchain

enables users who do not trust each other to agree on unchangeable and irrefutable

data without the need for a third party. In other words, what ensures trust in this sys­

tem is not the relationships between individuals but the first set of rules of the system

and the distribution of the record chain produced within these rules to everyone.

Thanks to this technology, a transaction can be recorded without a central authority,

so there can be independent secure communication between components. Blockchain

technology makes it possible to record information or events irrevocably afterward

together with the timestamp. When looking at the studies in the literature, there are

three basic features of blockchain technology: Unchangeable, distributed and cryp­

tographically secure. In addition, in the technical analysis of this technology, five

different components are mentioned: Nodes, transactions, blocks, cryptography and

consensus protocols. In a blockchain-based communication infrastructure, four uni­

versal security principles are provided: Authentication, non-denial, confidentiality

and data integrity. In blockchain technology, there are three different network types:

Private blockchain network, public blockchain network and consortium blockchain

network (Gupta, 2017; Carlozo, 2017; Zheng et al., 2016; Crosby et al., 2016).

Blockchain technology, which came onto the global agenda with the introduction

of Bitcoin in 2008, is an even older technology than cryptocurrencies and potentially

offers advantageous solutions that can be applied in almost every sector. However,

since the focus of this study is cryptocurrencies, one of the areas of use of blockchain

technology, technical details on blockchain technology have been left to other chap­

ters of this book and other studies in this field, and no further details will be given.

In the following sections of the study, the subject of cryptocurrencies is brought to

the fore.

2.3  CRYPTOCURRENCY

Having a dynamic structure throughout history, money has changed and transformed

in line with economic, social and technological development. The adventure, which

started with the use of materials such as seashells, beads and various stones, con­

tinues its journey with commodities money, representative money, fiat money and

finally, digital money. Especially in the last quarter of the 20th century, as a result

of this change, which has accelerated with the globalization process, cryptocurren­

cies show how far the concept of money has evolved today. Cryptocurrencies are

discussed as the most up-to-date type of digital money. Money, as one of the leading

subjects of the economic literature, has been subjected to different evaluations by

different approaches and schools in terms of its definition, functions and features,

and it has kept these discussions up to date with its development and transforma­

tion. Nowadays, at a time that concerns all actors in life, whether economic or not,

cryptocurrencies are high on the agenda due to their advantages, promises and risks

for the future. Whether cryptocurrencies are really money, whether they have the

basic properties of money and whether they fulfil their functions, how their value is

determined, what their legal status should be, and their current and potential usage