The gradual increasing use of the Internet, which becomes the sine qua non of our life in present days, becomes effective on commercial life. For example, by becom-ing widespread, electronic trade enabled the idiosyncratic economic integrity of digital media to form. The developing virtual economy created monetary units referred to as “virtual money”, including Litecoin, Amazon Coin, Freicoin, Name-coin, Facebook Units, Peercoinor da Ripple, and Bitcoin. The most prevalent one among these is Bitcoin (Sarıkatipoğlu et al., 2015: 90). We will also try to closely deal with Bitcoin in this section.
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First of all, let’s try to define Bitcoin. Bitcoin is a new paying system and is a completely digital consensus network. It is the first paying method from partner to partner, which does not have any mediator and obtains its power from the users.
From the perspective of a user, Bitcoin can be considered the same as shopping through the Internet using cash (Glantz, 2014: 1).
It is an electronic payment system, which is based on cryptographic evidence4, instead of requiring trust; it is a system in which two parts can directly make transactions with each other, without needing a third person (Nakamoto, 2008: 1).
Since the ciphering method is used, the aim of using crypto, generally called crypto monetary unit, is to provide the essence of security functions (Rogojanu &
Badea, 2014: 107). Bitcoin spread on a network, whose remaining part is broadly distributed, and it is not possible to be changed with fraud. In other words, al-though it is virtual money, Bitcoin users have wide control of their own existence (Glantz, 2014: 4). What makes Bitcoin unique is that it is the first digital payment system, which does not have any center in the world. This situation can seem to be confusing but it is not difficult to understand the concepts underlying it (Brito
& Castillo, 2016: 5). Bitcoin is essentially a digital file, in which accounts are kept in a similar way to an account book, with amounts of money on opposite sides of those accounts. In all computers in the Bitcoin network, copies of those accounts are available. The amounts in the account book do not represent anything in the physical world. Since they believe that people want to increase the amount that is present in the opposite side of their account number, that in return to this, they accept the exchange of goods and services in the real world, and also that other people will do the same thing, these amounts have value. The financial value of numbers is existent, because we believe in their values in the same way that we value real money (www.imponderablethings.com). Bitcoin can be used in the physical environment, in Internet medium, and everywhere (restaurants, cafes, private doctors, hairdressers, hotels, virtual monetary stick markets, etc.) else that accepts Bitcoin as a current monetary unit (Ege, 2013: 23). In this case, we can say that Bitcoin is as virtual as credit cards that we use in daily life, that they have certain use areas, and that they are spendable like other money (Glantz, 2014: 4).
Today, money’s function of facilitating the exchange of goods and services is seen as a concept that is minted by the government whereby everyone accepts its validity. Together with the global crisis experienced all over the world, on the
4 Cryptography is a whole set of techniques, which uses readable information and con-verts it to a state that is not able to be read by the undesired parts (https://tr.wikipedia.
org/wiki/Kriptografi).
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one hand, a distrust started to form against traditional banking. On the other hand, digital money has begun to take place in our lives. Moreover, it is said that today, digital money has challenged banknotes and coins. Although Bitcoin did not announce its name until 2012, after that year, it has experienced a rapid rise across the world and it has even begun to attract the attention of authorities of the monetary market (TBD, 2013: 35–36).
Virtual money is the first application of a concept first defined in 1998 by Wei Dei in cypherpunks e-mail list called the crypto monetary unit. Wei Dei put forward the opinion of a new monetary form using ciphering for controlling commercial transactions instead of through a central authority. The Bitcoin system was estab-lished by “Satoshi Nakamoto” 5 on January 4, 2009. Publicity of the system was done by means of an e-mail sent by this person. Later, this unknown person who does not want to disclose himself left the system. Since 2010, the system has been work-ing spontaneously. In the US, there are centers where we give Bitcoins and receive monetary units in exchange for them. In these exchange centers, in exchange for Bitcoins, people can receive real monetary units such as the Pound, Euro, and Yen (Sarıkatipoğlu et al., 2015: 92). Bitcoin can be obtained by purchasing Bitcoin from the place where the exchange is done, by exchanging Bitcoin with those in our circle, or by gaining Bitcoin through competitive mining (Glantz, 2014: 2).
Table 2: Bitcoin Prices, 2010–2015
Bitcoin Price in USD
1400 1200 1000 800 600 400 200 0
Resource: coindesk.com
5 Craig Wright, an Australian business man, in the early 2000s, announced that he was person who invented Bitcoin and that he has used the nickname Nakamoto for a long time. Although there were various views about whether or not Wright was Satoshi, the results of interviews made confirmed that he was the creator of Bitcoin.
Digital Economy and Bitcoin 65
Based on the variations in the value of the Dollar, in October 2010, the amount of Bitcoin capital was $1 million. By March 2013, its market value exceeded $1 billion.
Within this time, Bitcoin has been accepted by various businesses and organiza-tions as a payment instrument from China to coffee shops in Palo Alto and old curiosity shops in New Orleans (Kroeger, 2015: 2–3). With respect to the date of January 2015, the total amount of circulating Bitcoin, with approx. $13.7 million, showed an increase of $1 million compared to the previous year (Murphy et al., 2015: 3). The price of Bitcoin on May 2016 was $547. This price is the highest level of the last 21 months. Although the reason for this is not clearly known, it was observed that there is a significant correlation between fluctuations in the value of the monetary unit and macrocosmic values in China and that with the increase of deflation worry in China, the demand for Bitcoin increased. Due to the decrease of sales in the country and the risk of falling incomes, Chinese people withdrew their available money from the shares of the stock market. This has been observed as one of the reasons for the increase in the price Bitcoin. (www.techinside.com).
Ken Shishido, one of the proponents of Bitcoin, the digital monetary unit used on the Internet, describes his belief in Bitcoin, as follows. “I believe in individual freedom, free market competition, and small governments. 100 years ago, Dollar had equivalence as silver but there is nothing such a thing. US Government can lover when it desires and even it can completely demolish Dollar. In view of this, I do not believe in Dollar, Japan Yen, or monetary units of the other governments.
I believe in silver. I believe in gold; I believe in Bitcoin”. While Bitcoin, called the
“money of future”, is discussed by many companies and institutes from the aspect of “security concern”, in August 2013, Germany officially recognized this as the last favorite of markets. In the declaration, performed by the Germany Ministry of Finance, it was reported that Bitcoins can be used across the country for pay-ing tax or in commercial transactions. In the declaration of the Ministry, it was expressed that digital money was not only accepted as electronic money or foreign exchange and that it was only viewed as a financial instrument within Germany banking rules. In the declaration, it was underlined that Bitcoin was a “specific money that can be used for the different aims”. In November 2013, Bitcoin ATMs were opened in Cyprus, Canada, and finally in Turkey. In the Digital Foreign Cur-rency ticket window, which is operated by an e-wallet called the Travellers Box, which was installed at the Istanbul Atatürk Airport, people can exchange Bitcoin in exchange for Turkish Lira (TBD, 2013: 37–38).
The viewpoints of other countries about Bitcoin are varied. The Finland Cen-tral Bank declared that Bitcoin was not an electronic monetary unit or even an electronic payment instrument. Norwegian and Korean Governments declared
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that Bitcoin did not fit into the definition of money. The Chinese Central Bank stated that Bitcoin was not real money and that it did not have a legal status and, in 2014, Bitcoin was forbidden in China. However, in January 2016, the China Central Bank announced that it bad begun to conduct studies about developing its own digital monetary unit. In the same way, in Russia, Bitcoin was forbidden.
In Australia, toward late 2015, a resolution was presented for Bitcoin to be kept equivalent to the other monetary units.
In Turkey, in January 2016, there were two Bitcoin stock markets converting between the Turkish Lira and Bitcoin. These are BtcTürk and Koinim. In these stock markets, the exchange between Bitcoin and the Turkish Lira has occurred.
These stock markets bring together buyers and sellers and receive a fee in ex-change for their mediatory services. In Turkey, beside Bitcoin ATMs and stock markets, there are also companies accepting Bitcoin in exchange for their sales.
These companies are the ones that are active in various sectors and that occur in the different cities of Turkey. This also shows that Bitcoin aficionados proliferated in Turkey and that its use gradually become widespread (Ateş, 2016: 357–358).