Ostryanin S. A., Reutskova O. N.

Oles Honchar Dnipropetrovsk National University, Ukraine

DIGITAL CURRENCIES – AN ENTIRELY NEW WAY

Currently most spheres of human activity are getting more technical and change over the Web. Money values and currency values especially are going into the Internet. Originally money was regarded as material goods. Later it appeared in the form of paper bills and coins which were equivalent of gold in the central banks. After Jamaican conference money lost their connection with gold as a valuable standard. Now it is losing its form as a thing which can be palpable.

Recently, in the Web money have been transformed into digital currencies, which is not issued by the national central banks and does not perform a function of value measurement like existing currencies for instance Dollar etc. According to the legislations of most nations, digital currencies cannot be means of payments but they are being used to buy real goods or services. Digital currencies can also be exchanged.

The most perspective and extraordinary type of digital currency is called Cryptocurrency, which is based on cryptographic methods and operates in the decentralized peer computing network. It began in 2009, when a man under the nick-name Satoshi Nakamoto founded Bitcoin. It is considered to be the most significant payment system in the XXI century. According to this system one monetary unit is not released by anybody but mined by computers in the network. While one bitcoin is being mined – computer of its miner is solving different mathematical problems. Since its foundation the problems have been harder and harder to be computed so that’s why bitcoin exchange rate rose from twenty dollars per bitcoin in 2009 to one thousand in the late 2013. Recently it has become really notable and made sensation all over the world. Governments of such countries as Russia can decline it while Americans and Switzerland’s can accept it.

Some analysts compare Bitcoin with MMM tickets being popular in the middle 90s because its similar to bitcoin as values arise from nothing. This statement is probably true but only partly, because people should not forget about electricity costs and the process of solving math problems is becoming harder to be computed. Bitcoin has become so popular in the Internet that its clones started to appear like something mushroomed. Different Litecoin, Dogecoin and even Kaynecoin named after a famous rap singer Kanye West are based on the same mechanism like Bitcoin but they reached neither its popularity nor significant success. Bedises these clones have not enabled people to become billionaires like Bitcoin have. You can either decline these trends in economy and progress in money nature or accept it but you really can’t deny that big changes to currencies are appearing on the horizon of the future.