The Crypto Compendium
CRASH LANDING INTO CRYPTO
THE RISE OF BITCOIN
While cryptocurrency goes as far back as the 1980s, Bitcoin (BTC), as well as the utilisation of blockchain technology, was only really realised in black-and-white in 2008, when Satoshi Nakamoto published the Bitcoin white paper. To date, no one really knows who Nakamoto is, or if it was a one-man-job at all, but in 2009, this pseudonym became synonymous with the advent of cryptocurrency when they launched the first Bitcoin client and mined the first-ever Bitcoin, which in layman’s terms are the cryptocurrency wallets many of us use today.
Now, you may be wondering, why is this nine-page white paper is regarded as revolutionary in the realm of fintech? And also used as the blueprint for present-day cryptocurrencies? More importantly, how had Bitcoin gained its momentum? First off, let’s talk about the financial crisis of 2008, also known as the Lehman crisis. You can read all about it online, but the long and short of it is this: when the US government bailed out the nation’s largest banks and companies, which was followed by the downfall of two of the US’ largest investment banks—the Lehman brothers’ bankruptcy and the earlier collapse of Bear Stearns in March 2008 due to their failed hedge funds—the subsequent fallout caused a global recession of epic proportions. According to an article published by The Washington Post, not only did the US stock market plummet at nearly US$8 trillion, but the global economic growth also suffered a loss of more than US$2 trillion, leading to international trade taking a nosedive that caused losses across the entire globe. The point we’re making here is that the general public had lost its trust in banks, and being Too Big To Fail had catastrophic consequences.
THE VALUE OF MINTING AND BUYING BITCOIN
To understand the present-day volatility of Bitcoin, it is important to remember that value itself is subjective.
Think about it: what gives an item its value is us, the users who utilise it for whatever reason. The user plays the role of the buyer and the seller, both of which are roles that determine how much something is worth to us based on its utility and its role as a medium of exchange.
Technically speaking, anything can be made a currency by way of using it as a means of exchange. Like trading a couple of sheep for a cow, for instance. So how did we evolve from the bartering of goods to the fiat currency used to buy said goods?
Here’s an example to illustrate that evolution: you are a governing organisation managing a country with a huge population, so to keep things regulated and manageable, you decree a
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