Crypto
Money Matters: The rise of digital currencies and understanding cryptocurrency
Cryptocurrency has emerged as a revolutionary form of digital currency, attracting significant attention and investment worldwide.
Its rapid rise has transformed the financial landscape, challenging traditional banking systems and offering new opportunities for individuals and businesses alike. This article explores the fundamentals of cryptocurrency, its underlying technology and its implications for the future of finance.
The foundations of cryptocurrency
Cryptocurrency is a digital currency that uses technology to control the creation of new units and keep transactions secure. Bitcoin, widely recognized as the first decentralized cryptocurrency, was introduced in 2009 and ignited intense interest in the development and use of cryptocurrencies.
However, the foundations of modern cryptocurrencies were laid decades before Bitcoin was introduced. UC Berkeley’s David Chaum is heralded as a key figure in the early history of crypto for his development of a “blinding formula,” which could securely send and receive digital currency without the intervention or mediation of a central authority. He then released these technological developments into the market in 1990 under the moniker of eCash. Unfortunately, Chaum’s company DigiCash went bankrupt, but not before inciting a number of other companies to invest heavily in the development of their own cryptocurrencies, each backed by technology very similar to Chaum’s.
Enter Bitcoin. The year is 2008, and Satoshi Nakamoto just published a soon-to-be-famous white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” The white paper outlined the plan for Nakamoto’s internet-based currency, which would be released in limited quantities and backed by a verification system called proof of work. Moreover, Bitcoin operates on blockchain technology, which is a decentralized, public ledger that records all transactions chronologically.
Blockchain technology is the backbone of cryptocurrencies and has transformed various industries beyond finance. Blockchain acts as a distributed and immutable ledger for all parties involved, which allows every transaction to be transparent, secure and traceable. Each block in the chain contains a set of transactions, and every participant in the network has a copy of the blockchain, ensuring consensus and eliminating the need for intermediaries.
The rise of alt-coins
While Bitcoin was the pioneer, it was soon followed by the emergence of alternative cryptocurrencies, known as alt-coins. Alt-coins that you may recognize include Litecoin, Binance Coin, XRP and Elon Musk’s favorite, Dogecoin. These digital currencies expanded upon the principles of Bitcoin, introducing various improvements and innovations. Ethereum, launched in 2015, stands out as a notable alt-coin due to its programmable smart contracts, which enable the creation of decentralized applications (DApps) and decentralized finance (DeFi) platforms.
Decentralized applications operate on decentralized networks, such as blockchain. Similar to cryptocurrencies themselves, DApps allow for direct peer-to-peer transactions and facilitate secure transactions (many DApps have their own proprietary cryptocurrency associated with them). DeFi platforms are a subset of DApps that focuses on transforming traditional financial services using blockchain technology. One of the ultimate goals of DeFi platforms is to provide open, permission-less and inclusive financial services to users worldwide, regardless of their location or access to traditional banking infrastructure.
Cryptocurrency adoption and global impact
Due to its security and decentralization, cryptocurrency adoption has gained significant traction worldwide. Other reasons for its popularity include the potential for financial inclusion, reduced transaction costs and greater privacy.
Many think of cryptocurrencies as the realm of finance gurus on Wall Street. However, cryptocurrencies have also gained significant traction in countries with unstable economies and limited banking infrastructure. Cryptocurrencies are more accessible for many people in these countries, allowing them to access their money even when banking services are suspended. Further, crypto allows people in unstable economies to invest their money without having to rely on their floundering government and local economy.
Returning closer to home for most reading this article, the rise of cryptocurrency has also stimulated innovation in the fintech sector, leading to the development of new financial products and services (such as DApps and DeFi). It is yet to be seen how much the evolution of cryptocurrencies will change our financial landscape and institutions.
Challenges and the regulatory landscape
Unfortunately, the growth of cryptocurrencies poses problems alongside the benefits. As the popularity of cryptocurrencies continues to grow, so do the challenges and regulatory concerns surrounding them.
Governments and regulatory bodies are grappling with the need to strike a balance between fostering innovation and safeguarding against illicit activities such as money laundering and terrorism financing. Countries have taken different approaches, ranging from embracing cryptocurrencies and creating supportive frameworks to imposing strict regulations or outright bans. Achieving a harmonized global regulatory environment remains a significant challenge.
The future of cryptocurrency
The future of cryptocurrency holds immense potential and uncertainty. Cryptocurrencies are evolving beyond simple means of exchange and are becoming integral components of decentralized systems. The concept of decentralized finance (DeFi) is gaining traction, enabling individuals to access financial services — such as lending, borrowing and investing — without intermediaries. Additionally, central banks worldwide are exploring the idea of central bank digital currencies (CBDCs), which could revolutionize the existing financial system.
Cryptocurrency has undeniably made its mark on the financial world, disrupting traditional systems and presenting new opportunities. As the technology matures and regulatory frameworks continue to evolve, the potential for cryptocurrency to transform the global economy becomes more apparent. Understanding the fundamentals of cryptocurrency, its underlying blockchain technology and the implications it holds for the future is essential for individuals and businesses to navigate this new digital landscape.
Jacob Bingham is a project manager at Stage Marketing, a full-service content marketing agency based in Pleasant Grove.
Newsletter
Just before his cryptocurrency empire crumbled in November 2021, Sam Bankman-Fried considered going on Tucker Carlson’s show to “come out as a republican” to rehabilitate his image. On Thursday, almost a year since the former FTX founder was sentenced to 25 years in prison for defrauding users of his cryptocurrency exchange, he finally fulfilled his plan.
From “a little side room” of Brooklyn’s Metropolitan Detention Center, Bankman-Fried spent his 33rd birthday dishing to Carlson in a wide-ranging interview, which included new details about life in prison with his cell block mate, Sean “Diddy” Combs. As NBC previously reported, Bankman-Fried and Combs, who has been charged with sex trafficking, are being housed in the same unit.
“I’ve only seen one piece of him, which is Diddy in prison, and he’s been kind to people in the unit; he’s been kind to me,” Bankman-Fried told the former Fox News host on “The Tucker Carlson Show.” “It’s also — it’s a position no one wants to be in.”
Bankman-Fried, 33, was convicted in November 2023 of seven counts of wire fraud, securities fraud and money laundering for swindling customers of FTX and lenders of Alameda Research, its associated hedge fund. Prosecutors said Bankman-Fried “perpetrated one of the biggest financial frauds in American history.”
A chief public information officer for the US Attorney’s Office for the Southern District of New York declined to comment.
Life behind bars
Bankman-Fried told Carlson that he has “made some friends” at the Brooklyn center, where sources told NBC he is in a unit for detainees that need extra protection.
“It’s sort of dystopian,” Bankman-Fried said. “You know, the fortunate thing, the place I’m in, I’m not in … I’m not in physical danger.”
He said the unit has defendants of high profile cases and “a lot of ex-gangsters — or alleged ex-gangsters.” When asked how cellblock mates feel about being housed with him and Combs, Bankman-Fried theorized that some of them think “this is a big opportunity to meet people they wouldn’t otherwise get to meet.”
“They’re good at chess. That’s one thing I learned,” Bankman-Fried added. “Former armed robbers who don’t speak English and probably didn’t graduate middle school, a surprising number of them are fairly good at chess. I’m not saying they’re grand masters, but I lose games to them all the time. I was not expecting that.”
In addition to playing chess and working on his appeal, Bankman-Fried told Carlson he has started to read novels again. Carlson noted that Bankman-Fried seemed “less jumpy” and “healthier” after two years in prison. The former Fox host then said it seemed like Bankman-Fried was “flying high on Adderall” in his previous TV appearances.
Bankman-Fried denied ever being on the drug. “But I was pretty out of it. My mind was racing because there were, you know, a billion things to keep track of,” he added.
His changing political stance
Bankman-Fried described how his politics have evolved over the last five years from being a major Biden donor to having a better relationship with Republicans than Democrats by the time he went to trial.
“One fact that might be relevant. In 2020, I was center-left and I gave to Biden’s campaign,” he said. “I was optimistic he’d be a sort of solid center-left President. I spent the next few years in D.C. a lot. I made dozens of trips there, and was really, really shocked by what I saw — not in a good direction — from the administration.”
“By late 2022, I was giving to Republicans privately as much as Democrats. And that started becoming known right around FTX’s collapse, so that probably played a role,” he added, noting that he believed in ideas from both sides of the aisle.
In his trial, prosecutors showed a document where he considered ways to rehabilitate his public image after FTX collapsed, including going on Carlson’s show to “come out against the woke agenda.” Carlson asked him if he called in political favors during his trial, which Bankman-Fried denied because he didn’t want to do “something inappropriate.”
His optimistic view on the future of crypto
Bankman-Fried said “hopefully” things are moving in the right direction for cryptocurrency under Trump, noting that there are already a lot of “good things” happening.
“So I think the big question is, you know, when rubber meets the road, like, will the administration do what needs to be done and figure out how to do it?” he said. “Right now, crypto is not at the point where it could become an everyday tool.”
Carlson also asked Bankman-Fried if he believes “there is a lot of shady behavior in the crypto business.” Bankman-Fried said that a decade ago, he may have agreed, but the business is now “a lot smaller” and more regulated.
Bankman-Fried’s financial status
Carlson asked the former billionaire if he has “any money” left — and Bankman-Fried admitted “basically no.” In addition to his prison sentence, Bankman-Fried was ordered to pay $11 billion in forfeiture.
“The company that I used to own … had nothing intervened, today it would have about $15 billion of liabilities and about $93 billion of assets. So the answer should be, in theory, yes there was enough money to pay everyone back in kind,” he said. “But, that’s not how things worked out. Instead, it all got roiled up in a bankruptcy.”
“It’s been a colossal disaster,” he said. “Not stopping that from happening is by far the biggest regret of my life.”
His birthday plans in prison
Bankman-Fried, who spoke with Carlson on Wednesday, said he has no plans. He explained that he was never “big on birthdays on the outside” and was not looking forward to “celebrating another year in prison” for his 33rd birthday on Thursday.
“So you’re not going to tell Diddy it’s your birthday tomorrow? I don’t believe you,” Carlson asked.
Bankman-Fried responded that while he was not planning to tell Combs about his birthday, “someone else might tell him.”
Emirates NBD’s digital banking unit Liv has added cryptocurency trading to its mobile banking app.
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This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.
The new offering has been introduced in partnership with Aquanow, a global virtual asset service provider licensed by Dubai’s Virtual Assets Regulatory Authority.
London-based digital asset custodian Zodia will provide custody services for the new venture. Emirates NBD made a strategic investment in Zodia Custody in December.
Upon go live, customers will be able to buy, sell and trade cryptocurrencies within the Liv X app, whilst also managing their day-to-day finances.
The UAE is swiftly evolving to become a progressive crypto hub following landmark crypto-friendly policies and the highest cryptocurrency adoption rates in the world. About 30% of the population owns cryptocurrency and the crypto market is expected to increase by 8% year-on-year over the next four years.
Between July 2023 and June 2024, a Chainalysis report estimates the UAE received over $30 billion in crypto, ranking the country among the top 40 globally in this regard and making it Mena’s third-largest crypto economy.
Marwan Hadi, group head of retail banking and wealth management at Emirates NBD, says: “We are excited to introduce our new cryptocurrency offering on Liv X, in partnership with Aquanow, giving customers the opportunity to buy, sell and trade cryptocurrencies conveniently and securely. Offering cryptocurrency on Liv X is the next step towards the overall vision of Liv being a pioneer in innovation and excellence. With the highest crypto adoption rate in the UAE, we are keen to launch our own virtual asset offering to capitalise on this trend.”
Crypto asset manager Bitwise has filed to list a spot Aptos exchange-traded fund in the US — a token created by a team led by two former Facebook (now Meta) employees in 2022.
Bitwise filed an S-1 registration statement to list the Bitwise Aptos (APT) ETF on March 5, eight days after Bitwise indicated it would make such a filing when it registered a trust linked to the Aptos ETF in Delaware on Feb. 28.
The Aptos filing adds to the list of altcoins currently in the line to win the securities regulator’s approval.
Bitwise opted not to include a staking feature for the proof-of-stake powered Aptos blockchain and listed Coinbase Custody as the proposed custodian of the spot Aptos ETF. It has yet to specify which stock exchange it would be listed on.
A proposed fee or ticker wasn’t included either. Bitwise will also need to file a 19b-4 form for its Aptos ETF application and for the SEC to acknowledge it before the 240-day clock begins for the SEC to make a decision.
Source: Aptos
The Aptos filing marks Bitwise’s latest effort to expand from the spot Bitcoin (BTC) and Ether (ETH) ETFs it currently has on offer. It has also recently filed to list a spot Solana (SOL), XRP (XRP) and Dogecoin (DOGE) ETFs in recent months.
While Bitwise’s other US spot ETF filings have been aimed at the top tokens by market capitalization, Aptos appears to be an outlier, ranking 36th by market capitalization of $3.8 billion, according to CoinGecko.
Aptos was developed by Aptos Labs, a company founded by two former Facebook employees, Mo Shaikh and Avery Ching, in 2021.
It emerged as a potential “Solana killer” when it launched in October 2022 as a high-speed, low-cost layer-1 blockchain. However, its market cap is currently only one-nineteenth the size of Solana’s, CoinGecko data shows.
APT is up 14.4% over the last 24 hours to $6.25, CoinGecko data shows.
Related: NYSE Arca proposes rule change to list Bitwise Dogecoin ETF
Aptos boasts the 11th largest total value locked among blockchains at $1.03 billion, according to DefiLlama data. Over $830 million of that consists of stablecoins.
Real-world assets such as Franklin OnChain US Government Money Fund (FOBXX) have also been tokenized on the Aptos blockchain.
Bitwise isn’t a stranger to Aptos, having launched an Aptos Staking ETP on Switzerland’s SIX Swiss Exchange in November that offers a 4.7% return on staking yield.
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