ADAPTATION MECHANISM OF THE CRYPTO INDUSTRY IN THE PROCESS OF VIRTUALIZATION OF FINANCIAL FLOWS

Abstract

It has been investigated that the development dynamics of digital media environment causes the emergence of the crypto industry on the basis of blockchain technologies and asymmetric encryption of reliable transactions. The authors state that the crypto industry has been growing through the stages of adaptation, whose features are incredible dynamics and speed of transformations. It has been established that cryptocurrencies, introduced on the markets, function as a means of exchange, store of value and unit of account, are based on mathematical calculations, are a result of these calculations and have cryptographic protection. It has been noted that the basis of cryptocurrency is blockchain technology, considered as a distributed database created by electronic computing and representing a code, whose process of creation is called mining. The advantages and disadvantages hindering the development and use of cryptocurrency in the world have been outlined. Introduction. Current trends in the development of information technology and digitalization of economic processes create an innovative basis for the functioning of the financial market. The dynamic development of the digital media environment is due to the emergence of a new digital economy – Industry 4.0, which is accompanied by virtualization of financial flows through cryptocurrency circulation in the Internet environment based on new blockchain and asymmetric encryption technologies. Problem Statement. Modern computer information technology has significantly affected the global economy and the stock markets, creating opportunities for their virtualization. Today, despite the value of scientific results, many issues of organizational, legal, financial, information support, economic stimulation of the cryptocurrency market, as well as the adaptation mechanism of the crypto industry in the process of virtualization of financial flows remain unresolved. Although studies have been conducted by many authors, methodological approaches to solving the problems of the functioning of the financial mechanism and the integral assessment of the effectiveness of the development of cryptotechnologies are still insufficiently explored. In this context, there is a need for theoretical justification and the formation of a holistic view of the role of the crypto industry in the process of virtualization of financial flows as a basis for building effective financial policy, which determines the relevance of this study. Purpose. The aim of the study is to identify the main problems and outline the directions of development of cryptocurrency in the digital economy. Materials and Methods. The study of this problem was carried out using a multi-level concept, which includes a range of various scientific methods, in particular, dialectical and general scientific principles of complex research, which include: empirical (to identify approaches available in the global and domestic practice to the assessment of trends in cryptocurrency circulation and the cryptocurrency market – observation, comparison, description); theoretical-cognitive (to consider the essence and substantiate the cryptocurrency features – formalization, proposal and testing of hypotheses); general logic (to identify methodological problems of cryptocurrency integration into the financial system and differentiation of approaches to the concept of cryptocurrency – analysis, synthesis, scientific abstraction, generalization, induction, deduction, analogy). Results. It has been found that the emergence of cryptocurrencies has dramatically changed the perception of the world of finance and business. The costs of cryptocurrency extraction have been analyzed and their economic feasibility has been considered. It has been established that the main advantages of cryptocurrency are: the possibility of its use as an investment instrument, protection against inflation, lack of control and restrictions on financial transactions, anonymity, high speed transactions and low commission. However, there are some disadvantages, such as the possibility of a hacker attack, the high cost of cryptocurrency, the instability of its exchange rate, the complexity of legislation, the possibility of tax evasion and financing of criminal groups, speculation in the virtual currency market.