Chapter 1: A Brief History of Currency

To best understand cryptocurrency, a brief history of currency would be helpful. Whether bartering goods, a metal coin, a sheet of paper, or a string of code electronically mined from a computer, currency or money in its simplest form is a fixed unit used as a medium of exchange. Currency, or money, has been around since the beginning of human history. As society and civilization have evolved, so have the means by which goods are exchanged, with the transition from bartering to hard currency dramatically enhancing the speed, efficiency and fairness by which business gets done. (See the Indians deal for Manhattan)

With the advances of the internet, smartphones, and technology in general, how we pay for goods has never been easier. Only a generation ago, point of sale credit card transactions had to be phoned in and authenticated with an approval code. Now we pay for goods and services with bar codes and QR scans. We just tap and go within a system that has never been more secure. Mobile payments like Apple Pay are the norm now. Apps like Venmo and Zella are making our once always at hand checkbooks and checking accounts unnecessary, as traditional bank branches close across the land. Seriously, how often do we go to our banks anymore?

But technology has done far more than influence how we pay. Look across all our traditional mediums. Tech has completely altered the media world, as newspapers and magazines struggle to stay afloat. Tech has completely altered the music industry, with Spotify and Pandora making cds and record contracts  obsolete. Amazon has long been the largest bookstore in the world. Movie theaters have been replaced by Netflix and all the other upstart streaming services

So as technology continues to advance, it should come as no surprise that the role of traditional money itself should undergo similar transformation. Put more simply, the days of the cash register's cha-ching are no longer.

Enter Crypto

The year was 2008. Our "bankers", once stodgy conservative traditional types were playing fast and loose with our deposits, chasing obscene financial returns within all sorts of risky ventures. Investments like derivatives, credit default swaps, and mysterious baskets of mortgage backed securities that eluded the scrutiny of our top credit agencies became the investments of choice, promising unsustainable returns on investment.

 No longer content with the traditional deposit/loan business, investment banks began playing risky games with OUR deposits, creating a veritable casino with our life savings. As with all games of chance, not everyone can win. When Lehman Brothers filed for bankruptcy protection in 2008, the system rocked. Markets began crashing, credit froze up. The cornerstone of all financial markets, faith in the system, began to be questioned as the system teetered on the brink of a near complete meltdown.

It was time for the bailout. If the US Govt didn't come up with a couple trillion over the weekend, the entire economic system would collapse. How could all this happen? Where were the overseers and watchdogs? How could this happen on their watch?

Greed and Fraud were a good place to start. The Wall Street system seemed rigged. And as the fallout of the Great Recession unfolded, the sheer brazenness of our once trusted banking system left a generation of investors burned and highly suspicious and mistrustful of Wall Street's business as usual. I still have PTSD over watching millions of Americans lose their jobs and homes as I watched my 401K dissolve before my very eyes. Faith in our centralized banking system had been breached.

Einstein once said we can't solve our current problems with the same thinking we used that created them.

The calls for sweeping banking reform were loud, yet proved ineffectual, the lobbying power of the banking and investment firms simply too powerful to effect any meaningful restrictions on the those entrusted with our life savings. Within a year, Wall Street was back to business as usual with private jets, obscene corporate spending and bonuses back in action, all paid for with our money. The reform Wall Street movement came and went. Elizabeth Warren's pet project, the Consumer Financial Protection Bureau was neutered right from its outset by legal challenges and political maneuvering.

Part of the enduring power of our current financial system was it seemed almost impossible to even consider a different one. We take so much of it for granted. But what is the cultural role of money and is it strictly the purview of governments and centralized banks for it wasn't always this way And what would it take to challenge business as usual of our current monetary system? 

It would take a consumer revolt to shake up the business as usual of Wall Street. In what form would that come?

The year 2009. An anonymous programmer named Satoshi Nakamoto released the now famous (and surprisingly readable) white paper, detailing the technical documentation for the first blockchain and the launch of the original digital currency, the cryptocurrency Bitcoin. Bitcoin  was revolutionary in that it used a decentralized (person to person) blockchain (digital accounting infrastructure for all crypto transaction) to notate and authenticate all Bitcoin transactions (MUCH much more about blockchains later) 

If I may pause a moment. If creating a new system of money was easy, we'd all be sunning away on a private beach somewhere. Turns out inventing our own money isn't the hard part, (thousands of cryptocurrencies currently exist, with many more being mined currently on a server near you). The challenge is getting people to accept that money as a store of value. That's the hard part. But as legend goes, the first ever recorded crypto transaction was 40 bitcoin for two large pizzas. And I sure hope those pizzas were good. The Bitcoin used to pay for them in 2009 would be worth 400 million dollars today!!

But early crypto valuations aside, what has made crypto strong and enduring is its a well funded robust,  ideological movement with serious implications for our political and economic future. Bitcoin, which emerged out of the ashes of the 2008 financial crisis, first caught on among libertarians and anti-establishment activists who saw it as the cornerstone of a new, incorruptible monetary system. 

And somewhere along the line, Crypto crossed a tipping point (calling Malcolm Gladwell). When that exact moment occurred will be the stuff of historians. For over a decade, crypto seemed to be something we could ignore. Like Google glass or the hoverboard, technological advancements we heard about and acknowledged, but saw little need to engage.

But Crypto today is now mainstream, having crossed over in to widespread acceptance. Turn on any sporting event and there's Matt Damon imploring you that Fortune favors the brave. Then there's Larry David (more celebs). The Staples Center in Los Angeles is now Crypto.com. FTX bought the naming rights to the Miami Heat's new arena. Cities like Miami and the new mayor of NYC Adams vow to become the most favored cities of the Crypto boom. And wisely so. Since those first two pizzas were sold, the crypto market is now worth in total of 1.75 trillion dollars, roughly the size of Apple. And all in less than 15 years, a creation of wealth never seen before in the history of mankind. Not even the oil reserves of the Middle East can rival Crypto's surge in wealth this past generation.

But what lies within this valuation. Apple and Google, two similarly valued entities, are ubiquitous in our society. How can crypto be worth as much? Mostly because of the speculative nature of Crypto investing. This is the future, not all that dissimilar than Tesla. Tesla is nearly a trillion dollar company, but if you liquidated all its assets, you'd come up a few 100 billion short of a trillion. But Tesla battery technology is the future and wise investors are willing to bet on that. Crypto is no different. The potential usages of blockchain technology are limitless and coming. And savvy investors see this, hence the run-up in valuation.

Not to say there haven't been growing pains. Volatility and security have hampered Crypto as a safe haven for capital, to say nothing of just how poorly explained the whole world of Crypto has been by its advocates. But its meteoric growth is real and no longer relegated to the prototypical Crypto-Bro Gamer . 

Its power, both culturally and economically, have become hard to ignore, with over 20% of adults and a whopping 36% of millennials owning some version of cryptocurrency. The online trading platform Robinhood suffered near weekly crashes from its inability to handle the volume of Crypto trades taking place early 2021.  And it doesn't hurt that the wealthiest most enigmatic and visionary man in the world, Tesla's Elon Musk is one of Crypto's premier champions.

No, once easily ignored, Crypto is a new economic force to be dealt with. Fortunes have been made and with fortunes come power, the power to craft legislation and influence the economic environment in ways favorable to Crypto's wider acceptance in society and our wider economy.

And though it still remains somewhat controversial (primarily for its inability to explain itself better) and skeptics there are many, the overriding fact remains that when so much talent, energy and money flows toward a new innovative technology, regardless of one's philosophical views, it would be prudent going forward to pay very close attention