Monetary and Technological Aspects of the Emergence and the Development of Cryptocurrencies

An emergence and a rapid development of cryptocurrencies have its monetary and technological background. From the monetary aspect, cryptocurrencies emerged as one of the solutions to the consequences of the last major World financial and economic crisis. To address the consequences of this crisis, the solution was the expansive monetary policy on the global level. Increasing the quantity of money in circulation leads to the fall of its value, and makes depositors search for the solutions for preserving the value of savings, apart from gold and other precious metals, outside the existing monetary system. In addition to this investment opportunity, the nature of cryptocurrencies as an easily transferable payment method, without an intermediary, further increased their attractiveness. From a technological point of view, the emergence of cryptocurrencies was enabled and supported by the emergence of a blockchain technology as a distributed database. This technology represents a decentralized, publicly available database containing registers of asset and transactions in the socalled peer to peer network run by globally connected computers without the impact of any state institutions or powerful individuals and corporations. Therefore, there is a common belief that transactions with cryptocurrencies are anonymous and, thus, often used on the black market. However, these transactions are only partially anonymous. Governments, as well as other users, may check each and every bitcoin address, the amount of money on these addresses, and the flows of money between those addresses through the Internet. There are also browsers called “blockchainexplorers”, on the Internet, where after entering the address, it is possible to obtain information about the cash balance and all incoming and outgoing transactions.