The Money of the Future

Cryptocurriences are rising in both market share and users.

By Rhea Pankhurst.

Decentralized “cryptocurrencies” like bitcoin and ethereum are growing at a phenomenal rate. From their shadowy origins with cypherpunks, darknet gambling, and drug markets, they are increasingly finding favor in the highest echelons of politics and money. From Goldman Sachs to Vladimir Putin, the world is embracing cryptocurrencies. But what exactly are these cryptic cryptocurrencies? And how disruptive will they prove?

In November 2009, a secretive and now notorious programmer, known only by the handle ‘Satoshi Nakamoto’, released Bitcoin (BTC) to the world. Their vision was a peer-to-peer currency, anonymous, and fundamentally beyond the control or regulation of governments and central banks. Instead of a central authority keeping track of who owns how much, bitcoin depends on a distributed, publicly viewable ledger of all transactions and all new coins that have been created—called the blockchain. Each bitcoin, or fraction of a bitcoin, is associated with a unique address, managed by a user’s encrypted ‘wallet’ that needs have no ties to a real-world identity. Transactions are processed and verified by a distributed computing task called ‘mining’ that can be run on any hardware connected to the Internet worldwide. Often run on specialized hardware, mining is computationally expensive, but users are compensated for this cost, as new bitcoins are generated for them as part of the mining process.

The trustless, unregulatable, anonymous nature of bitcoin rapidly attracted the interest of futurists and libertarians, excited by the potentially disruptive implications of the technology in a world still reeling from the 2008 banking crisis. The genesis block, the first coins mined by Satoshi themself, contains a reference to a January 2009 New York Times headline: “Chancellor on brink of second bailout for banks.”

In the eight years since bitcoin was launched, cryptocurrency adoption has exploded. The value per coin has grown from a fraction of a dollar to nearly …

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