Why Crypto Exists
Understanding the problems cryptocurrency was designed to solve.
Historical Context
Bitcoin was created in 2009, right after the 2008 financial crisis. The first block contained a newspaper headline about bank bailouts — a statement about the problems of centralized finance.
The anonymous creator, Satoshi Nakamoto, wrote: "The root problem with conventional currency is all the trust that's required to make it work."
Problems Crypto Aims to Solve
1. The Double-Spend Problem
Digital files can be copied infinitely. Without a central authority, how do you prove you haven't spent the same digital dollar twice? Blockchain solved this through distributed consensus — thousands of computers agree on who owns what.
2. Dependence on Intermediaries
Banks can freeze accounts, deny transactions, or fail entirely. Crypto allows peer-to-peer transactions without needing permission from any institution.
3. Financial Exclusion
Billions of people lack access to banking. Anyone with an internet connection can create a crypto wallet and participate in the global economy.
4. Cross-Border Friction
International transfers are slow (days), expensive (high fees), and complex. Crypto transfers work the same whether sending across the street or across the world.
5. Monetary Policy Concerns
Governments can print unlimited currency, potentially devaluing savings. Bitcoin has a fixed supply of 21 million coins — no one can create more.
Who Uses Crypto Today?
Individuals
- • Long-term holders ("HODLers")
- • International remittance senders
- • People in unstable economies
- • Technology enthusiasts
Institutions
- • Investment funds
- • Corporations (treasury holdings)
- • Payment processors
- • Banks (custody services)
While crypto solves real problems, it also introduces new ones:
- Extreme price volatility makes it unreliable as everyday money
- Self-custody means no recourse if you make mistakes
- Regulatory uncertainty in many jurisdictions
- Environmental concerns with some networks
- Widespread scams and fraud
Crypto is neither a magic solution to all financial problems nor a worthless scam. It's an evolving technology with real use cases and real risks. Understanding both is essential before participating.