X Международная студенческая научная конференция Студенческий научный форум - 2018

With the development of the Internet and the expansion of the integration space in the sphere of financial regulation, new financial products and instruments appear, the main purpose of which is to meet the needs of economic entities in an effective, efficient and safe money exchange. The representative of such an instrument is crypto currency.

Crypto currency (virtual currency) is a digital representation of the value, which is based on the system of a distributed registry (blockchain), which is used in calculations as a means of payment, is not issued by the state.

There are more than 70 different types of risks associated with the use of crypto currencies, but despite this, the scale of calculation is increasing, and their popularity is growing. By 2014, the total number of different crypto currencies was more than 80. And by 2018, more than 1,000 different crypto currencies have been created and are on the crypto currency market, with different rates and the number of coins.

Crypto currency is not material and in fact is just a code (type) of digital currency, accounting and issuance of which are based on certain cryptographic methods and are not regulated in any way. We can say that formally, it acts as a kind of bonus which can be redeemed for any service or product.

The issue of crypto currencies is carried out by means of "mining" or mining. Mining is the process of using the power of computing computer stations with the help of which chains of crypto currency transaction blocks are created. In turn, each block must meet certain criteria of complexity and correctness of the creation, for which hashing algorithms are used. It follows thence that the initial value of crypto currencies is the cost of electricity spent in the mining process.

The secondary value of crypto currencies determines the demand for them. It can be of several types: purchase of goods (for crypto currency); transfer of crypto currency from one account to another without charging a fee (or less than 0.1%); speculative-investor (purchase of crypto currency in the hope that it will be able to sell it more).

And an important role in the pricing process is played by the final or final issue of crypto currencies.

One of the most famous crypto currencies is Bitcoin (bitcoin), which occupies 40% of the crypto currency market. Limited issue volume bitcoin total number of coins to 21 million the Process of transaction processing and emissions produced collectively and anonymously, effort networks, without the mediation of the Bank. Already in 2017, bitcoin started to gain popularity among the many various investors, including large investment funds.

To date, crypto currency, as a special type of payment, has become very widespread and popular. Among the most famous crypto currencies, software past bitcoin are litecoin, ppcoin, terracoin, namecoin, ripple, Ethereum, nem, dash, altcoins, novacoin.

Most of the altcoins are just a variation of bitcoin. When creating new currencies, they use the existing bitcoin code and improve it at their discretion. As a result, we get a branching of crypto currencies, with a common "start" in the form of bitcoin. Such a process is called "hard fork" (literally hard fork). That is, when currency users are not able to come to a common decision about the work of digital money, there is a hard fork.

For example, we can observe a similar situation with bitcoin in August 2017. A distinctive feature of bitcoin is the speed and low cost of transactions. However, the popularity of the crypto currency has increased so much that the system has ceased to cope with such a volume of work and began to malfunction. As a result, bitcoin users had to wait for a few hours, and in some cases even days, for the operation to occur.

Below is a graph (figure 1) of the official exchange rate of bitcoin to the Russian ruble for August 2017 according to the Central Bank.

Figure 1 - Changes in the exchange rate by days in the period from 01.08.2017 - 31.08.2017 year

According to this schedule, we can observe how the bitcoin rate has changed in a very short period of time. During 30 days, bitcoin gained momentum and by the end of August, despite periodic depreciation, the currency exchange rate on 31.08.2017 increased 98879.36516, compared to 01.08.2017.

Bitcoin users came to the conclusion that it is necessary to improve the system. But the crypto currency does not have a single owner who would make any changes to improve the system. In order to make changes to the decentralized crypto currency, the majority decision is not enough. It is necessary that 99% of users accept the new rules and comply with them. After making a decision to change the bitcoin system by the bulk of users, it was not possible to come to a common action plan. As a result, the market has become more on a single bitcoin, as bitcoin split to bitcoin and bitcoin to cash. Next, consider some crypto currencies by bitcoin.

Ethereum (Ethereum, ether) is the currency of "smart contracts", occupies 18% of the crypto currency market. The currency was created in 2015. Vitaly Buterin, a canadian programmer of Russian origin, raised funds through crowd funding. Ethereum is the first crypto currency that uses the technology of "smart contracts", which means it is able to" take the form " of any object.

For example, at the conclusion of the wager, the parties prescribe certain conditions and make some amounts into the account, in turn, the "smart contract" removes the sums paid into the account and holds them until the terms of the contract are fulfilled, that is, until one of the parties wins. This approach reduces human intervention and imposes these duties on the machine. In the future, Ethereum can be used in logistics, accounting and law.

Ripple is the fastest crypto currency and occupies 5.7% of the total crypto currency market. Also, ripple feature is that the code of this crypto currency is written from scratch, commissioned by venture funds. Unlike crypto-currencies we have discussed above, ripple is not mine. Because the system is centralized and all the digital money already exist and are owned by the company – Ripple Lab, which gives out a crypto currency in a variety of useful calculations, processing of scientific data from different universities.

On the official website of ripple calculator shows that the turnover of the Bank 5mln. $ and the number of transactions - 300 thousand pieces per year, it is possible to save from 3 to 4 dollars per transaction, which means that the savings of the Bank will be more than a million dollars per year.

Based on all of the above, we can highlight the main advantages and disadvantages of crypto currencies, which will be presented in the following table 1:

Table 1 - main pros and cons of crypto currencies

The advantages of cryptocurrencies	Disadvantages of the cryptocurrency
the absence of taxation	high volatility
low fees on transactions	inability to return an erroneous payment
round the clock earnings available to all	there are risks of bankruptcy of the crypto-exchange
the use of cryptocurrency to pay for goods and payments to customers of different countries	the lack of control issue and turn – in errors the client is guilty
ways to earn cryptocurrency available to everyone

References

1. Bitcoin currency exchange rate history (August 2017) [Electronic resource] / Calculator help portal. - URL: https://www.calc.ru/kotirovka-bitkoin.html?date=2017-08.

2. Cryptocurrency [Electronic resource] / legal aspects of cryptocurrency and ICO. - 2017. - URL: http://www.lp.ru/uploads/3526_lp_30_book_view.pdf

3. Martynenko N. N. Money, credit, banks: a tutorial and workshop for undergraduate academic / N. N. Martynenko, Yu. a. Sokolov - M.: publishing house of yurayt. 2018. Pp. 29 - 30.

4. Five main threats of cryptocurrencies [Electronic resource] / A. pashinskaya / Ekonomika. - 2017. – URL: http://www.dw.com/ru/5-популярных-криптовалют-кроме-биткоина/a-40531775.

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