CRYPTOCURRENCY AS A FACTOR FOR THE DEVELOPMENT OF AN INNOVATIVE ECONOMY

Abstract

The article examines the essence of cryptocurrency as one of the key factors for the development of an innovative economy in the context of the digitalization of financial relations. The evolution of approaches to defining the concept of cryptocurrency is considered, the positions of international organizations are analyzed, and the author's interpretation of this category is proposed as a virtual currency that functions on the basis of cryptographic protection methods and is capable of performing the functions of a means of payment, a means of accumulation, and an object of property.Particular attention is paid to the comparative analysis of cryptocurrency and electronic money, as a result of which their common features and fundamental differences are determined, in particular the decentralized nature of cryptocurrencies, the absence of an emission center and financial intermediaries. The mechanisms of functioning of cryptocurrency transactions and the features of using blockchain technology are studied.The article systematizes the advantages and disadvantages of cryptocurrencies. The main advantages include a high level of data protection, impossibility of forgery, low transaction costs, and deflationary nature. At the same time, key risks have been identified, including high volatility, lack of proper legal regulation, and increased fraud threats.The current state of the crypto market has been analyzed, in particular the distribution of cryptocurrencies by capitalization level and the assessment of their risk and profitability. It has been established that the market is characterized by high capital concentration and the dependence between the level of risk and the potential return on assets.Special attention is given to unresolved issues in the field of cryptocurrency research, including the lack of a unified theoretical approach to defining its economic nature, the ambiguity of its legal status, and the challenges of integrating cryptocurrencies into the traditional financial system. The methodological basis of the study includes a systematic approach, a comparative analytical method, as well as methods of generalization and abstraction, which made it possible to comprehensively assess the role of cryptocurrencies in modern economic processes.The practical significance of the obtained results lies in the possibility of using them to improve approaches to the regulation of the cryptocurrency market, risk assessment, and the development of innovative financial instruments. It is substantiated that cryptocurrencies play an important role in the formation of an innovative economy, contributing to the development of new financial instruments, digital platforms, and decentralized models of economic interaction.