Crypto is seen as a revolution that has redefined the meaning of money in our modern age. It’s a type of electronic money, but it does not exist in a physical form like the cash we use in our daily lives.
Instead of having cash or coins in your wallet, cryptocurrencies are stored entirely digitally online.
These currencies use modern technologies to exchange money online and are completely different from traditional money printed by central banks.
The most famous of these currencies is Bitcoin, and a variety of other currencies, like Ethereum, cannot be overlooked, as all cryptocurrencies seek to change the rules of the global financial game.
But what is the importance of cryptocurrencies? Simply put, crypto replaces the traditional financial system, which relies on central banks.
With crypto, we don’t need any third party, such as banks or financial institutions, to transfer money between us. We can transfer money directly to another person around the world, and this is done online in a faster and less expensive way.
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How do we understand crypto?
A new technological wave: Crypto enters the financial world
With the advancement of technology in the late 20th century, we witnessed many technological waves that changed the way we interact with the world. Let’s review these waves that changed the way we deal with money and the economy:
1. Internet (1982)
The first wave began with the discovery of the internet, which radically changed the way people communicate.
It made it possible to connect with people around the world with ease, and email, forums, and websites became essential tools for interaction. This technological era paved the way for many of the innovations that followed.
2. Direct interaction (after 2000)
With the advent of the Internet, it became possible to interact directly and instantly online, and social media emerged that radically changing the way people communicate with each other.
3. E-commerce and Internet of Things (after 2010)
With the development of the internet, we began to witness a boom in e-commerce, making it easier to purchase goods and services online.
The Internet of Things (IoT) also emerged, as smart devices like phones, cars, and homes began to interact with each other over the internet.
This wave represents another transformation in the world of commerce and economics, as technologies become more interconnected and widespread, and it is now possible to transact money and business in all its forms through online apps.
With the advancement of these technological waves, cryptocurrencies began to emerge, representing a new transformation in the world of finance and economics.
Bitcoin and Satoshi Nakamoto
In 2008, following the global financial crisis, a research paper was published online by someone under the name Satoshi Nakamoto, carrying the message of financial, social, and political freedom. The paper stated:
Bitcoin-Electronic Cash – End-to-End Without a Middleman
Satoshi’s message was to free financial institutions from the control, restrictions, and oversight of central banks and to eliminate traditional intermediaries.
Politicians are bailing out the banks again – Satoshi Nakamoto
Satoshi wrote these words referring to the way governments intervene to bail out banks during economic crises, which exacerbates financial corruption, with the price usually paid by ordinary people.
This paper introduced Bitcoin as the first cryptocurrency, introduced in January 2009, based on blockchain technology. This technology facilitates the rapid storage of financial transactions without the need for intermediaries such as banks and centralized financial institutions.
The Bitcoin goal, according to its creator, is to eliminate the middleman, who is also a censor and can impose his own changing terms based on his policies. The goal is also to eliminate the burden of costs and avoid being subject to his economic and political policies, which negatively impact currency prices.
What is blockchain?
Blockchain is a type of electronic ledger in which all transactions are recorded securely and transparently, so that they cannot be tampered with.
Imagine that there is a ledger everywhere, and every time a money exchange occurs between two people (like sending or receiving Bitcoin), that exchange is written down on its own page inside that ledger.
The beauty of blockchain is that it’s not stored in one place, but rather copied across hundreds or thousands of computers around the world, which means it’s impossible to tamper with.
Blockchain is a solution to mathematical equations, and based on how well someone solves these equations, they are rewarded for solving them and given Bitcoin.
How blockchain works
- Transactions: Each operation (like sending or receiving Bitcoin) is recorded in a “block,” like a new page in a ledger.
- Verification: Before a block is added to the blockchain, it must be verified. This is done by solving complex mathematical equations.
- Signature: After verification, the block is added to the chain and therefore cannot be changed.
What does the word block mean?
A “block” is simply a collection of transactions (like money transfers) that have been grouped. As new transactions occur, they are grouped into a block (like a page) and added to the chain after verification.
Simple model to illustrate the idea
- Imagine that you are in a school and you need to record students’ grades in each student’s notebook.
- Each time a new score is recorded, it is added to a new page of the notebook.
- The teacher cannot change or delete any grade once it is recorded in this notebook, because it is distributed to many people in the school, and each person has a copy of it.
Blockchain operating characteristics
1. Decentralization
In the traditional system, when you send money to another person, the transaction must go through a bank or financial institution that verifies its authenticity and records it in its own ledger.
But in blockchain, there is no third party, such as a bank. Transactions are verified by people who participate in the system, who ensure that the transaction is valid. Every device participating in the system works to verify this.
2. Encryption and data protection
In blockchain, data is protected using advanced encryption techniques. This means that it is difficult for anyone to alter or hack transactions once they are added, as the information is encrypted.
3. Add transactions
When a transaction, such as sending cryptocurrency from one person to another, is completed, a new block is added to the blockchain.
This block contains the transaction details—like the sender, recipient, and amount—after it is added. The transaction becomes permanent and cannot be changed.
4. Transparency and privacy
Everyone can see the transactions that take place in the system, and while the transactions are visible, the identities of the people involved in the transactions remain hidden.
After reviewing and explaining the crypto philosophy and blockchain, we will address in the next section various points discussed by ordinary people about this new financial system, its advantages, disadvantages, and implications.
Who controls the Bitcoin in circulation around the world?
Bitcoin was discussed because it is the most widely used currency globally, relies on a decentralized system for financial transactions, and has a market value exceeding $2 trillion.
Therefore, it was necessary to shed light on the most important holders of this currency, including countries, institutions, and investors.
Crypto political exploitation
1. Trump’s Impact on Crypto: From Political Appointments to Trump token failure
One of the main points of controversy in the crypto industry is political interference.
After the election of US President Donald Trump—who received significant support during his election campaign from the crypto lobby—the current US administration has focused more on cryptocurrencies, compared to the intense oversight the industry faced during the term of former President Joe Biden.
2. Appointing an ally to the crypto industry
When Trump took office, he began to significantly change policy toward cryptocurrencies, directly impacting the crypto industry by appointing Paul Atkins, a lawyer and staunch ally of the sector, to head the SEC.
This appointment has eased regulatory pressure on crypto companies, allowing them to expand without the strict regulatory regimes that lawmakers in the Biden administration had supported.
3. Trump Token: Collapse and Huge Losses for Investors
Political interference wasn’t limited to appointments. Trump himself launched his own cryptocurrency, World Financial Liberty, giving him a personal stake in the sector’s success.
This shift to support cryptocurrencies was not merely political support, but was also driven by his own interests, as there was added value to him personally in the continuation of this sector.
What dealt a major blow to cryptocurrency investors was the failure of the Trump token.
After Trump launched his promotional campaign for his cryptocurrency, its value temporarily rose, attracting many regular investors.
Over time, the currency experienced a sharp decline in value, causing huge losses for investors who had bet on the project’s success.
Trump had championed cryptocurrency on his media platforms, but when its value collapsed, it came as a shock to investors, with more than 800,000 accounts suffering losses of over $100 million due to their investments in the currency.
For observers, the presence of figures like David Sacks, the AI and crypto czar, indicates that Trump was seeking to leverage crypto technology and technological innovation to boost the American economy.
The nomination of figures directly involved in cryptocurrencies, like Howard Lutnick, also reflects a desire to push the industry toward greater official recognition and participation in national politics.
However, it remains difficult to determine the full extent of Trump’s commitment to crypto, especially given his past positions on economic issues, which have been characterized by volatility and a predominance of personal vision.
The negative influence of politicians on the market: the Argentine president as a model
Alongside Trump, Argentine President Javier Milei also caused a stir in the crypto world.
In a surprising move, Milei launched a new cryptocurrency, Memecoin, which he was promoting in Argentina. The cryptocurrency has no real practical function, relying primarily on a joke or a popular mascot.
These coins, which were launched for marketing or token purposes, were known for their high risk, but Milei attracted many Argentine investors, who bet on it.
However, as is the case with cryptocurrencies launched under the auspices of politicians, the Milei coin experienced a sharp decline in its value within a very short period.
Prices suddenly collapsed, resulting in huge losses for Argentine investors who decided to engage in this risky investment.
This sudden decline in the currency’s value sparked a political crisis within the country, with investors suffering financial losses exceeding $250 million.
Other politicians and their influence on the crypto market
Other political interventions were not limited to Trump and Milei. For example, Russian President Vladimir Putin played a role in influencing the crypto market through his economic policies.
This was particularly evident with his statements about Russia’s adoption of blockchain technologies and its search for alternative markets for economic exchanges, free from Western hegemony. This statement had an impact on directing investments toward crypto markets in other countries.
In China, too, government policies have played a role in market volatility. Although China banned crypto mining in 2021, government statements regarding cryptocurrencies have contributed to a sense of uncertainty.
Ultimately, it becomes clear that crypto is no longer just a financial innovation, but rather an arena where technology intersects with politics and economics.
From Bitcoin to politician-linked cryptocurrencies, political decisions have directly influenced the trajectory of these digital assets, ranging from official support to restrictive legislation to market manipulation.
As crypto continues to evolve, the most important question remains: Will they remain a tool for financial liberalization, or will they become a tool of political and economic forces?
