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The bitcoin phenomenon: a new currency and a new payment system

in today's global world

S. Pertseva, PhD in Economics, Associate Professor, Department of International Finance, MGIMO (U)

Bitcoin is a unique and promising innovation in the area of

financial and payment systems. Today, this cryptocurrency is attracting increasing attention.

Today, this cryptocurrency is attracting more and more attention. It is worth noting that bitcoin's uniqueness

is that it is a new monetary unit based on

cryptography, and it's also a new decentralized

blockchain-based payment system. The emergence of this virtual currency

has forced a rethinking of traditional payment schemes and a reflection on the

about the evolution of the global monetary order.

Speaking about the background of bitcoin's emergence, it is worth noting that

The years of 2007-2008 proved to be a period of economic turbulence for

of the global economy. The following events occurred during this period of time

the mortgage crisis in the USA, which triggered the global

For the first time in its history, the Fed resorted to a stimulus mechanism.

for the first time in its history, the Fed resorted to quantitative easing.

the debt crisis of individual member states. Such economic

difficulties and declining confidence in national monetary authorities

monetary authorities paved the way for the emergence of a new currency and a new payment system called bitcoin.

bitcoin.

Bitcoin is not the only cryptocurrency: there are 150 of them today.

Bitcoin is not the only cryptocurrency: there are more than 150 of them today and most of them are called altcoins.

that is, they are alternative currencies based on the Bitcoin protocol.

bitcoin and based on its protocol, but with their own unique combination of properties.

combination of properties. Bitcoin, however, is the first cryptocurrency in

chronology, in scale of use and in market capitalisation.

Although today bitcoin has a market capitalisation of more than 6.5

billion1

and an average of 150,000 transactions a day are made with the cryptocurrency

more than 150 thousand transactions a day,2

The history of the digital currency's emergence cannot

The history of the digital currency cannot be established with absolute certainty, and there is no official and

documented version is not available. According to the most widely accepted version on the net, bitcoin appeared as a digital currency.

The most widely circulated version is that bitcoin owes its emergence to Satoshi Nakamoto, while the concept of cryptocurrency

The concept of the cryptocurrency was first proposed in 1998 by Wei Dai3

.

A programmer who belongs to an informal group of cyberpunks

(cyperpunks4)

proposed the idea of a new form of money that would

cryptography for control and transactions, but without a central regulator.

there would be no centralized regulatory institution.                                                            


2

In October 2008, a so-called "white paper" appeared online on behalf of Satoshi Nakamoto

so-called 'white paper'.

5

which describes the nature, mechanism and purpose of cryptocurrencies.

of the cryptocurrency and its purpose. The first transaction involving

bitcoin was made in January 2009, following

the first blockchain, dubbed 'genesis', was launched just beforehand, which marked the start of the mining process.

which marked the start of the mining process.

"Genesis" was created on 3 January 2009, and the first block of the system

in addition to the hash algorithm, contained the following text inscription "The Times

03/Jan/2009 Chancellor on brink of second bailout for banks", which translated

means: "England's finance minister is preparing to launch a second round

bailout for banks". The phrase is taken from a

headline on January 3, 2009 from The Times6.

. The use of this particular phrase

in "genesis" may further indicate the idea behind the creation of

alternative currency and alternative settlement system - the creation of an

independent monetary unit and system due to a loss of confidence in the already

existing ones.

Let's move on to a direct characterisation of bitcoin. So,

The cryptocurrency has the following features:

1. bitcoin is a network that operates based on

basic consensus principle, which assumes that there is

of the network are always in agreement about what is happening in the network.

2. Bitcoin can be called the "electronic money" of the Internet,

in the sense that it is settled directly between counterparties, without the involvement of a third party, i.e. a settlement system.

a third party, i.e. a settlement agent, as is the case, for example, with

payments by means of a bank card.

3. Due to the fact that bitcoin is a decentralised system, no

bitcoin is a decentralized system and no particular individual or institution owns or controls it; bitcoin is located on the Internet.

bitcoin is controlled by an entire, networked community of users.

community of users. Of course, groups of programmers and

are working to improve the cryptocurrency system,

But any innovations cannot be imposed; it is up to users to decide whether or not to accept the updates.

users decide whether or not to accept updates and new versions. Thus

Thus, the choice of where to develop the system is made by

consensus within the network. The only condition that must be

The only condition that must be complied with by all participants imperatively is the availability of software that satisfies the general rules of the network.

software that satisfies the general rules of the network.

4. Bitcoin is a fairly simple and straightforward

to the consumer. From the user's point of view, bitcoin is

a mobile application or a program installed on a computer,

Bitcoin is a mobile application or computer program that gives access to a person's personal wallet 


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