Bitcoin, which just surpassed $100,000, is the most popular cryptocurrency but is surrounded by mystery, scandals and a still dark reputation.
The world of cryptocurrencies has been rocked by the failures of high-profile companies and the downfall of some famous entrepreneurs. Changpeng Zhao, who headed Binance, the largest cryptocurrency platform, was sentenced in the United States to four months in prison for violating anti-money laundering laws. «I have no desire to be CEO again. But I certainly wouldn’t mind a pardon,” Zhao wrote this week in a message on X asking for clemency from Donald Trump when he takes office in January.
Binance’s main rival, FTX, filed for bankruptcy in late 2022, and its founder, Sam Bankman-Fried, was sentenced in March to 25 years in prison for fraud and conspiracy. Its collapse tarnished the industry’s reputation, but the sector continued to demand greater regulatory clarity, a call led by Bankman-Fried.
TOWARDS RESPECTABILITY
Bitcoin investors today celebrated Trump’s decision to put a cryptocurrency advocate at the head of the Securities and Exchange Commission, the US regulator, strengthening their optimism that a future administration will be more benevolent towards the sector. While much of the excitement around Bitcoin is speculative in nature, the currency has gained some respectability in recent years. U.S. financial regulators approved bitcoin-traded funds in January, allowing a broader audience to invest in the virtual currency without having to purchase it directly. In September 2021, El Salvador became the first country to accept bitcoin as legal tender, although the currency has not won over its population. According to a study by the Central American University, in 2023, 88% of Salvadorans had never used it.
LIMITED NUMBER
Bitcoin is based on blockchain technology, a decentralized database that allows information to be stored and exchanged in a secure, secret and unchangeable way. Each transaction is recorded in real time in an unalterable register. Bitcoins are created (or “mined”) as a “reward” when powerful, energy-intensive computers solve complex problems. So-called “miners” validate transactions to create bitcoins. To avoid uncontrollable growth, Satoshi Nakamoto limited the number global coin count to 21 million, a level that should be reached by 2140. Every four years, the reward for “miners” is halved, slowing the pace of introducing new bitcoins to the market and increasing their value making them more scarce.
A MYSTERIOUS CREATOR
In the 16 years since bitcoin was invented, no one has been able to identify its founder with absolute certainty. It all began in October 2008, when a nine-page “white paper” attributed to a certain Satoshi Nakamoto presented the principles of this virtual currency which “would allow online payments to be made from one financial institution to another without going through the institutions finance”.
The idea was to escape the control of central banks, traditionally the only institutions capable of creating money. But is Satoshi Nakamoto a real name? A pseudonym? A team of people? There are several theories, but the mystery persists. An Australian computer scientist named Craig Wright claimed to have written this white paper, but the High Court of Justice in London ruled out that he was the legendary Nakamoto. Since its creation, Bitcoin has received accusations of being the currency used in the deep internet for illegal payments that leave no trace. It is also the currency claimed by hackers in their cyber attacks.