Before diving into cryptocurrency, let’s understand the basics of good old-fashioned currency. ​A brief timeline of money goes something like this: since around 700BC, currency existed primarily as metal objects and paper. Early as the 1800s, the concept of ‘charge cards’ were introduced, evolving into credit cards during the 1900s. Then money went digital. What many consider the human race’s greatest achievement occurred in 1994: the first online purchase of a pepperoni and mushroom pizza from Pizza Hut.

Despite just being a piece of paper, money has value because we accept it to pay for goods and services. We all agree that bill which has a big ‘10’ on it is worth the purchasing power of ten United States Dollars. This notion is supported by the government, and centralized systems like the Federal Reserve set monetary policy, oversee financial institutions, and maintain efficient payment systems. Groundbreaking as it was, using the internet to purchase a pepperoni and mushroom pizza from Pizza Hut followed the customary rules established in our monetary system. It wasn’t until the conception of Bitcoin in 2008 that everything was flipped upside down.

While on the surface it looks like a standard digital payment method (such as PayPal), Bitcoin is engineered completely differently. It uses a decentralized system called blockchain. A blockchain is a public ledger of transactions maintained by a network of stakeholders. Long story short, this means there are no middlemen on the blockchain, like the Federal Reserve and other financial institutions. In Bitcoin’s case, this is intended to make transactions low cost, fast, and simple.

Visual overview of Blockchain's basics

In addition to acting as a payment system, the technology behind blockchain offers several benefits: unparalleled security due to its immutability, transparency from its open source nature, and ease of use through the elimination of unnecessary third parties. Blockchain’s applications are infinite: use cases include tracking supply chains, ‘tokenizing’ assets, verifying identities, securing medical records, reinventing financial contracts, and more.

At a broad level, cryptocurrencies can be categorized in two ways:

  1. Asset currencies: examples include Bitcoin, Litecoin, and Stellar, used for monetary transfer and storage. They make transactions more accessible, reliable, and efficient.
  2. Utility currencies: examples include Ethereum, Cardano, and Chainlink, used as a vehicle to utilize blockchain technology. They explore how blockchain can improve, replace, or invent systems.

Since its introduction in 2008, the value of cryptocurrencies has been a roller coaster. Those of us nerdy enough to get in early were lucky, to say the least. Mainstream hype gathered around crypto in 2017, sending the ~$10 billion market cap soaring to a valuation of almost one ​trillion dollars, then crashing to $100 billion, and now leveling out to around $250 billion. This high valuation of crypto helped establish itself as an asset class. Financial institutions, like CME group, support trading Bitcoin futures, and trading brokerages, like Robinhood, allow buying and selling cryptos, even obscure ones like the meme Dogecoin.

The crypto bubble is eerily familiar to the dotcom bubble of the early 2000s. In both cases, new technology received unprecedented investor speculation which culminated in a price crash when value couldn’t be realized. While the volatility of crypto has cast shadows of doubt upon its legitimate use cases, it's possible that the technology just isn’t ready for adoption yet, similar to how online shopping wasn’t mainstream during the dot com bubble (besides buying pepperoni and mushroom pizzas from Pizza Hut).

Side by side comparison of Bitcoin’s bubble in 2018 vs. Amazon’s bubble in 1999

One of the leading utility currencies, Ethereum, shows how slow development is. Currently, developers are working on Ethereum 2.0, a major update to their blockchain. While initially set to launch in early 2020, this has been continuously delayed, with timelines for certain milestones being pushed back more than 5 years. And even when it is launched, it’s likely Ethereum 2.0 will be in testing phases for at least a couple of years. Other projects have missed their deadlines, implying the difficulties of blockchain development is underestimated.

Despite its feasibility right now, several companies, such as IBM, have already created teams and divisions to harness blockchain as a potential solution for their clients. Facebook made headlines with a project called ‘Libra’, a crypto based form of payment accessible through their technologies such as WhatsApp and Messenger. Following a juicy testimony featuring Facebook’s CEO/accused lizard person Mark Zuckerberg and the US Congress, Facebook was pressured to adapt the Libra project to be less crypto oriented, after Congress categorized it as a threat to the global financial system.

Libra’s drama wasn’t the first time the government addressed crypto. Initially, organizations like the SEC set crypto regulations for taxation purposes and to protect investors in unfamiliar territory. Quickly, the government’s interest grew dramatically: over 32 bills have been introduced to Congress regarding the subject.

The government’s attitude towards crypto is mixed. On one hand, members of Congress are pushing to establish important crypto ground rules necessary for adoption. The Blockchain Promotion Act bill introduces the "Blockchain Working Group", a government entity that will investigate applications of blockchain technologies, such as in the Department of Defense. The Protecting Consumers from Market Manipulation Act bill requires crypto to be a "designated financial market utility", which legitimizes them as an asset class. Crypto is at least a part of the conversation, with rhetoric implying it is more than just a fad.

On the other hand, crypto advocates have accused governments of having a hostile attitude towards it. Outside of the United States, some countries have outright banned or are taking a restrictive approach to crypto. In China, the government has shut down many crypto exchanges, fearing they underpin their central bank. The SEC continuously strikes down crypto related trading operations, such as Bitcoin ETFs, which delegitimizes it as an asset. From a big picture, the decentralized nature of crypto inherently clashes with the centralized nature of standard financial systems. While some hardcore crypto enthusiasts claim it is a technology that can replace the current monetary structure and “take down the man”, it is more likely crypto will evolve to work within the preexisting financial system.

This was apparent during the coronavirus pandemic when the House of Representatives Fintech Task Force started considering a type of "digital dollar" to speed the pace at which current financial infrastructure provides aid. These hearings may have also been in response to China testing a digital currency called DCEP. Don’t get too excited, though. China’s digital currency, while based on principles of security, reliability, and efficiency that cryptocurrency stands for, has several financial intermediaries and doesn’t follow the decentralized approach crypto takes. To the dismay of crypto extremists, technology like this doesn’t dismantle the financial system. It is likely other governments will follow the same approach when adopting blockchain technology into their folds.

The future of crypto isn’t clear. As an investment, its speculative. As a new technology, its development timeline is murky. As a legitimate monetary system, its adoption by the government is unpredictable. However, the interest in crypto isn’t waning. LinkedIn reports blockchain development as the most in-demand skill in 2020. Its underlying technology is revolutionary and has begun to reshape processes across the world. It is likely, while we don’t know when or how, that someday any online purchase of a pepperoni and mushroom pizza from Pizza Hut will be supported by some variant of cryptocurrency technology.

All views expressed in this article are not to be taken as investment advice. Please visit​ to get in contact with the author. Additional editing provided by Emily Yaklich.