Cryptocurrency, or crypto for short, is a digital or virtual currency that relies on cryptography for security. Unlike traditional money (like dollars or euros), it is decentralized and operates on blockchain technology, essentially a public, distributed ledger. Transactions are verified and recorded on this ledger by network participants, removing the need for central authorities like banks or governments to oversee them.

Bitcoin, the First Step in Digital Currency

Bitcoin is the first and most well-known cryptocurrency, often called digital gold. Created to bypass centralized banking systems and give people control over their finances, it allows peer-to-peer transactions without intermediaries. Its decentralized nature, limited supply (only 21 million bitcoins will ever exist), and blockchain-based security make it unique. Bitcoin set the foundation for other cryptocurrencies; hence, it’s synonymous with the concept of crypto.

To understand how it works, think of Bitcoin as a huge, shared notebook that everyone can see but no one can change without everyone else’s approval. This notebook (the blockchain) keeps track of every Bitcoin transaction. Each transaction is verified by a network of computers (called miners), ensuring its authenticity and preventing fraud or double-spending. Blockchain keeps things fair and honest when people trade or share things, like digital money.

Let me take it a little further: imagine a game where everyone writes down every move they make, but before anyone can officially move, the rest of the players must confirm it’s a legal move. If a player tries to cheat, the others can reject that move because it doesn’t match what everyone else recorded. The system operates through consensus, meaning everyone has to agree before something can be finalized.

Why Was It Started?

Bitcoin was created in response to the 2008 global financial crisis. Many people lost faith in the traditional financial system, and Bitcoin emerged as a radical alternative. It was designed to be free from government control, inflation, or manipulations by large financial institutions.

Bitcoin was launched online by Satoshi Nakamoto, a pseudonymous person or group. They published a white paper in 2008 titled Bitcoin: A Peer-to-Peer Electronic Cash System and mined the first block, known as the Genesis Block, in January 2009.

The project was initially discussed on cryptography mailing lists, attracting developers and privacy-focused communities worldwide. While the origin isn’t tied to a particular geographical location, it is closely associated with global online communities.

Early Evolution of Bitcoin

In its early years, cryptography enthusiasts, libertarians, and privacy advocates were drawn to Bitcoin’s decentralized nature. Interest grew as the first few blocks were mined, and the system proved functional.

Initially, Bitcoin had little monetary value—early transactions involved trading it for pizza or coffee, with one famous example in 2010 where a programmer bought two pizzas for 10,000 Bitcoin (worth billions today).

Bitcoin became associated with the dark web in these early years due to its anonymity. Sites like Silk Road (founded in 2011) used Bitcoin for illegal transactions, such as drug dealing, fueling its reputation for operating outside the law, even as legitimate interest grew.

How Bitcoin Worked on Both Sides of the Law

Cryptocurrency regulation varies widely across the globe. Some countries (like the U.S. and Japan) have embraced crypto but with stringent rules, while others (like China) have banned it entirely. International bodies like the FATF are pushing for more unified standards to reduce risks associated with anonymity and cross-border transactions, especially regarding illegal activities like money laundering and terrorism financing.

Bitcoin’s promise of anonymity made it a popular currency for criminal activity, especially on the dark web. Silk Road allowed users to buy and sell illegal goods with Bitcoin, which attracted scrutiny from law enforcement. However, while Bitcoin transactions are pseudonymous (your identity isn’t tied directly to a Bitcoin address), the transparency of the blockchain can reveal patterns of activity, which led to multiple arrests once investigators caught on to this trail.

Conversely, Bitcoin attracted investors, businesses, and tech enthusiasts who saw its potential as a revolutionary financial tool. Legal exchanges began forming, and merchants and companies increasingly accepted Bitcoin as a legitimate form of payment. As it became mainstream, businesses like Overstock and PayPal began to accept Bitcoin, and institutional investors started treating it as a valuable digital asset.

When and How Bitcoin Became Political (Globally and in the U.S.)

Bitcoin became political as it threatened established financial systems. Governments saw its decentralized nature as a challenge to their control over monetary policy. Countries like China, India, and Russia initially cracked down on crypto, seeing it as a threat to their national currencies or a tool for tax evasion. Meanwhile, countries like Switzerland and Japan embraced Bitcoin, framing it as an opportunity for innovation and investment.

In 2021, El Salvador made global headlines by becoming the first country to adopt Bitcoin as legal tender. This marked a major milestone in the political journey of Bitcoin, signaling its shift from a niche asset to a tool that could influence national economies.

How might cyrpto be used in the near term?

1. Digital Currencies from Governments

Many governments are working on creating digital versions of money, called Central Bank Digital Currencies (CBDCs). These digital dollars or euros will make payments faster and more secure, using technology similar to Bitcoin but controlled by the government. China is already testing its digital yuan, and other countries will likely follow.

2. Faster and Cheaper International Payments

Cryptocurrencies, like stablecoins, could be used more for sending money across countries. Right now, transferring money can be slow and expensive, but with crypto, it could happen much faster and at lower costs. This will help people who send money to family members in other countries.

3. Better Security for Blockchain

The technology behind cryptocurrencies, called blockchain, will continue to improve in security. New developments, like zero-knowledge proofs (ZKPs), will make it possible to confirm transactions without sharing sensitive details. This is important for things like healthcare or financial services that need to keep information private.

4. More Decentralized Financial Services (DeFi)

Decentralized finance, or DeFi, allows people to use financial services—like borrowing or lending—without needing a bank. DeFi will continue to grow, and more people will use these platforms because they’re becoming safer and easier. DeFi is especially helpful in places where people can’t easily access banks.

5. Turning Real-World Stuff into Digital Assets

With blockchain, physical things like real estate, art, or even stocks can be turned into digital tokens, meaning people can own and trade small parts of them. This could make it easier for people to invest in things they normally couldn’t afford. For example, you could buy a small share of a house or an expensive painting.

Tune in to Part 2, as I discuss how crypto is an important feature of the Project 2025 Mandate for Leadership.