Blockchain Technology and Bitcoin

Since Blockchain is a new concept, it is very difficult to find a complete and accurate definition in the literature. However, according to the definition made in the article titled Blockchain Technology and Its Situation in the Turkish Finance Sector by the Journal of Finance, Economics and Social Research; It is possible to roughly explain this new technology as follows: "Blockchain is basically a technology designed for the safe and secure storage and management of data containing value - such as money, identity, valuable papers. (Ethereum Blog, 28.06.2018)".

In order for business processes to operate safely and efficiently, information must be transferred as quickly and accurately as possible. At this point, Blockchain technology meets this need by creating a virtual ledger containing relevant records that can only be accessed by authorized network members. The fact that members who can access this system cannot make any changes to the data highlights the elements of reliability and transparency in terms of the relevant technology. In short, it is clear that this indestructible and unchangeable technology, which has an anonymous structure and is not a central system, is a revolution in the world of technology in terms of both reliability and transparency.

Blockchain Working Principle

In blockchain technology, the concept of identity is created in the form of a user identification number recognized by all networks. In this way, personal information such as username and surname can be kept in the background and stored by individuals within the scope of data security. All transactions made via Blockchain are verified by the user and the records become permanent. This verification, made by the parties of the relevant transaction without involving a central system in the process, is the most important indicator of a decentralized technology approach. When a new transaction or an edit to an existing transaction comes to a blockchain, typically the majority of nodes in a blockchain application execute algorithms to evaluate and verify the history of the individual proposed blockchain block. If a majority of nodes reach a consensus that the date and signature are valid, the new transaction block is accepted into the ledger and a new block is added to the transaction chain. This is actually the main reason why it is called Chain. If the majority disagrees with adding or changing the ledger entry, it is rejected and not added to the chain. This distributed consensus model allows the blockchain to operate as a distributed ledger and, most importantly, there is no need for a central authority to tell which transactions are valid and (more importantly) which are not.

Blockchain World in the Future

With the development of blockchain technology, it is predicted that many applications and services we use today will be decentralized and transparent. As the phenomenon of interoperability between blockchain applications increases, we will gradually witness the internet world becoming blockchain-based. This approach is called web 3.0. This term represents a more democratic and decentralized internet that operates entirely on blockchain. Users, on the other hand, will be the full masters of their own data in this new internet and will be able to make decisions in all processes that require explicit consent, such as data processing and sharing.

Blockchain technology has begun to be widely used in banking, other financial institutions and the cryptocurrency sector, and new areas are being built every day. In this context, one of the first concepts that comes to mind is, of course, the concept of "Metaverse". Metaverse is the name given to the perceptual universe in which people feel completely mentally, thanks to augmented virtual reality devices, without making any physical effort. The future of the Metaverse concept, which has become a recent favorite of giant companies such as NVIDIA, Microsoft and Facebook, causes different predictions to be put forward in many respects.

Cryptocurrency Concept and Its Use in Turkey

Cryptocurrency in short; It is a digital, online and decentralized currency that can be used to purchase goods and services. The decentralization of cryptocurrencies comes from a blockchain that functions as a distributed ledger, a public database of transactions.

According to statistics, Turkey ranks fourth in the world in the field of cryptocurrency ownership or use with a rate of 16%, while the number of cryptocurrency owners in Turkey is announced as approximately 2.5 million as of 2021.

According to the regulation prepared by the Central Bank of the Republic of Turkey (CBRT) on April 16, the direct or indirect use of crypto assets for the purchase of goods and services has been banned as of April 30, 2021.

While there are no restrictions on crypto money purchases and sales, it is aimed to limit its use for the purchase of goods and services, "crypto assets are not subject to a regulation and control mechanism, there is no central interlocutor, their market values ​​show excessive volatility, they can be used in illegal activities due to their anonymous structure, wallets can be stolen or It can be used illegally without the knowledge of the owners, and the transactions can be irreversible.” In addition, with the relevant regulation, a definition has been made for cryptocurrencies, which did not previously have a definition in Turkish Law.

As a continuation of the developments, the Regulation on Prevention of Laundering Proceeds of Crime and Financing of Terrorism was published in the Official Gazette on 01.05.2021. With this regulation, crypto asset service providers have also been accepted as liable within the scope of the regulation by the Financial Crimes Investigation Board within the scope of the Ministry of Treasury and Finance. In addition, regulations have been introduced to ensure that crypto asset service providers conduct detailed identification during each transaction over a certain amount and report suspicious transactions to the Ministry of Treasury and Finance, regardless of the amount.
When these developments are evaluated, we can see that in every development that takes place in this field full of innovations, the legal world tries to make sense of these innovations and draw their boundaries with certain regulations.

Bitcoin Concept

Bitcoin, created by Satoshi Nakamoto in 2009, is considered the first decentralized cryptocurrency. The transaction with this cryptocurrency took place in January 2009 between Nakamoto and the first users of Bitcoin. The first known payment transaction was made by a bitcoin miner in 2010. Over time, the currency began to gain wider attention and Bitcoin began to be used in commercial life by many retailers in 2012 and 2013. Bitcoin, which has become a favorite of investors looking for a safe haven, especially during the crisis, has become increasingly difficult to produce. With the Bitcoin halving in May 2020, this cryptocurrency, which is increasingly difficult to produce, has begun to be accepted as an investment tool. The price of Bitcoin, which has a limited supply due to its structure, depends only on the supply-demand relationship. Prices and market volume are determined automatically by investors' Bitcoin purchases and sales.

There are basically two ways to own Bitcoin; To buy it in exchange for real currencies through cryptocurrency platforms or to obtain the result as a reward after block production (mining) by deciphering cryptographic codes. Bitcoin buying and selling can be done through many platforms.

Bitcoin Production Capacity

Bitcoin is not unlimited by nature, but as can be understood, this feature, which makes it valuable and seen as an investment tool, has become one of its prominent features. The relevant process for Bitcoin, of which only 21 million units will be produced, is expected to be completed in 2140, and considering the current situation, there is a significant possibility that this period will be pushed earlier.

Bitcoin Mining

The process of uncovering Bitcoin is called "Mining". This term has also strengthened comparisons with gold. Bitcoin mining is done with difficult password solutions. Thus, new blocks are revealed. The launch of new Bitcoins is also possible in this way. Miners earn money in return for these difficult transactions. This is called "Block Reward" or "Miner Reward".

As a result, although cryptocurrencies, which are becoming more valuable day by day and have become the favorite of investors, leave positive impressions on their investors in terms of reliability and transparency, they are sometimes used by malicious people in the markets for the purpose of defrauding the masses. The fact that economic literacy is not sufficiently developed and the nature of cryptocurrencies is complex and difficult to understand leads to these negative consequences. Based on these issues, it has become inevitable for the authorities to introduce some legal regulations, and it is even observed that many countries, especially the United States, have taken concrete steps in this regard. In fact, one of these countries, El Salvador, became the first country to accept cryptocurrency as official currency. With the relevant law coming into force in the country, all workplaces are obliged to accept payments made in bitcoin as well as American dollars. Even if such positive steps are being taken, the fate of cryptocurrencies is still uncertain in many respects. It is quite possible to say that cryptocurrencies, which were introduced by focusing on the concept of decentralization, will continue to exist in a period when demand from investors is constantly increasing and the effects of central authorities on the economy are negatively criticized.