What Is It, How It Does It Work, and Who’s Using It?
I’ve never really understood cryptocurrency and as a result I haven’t paid much attention to it. Recently Donald Trump signed his Executive Order “Strengthening American Leadership in Digital Financial Technology. The Executive Order established the “Presidential Working Group On Digital Asset Markets”, to explore the creation of a national digital asset (cryptocurrency) stockpile.
That’s when I decided it was time to find out more about it. And, being a guy, my first thought was to just go and buy some. It turned out to be a little more complicated than walking into your local bank and asking to buy a Bitcoin.
To begin with, the current value of a Bitcoin is in excess of $83,000. Most cryptocurrency exchanges allow fractional purchases, some as low as $10. The transaction fee will run about 20% of a small purchase, so it may not be a particularly good investment at that level. The fee is a lower percentage for larger purchases.
You can purchase cryptocurrency such as Bitcoin through cryptocurrency exchanges. There are at least three reputable platforms available in the United States. Bitcoin can also be purchased in small amounts through PayPal and Venmo.
Once you’ve made your purchase, you’ll have to have a Bitcoin wallet, where you will store your Bitcoins. A digital wallet is like a bank account for Bitcoins but with highly sophisticated security. There are two primary types. The custodial wallet is managed by a third-party service and is easy to use, but you don’t control the privacy keys—a serious consideration if you are making a large purchase. There are the non-custodial wallets where you have full control over your privacy key. The most common of these is the Bitcoin.com wallet. It’s user friendly and mobile according to its website.
One thing to consider. Bitcoin purchases for the most part require full identification including Social Security number. This is based on money laundering regulations. The only exception to this is the Bitcoin ATMs (vending machines) that usually only require a driver’s license number and a cell phone number. However, only very small purchases are available through these ATM’s.
Cryptocurrency may seem like a recent invention, but the ideas behind it go back several years. Today, it’s more than a buzzword, it’s a financial tool, an investment asset, and for some, even a national currency. In this post, we’ll explore where crypto came from, how it gets its value, how it’s used in the real world, and which governments (if any) treat it like real money.
Where It All Began: The Origin of Cryptocurrency
Cryptocurrency’s origin begins with a previously unknown person—or possibly a group—known only as Satoshi Nakamoto. In 2008, Nakamoto published a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” A few months later, in January 2009, the Bitcoin network was officially launched with the mining of the first block, called the Genesis Block. This marked the birth of the world’s first viable cryptocurrency, Bitcoin.
The purpose was to create a form of money that could operate without the control of governments or financial institutions. Bitcoin was designed to be decentralized, transparent, and secure—made possible by blockchain technology. The blockchain is a digital ledger, distributed across thousands of computers, that records every transaction made in the network. Once data is entered, it’s nearly impossible to change—giving it an edge over traditional banking records when it comes to fraud prevention. Earlier attempts to develop a digital currency like eCash and b-money failed because they couldn’t solve the problem of security: protecting their crypto from unauthorized duplication.
By 2011 Nakamoto vanished, leaving a final message that they had moved on to other things. Nakamoto is believed to have mined about 1,000,000 bitcoins which are still sitting untouched in a known wallet address. At today’s prices Nakamoto’s Bitcoins are worth billions. Why did Nakamoto do it? No one knows.
What Gives Crypto Its Value?
One of the most common questions about cryptocurrency is: “What gives it value?”
Unlike the U.S. dollar, which is backed by the full faith and credit of the government (called a fiat currency in modern financial jargon), most cryptocurrencies are not backed by a either a physical commodity or government guarantee. Instead, their value comes from a mix of:
- Scarcity: Most cryptocurrencies have a cap on how many coins can exist. For example, Bitcoin is limited to 21 million coins. That built-in scarcity is one reason why people compare it to gold.
- Utility: A coin that can be used for more than just speculation—such as transferring money quickly or executing smart contracts—tends to be more valuable.
- Network Adoption: The more people who use or invest in a cryptocurrency, the more valuable it tends to become. This is often called the “network effect.”
- Speculation: Let’s be honest, a lot of crypto value is driven by people buying low and hoping to sell high. That makes crypto prices volatile, which is both a risk and a reward depending on your timing.
Cryptos like Bitcoin and its major competitor Ethereum gain and lose billions in value in a single day, driven by news, regulation, and even tweets.
Bitcoins are generated through dedicated blockchain technology which ensures their safety and prevents them from being duplicated. As a result, many people view them as a store of value (digital gold). They can also be used as a medium of exchange although that is less common due to volatility and high transaction fees.
There’s another type of cryptocurrency called the meme coin. They often start as jokes or are done by some people as a source of revenue. They have little or no real-world use. They rely on community hype and social media to generate popularity and value. They don’t have their own blockchain, instead they’re built on top of existing platforms. They’re usually created quickly with minimal technical barriers and their security and functionality vary widely.
The best-known meme coin is the $TRUMP coin. It was released just before Donald Trump’s inauguration. A $TRUMP coin reached a high of $75.35 on January 19th, 2025, but it quickly lost almost all value. A $TRUMP coin is currently worth about 27 cents. The Trump family and their associates made millions on transaction fees while investors lost massively in the market. I would not consider meme coins as a real invetment. If you purchase one, consider it as a hobby.
A new advancement in the cryptocurrency scene is the Stablecoin. This type of cryptocurrency is designed to maintain a stable value. It is usually pegged to a traditional asset like the US dollar, the Euro or perhaps gold. The goal is to offer the benefits of cryptocurrency, like fast digital transactions and decentralized access, without the wild price swings seen with other coins like Bitcoin.
Most Stablecoins are backed in one of three ways:
- Fiat backed (most common): for example, for every Stablecoin issued a dollar (or equivalent) is held in reserve. This could be considered a digital version of cash held in a bank account.
- Crypto backed: Each Stablecoin is backed by other crypto currencies but is usually over collateralized to guard against volatility. For example, $150.00 worth of a regular cryptocurrency is held to issue $100 worth of Stablecoin.
- Algorithmic: Stablecoin uses software and smart contracts to control the coin supply and keep the price stable with no actual reserve assets. The most famous example of this was TerraUSD which had a spectacular collapse in 2022.
Stablecoins are designed to a hedge against volatility in the standard crypto markets. They provide the same fast cheap international payments as other cryptocurrency and can provide dollar like stability in countries with unstable currencies. Fiat based coins are generally seen as more reliable because they are frequently audited and are regulated more closely. Others, especially algorithmic ones, have greater risk.
How Is Cryptocurrency Used?
People use cryptocurrency in several different ways, and the list is growing:
1. Digital Payments
Crypto was originally created to be a medium of exchange. Some online and brick-and-mortar retailers accept Bitcoin, Ethereum, or other coins. Services like PayPal and Cash App also allow crypto transactions. However, due to high transaction fees and slow processing times (especially for Bitcoin), it’s not exactly the most convenient way to buy your morning coffee.
2. Investment and Speculation
Most people today use crypto as an investment. Others trade coins daily to make quick profits, a practice known as day trading. Like with the stock market, day trading is a risky business—crypto prices can swing wildly based on rumors or regulatory changes.
3. DeFi (Decentralized Finance)
DeFi is a rapidly growing branch of the crypto world. It allows people to borrow, lend, and earn interest on crypto without going through banks. Platforms like Uniswap and Aave are examples of DeFi services that operate on Ethereum’s blockchain.
4. NFTs and Digital Ownership
A non-fungible token (NFT) is a unique digital asset that represents ownership or proof of authenticity of a specific virtual item, such as artwork, music, video clips, virtual real estate, or even tweets, that is stored on a blockchain—a decentralized digital ledger. Its uniqueness is encoded in metadata and tracked on the blockchain, allowing anyone to verify who owns a particular NFT and ensuring that it can’t be duplicated or counterfeited. (It is beyond me why anyone would spend real money for virtual ownership.)
5. Remittances
Crypto can be a low fee way to send money across borders, especially to countries where banking systems are weak or expensive. Some developing nations have embraced this use enthusiastically.
Is Any Government Using It as Legal Tender?
Yes—but just one (so far): El Salvador.
In September 2021, El Salvador became the first country in the world to adopt Bitcoin as legal tender. That means businesses must accept it alongside the U.S. dollar (which is also legal tender there). The country launched a national crypto wallet called “Chivo,” gave citizens a $30 bonus in Bitcoin to download it, and is even planning “Bitcoin City,” powered by geothermal energy from a volcano.
The move has been controversial. Critics argue Bitcoin’s volatility makes it a poor substitute for cash. Citizens have complained about wallet bugs and transaction errors. On the other hand, the government sees it as a way to attract foreign investment and reduce dependence on traditional banks.
Despite rumors to the contrary, there is no evidence that the US is using Bitcoin to pay El Salvadore to imprison US deportees.
More recently, the Central African Republic is in the process of declaring Bitcoin legal tender, but with far less fanfare and infrastructure than El Salvador. Other countries, like Ukraine, have legalized the use of crypto for payments but stop short of declaring it legal tender. Most other nations take a cautious or skeptical approach.
Is It Real Money?
That depends on how you define money.
Cryptocurrency satisfies some of the classic definitions: it’s a medium ofexchange, a store of value, and (sometimes) a unit of account. But most governments still don’t recognize it as “money” in the legal sense. In the U.S., the IRS treats crypto as property for tax purposes, not as currency. That means every time you buy a coffee with Bitcoin, you technically owe capital gains tax if it’s gone up in value since you bought it.
The Federal Reserve and other central banks are exploring Central Bank Digital Currencies (CBDCs) as an official alternative. These would be government-backed digital dollars, unlike Bitcoin, which is decentralized. Think of it as crypto with guardrails.
Final Thoughts
Cryptocurrency is still in its Wild West phase. It’s a fascinating mix of finance, technology, and ideology. While it’s unlikely to replace national currencies anytime soon, it’s already reshaping how people think about money, investing, and even trust in future assets.
Will more countries follow El Salvador’s lead? Will governments roll out their own digital currencies? Or will crypto remain a fringe asset class for techies and risk-takers? That’s still up in the air—but one thing’s for sure: crypto is no longer just a financial experiment. But I must wonder how good an investment it is if you can buy crypto from a vending machine in a convenience store.
Am I ready to jump into the crypto market? I don’t think so — at least not yet. Well, maybe a few dollars just for fun.
The Rise of Cryptocurrency
By John Turley
On April 11, 2025
In Commentary, Politics
What Is It, How It Does It Work, and Who’s Using It?
I’ve never really understood cryptocurrency and as a result I haven’t paid much attention to it. Recently Donald Trump signed his Executive Order “Strengthening American Leadership in Digital Financial Technology. The Executive Order established the “Presidential Working Group On Digital Asset Markets”, to explore the creation of a national digital asset (cryptocurrency) stockpile.
That’s when I decided it was time to find out more about it. And, being a guy, my first thought was to just go and buy some. It turned out to be a little more complicated than walking into your local bank and asking to buy a Bitcoin.
To begin with, the current value of a Bitcoin is in excess of $83,000. Most cryptocurrency exchanges allow fractional purchases, some as low as $10. The transaction fee will run about 20% of a small purchase, so it may not be a particularly good investment at that level. The fee is a lower percentage for larger purchases.
You can purchase cryptocurrency such as Bitcoin through cryptocurrency exchanges. There are at least three reputable platforms available in the United States. Bitcoin can also be purchased in small amounts through PayPal and Venmo.
Once you’ve made your purchase, you’ll have to have a Bitcoin wallet, where you will store your Bitcoins. A digital wallet is like a bank account for Bitcoins but with highly sophisticated security. There are two primary types. The custodial wallet is managed by a third-party service and is easy to use, but you don’t control the privacy keys—a serious consideration if you are making a large purchase. There are the non-custodial wallets where you have full control over your privacy key. The most common of these is the Bitcoin.com wallet. It’s user friendly and mobile according to its website.
One thing to consider. Bitcoin purchases for the most part require full identification including Social Security number. This is based on money laundering regulations. The only exception to this is the Bitcoin ATMs (vending machines) that usually only require a driver’s license number and a cell phone number. However, only very small purchases are available through these ATM’s.
Cryptocurrency may seem like a recent invention, but the ideas behind it go back several years. Today, it’s more than a buzzword, it’s a financial tool, an investment asset, and for some, even a national currency. In this post, we’ll explore where crypto came from, how it gets its value, how it’s used in the real world, and which governments (if any) treat it like real money.
Where It All Began: The Origin of Cryptocurrency
Cryptocurrency’s origin begins with a previously unknown person—or possibly a group—known only as Satoshi Nakamoto. In 2008, Nakamoto published a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” A few months later, in January 2009, the Bitcoin network was officially launched with the mining of the first block, called the Genesis Block. This marked the birth of the world’s first viable cryptocurrency, Bitcoin.
The purpose was to create a form of money that could operate without the control of governments or financial institutions. Bitcoin was designed to be decentralized, transparent, and secure—made possible by blockchain technology. The blockchain is a digital ledger, distributed across thousands of computers, that records every transaction made in the network. Once data is entered, it’s nearly impossible to change—giving it an edge over traditional banking records when it comes to fraud prevention. Earlier attempts to develop a digital currency like eCash and b-money failed because they couldn’t solve the problem of security: protecting their crypto from unauthorized duplication.
By 2011 Nakamoto vanished, leaving a final message that they had moved on to other things. Nakamoto is believed to have mined about 1,000,000 bitcoins which are still sitting untouched in a known wallet address. At today’s prices Nakamoto’s Bitcoins are worth billions. Why did Nakamoto do it? No one knows.
What Gives Crypto Its Value?
One of the most common questions about cryptocurrency is: “What gives it value?”
Unlike the U.S. dollar, which is backed by the full faith and credit of the government (called a fiat currency in modern financial jargon), most cryptocurrencies are not backed by a either a physical commodity or government guarantee. Instead, their value comes from a mix of:
Cryptos like Bitcoin and its major competitor Ethereum gain and lose billions in value in a single day, driven by news, regulation, and even tweets.
Bitcoins are generated through dedicated blockchain technology which ensures their safety and prevents them from being duplicated. As a result, many people view them as a store of value (digital gold). They can also be used as a medium of exchange although that is less common due to volatility and high transaction fees.
There’s another type of cryptocurrency called the meme coin. They often start as jokes or are done by some people as a source of revenue. They have little or no real-world use. They rely on community hype and social media to generate popularity and value. They don’t have their own blockchain, instead they’re built on top of existing platforms. They’re usually created quickly with minimal technical barriers and their security and functionality vary widely.
The best-known meme coin is the $TRUMP coin. It was released just before Donald Trump’s inauguration. A $TRUMP coin reached a high of $75.35 on January 19th, 2025, but it quickly lost almost all value. A $TRUMP coin is currently worth about 27 cents. The Trump family and their associates made millions on transaction fees while investors lost massively in the market. I would not consider meme coins as a real invetment. If you purchase one, consider it as a hobby.
A new advancement in the cryptocurrency scene is the Stablecoin. This type of cryptocurrency is designed to maintain a stable value. It is usually pegged to a traditional asset like the US dollar, the Euro or perhaps gold. The goal is to offer the benefits of cryptocurrency, like fast digital transactions and decentralized access, without the wild price swings seen with other coins like Bitcoin.
Most Stablecoins are backed in one of three ways:
Stablecoins are designed to a hedge against volatility in the standard crypto markets. They provide the same fast cheap international payments as other cryptocurrency and can provide dollar like stability in countries with unstable currencies. Fiat based coins are generally seen as more reliable because they are frequently audited and are regulated more closely. Others, especially algorithmic ones, have greater risk.
How Is Cryptocurrency Used?
People use cryptocurrency in several different ways, and the list is growing:
1. Digital Payments
Crypto was originally created to be a medium of exchange. Some online and brick-and-mortar retailers accept Bitcoin, Ethereum, or other coins. Services like PayPal and Cash App also allow crypto transactions. However, due to high transaction fees and slow processing times (especially for Bitcoin), it’s not exactly the most convenient way to buy your morning coffee.
2. Investment and Speculation
Most people today use crypto as an investment. Others trade coins daily to make quick profits, a practice known as day trading. Like with the stock market, day trading is a risky business—crypto prices can swing wildly based on rumors or regulatory changes.
3. DeFi (Decentralized Finance)
DeFi is a rapidly growing branch of the crypto world. It allows people to borrow, lend, and earn interest on crypto without going through banks. Platforms like Uniswap and Aave are examples of DeFi services that operate on Ethereum’s blockchain.
4. NFTs and Digital Ownership
A non-fungible token (NFT) is a unique digital asset that represents ownership or proof of authenticity of a specific virtual item, such as artwork, music, video clips, virtual real estate, or even tweets, that is stored on a blockchain—a decentralized digital ledger. Its uniqueness is encoded in metadata and tracked on the blockchain, allowing anyone to verify who owns a particular NFT and ensuring that it can’t be duplicated or counterfeited. (It is beyond me why anyone would spend real money for virtual ownership.)
5. Remittances
Crypto can be a low fee way to send money across borders, especially to countries where banking systems are weak or expensive. Some developing nations have embraced this use enthusiastically.
Is Any Government Using It as Legal Tender?
Yes—but just one (so far): El Salvador.
In September 2021, El Salvador became the first country in the world to adopt Bitcoin as legal tender. That means businesses must accept it alongside the U.S. dollar (which is also legal tender there). The country launched a national crypto wallet called “Chivo,” gave citizens a $30 bonus in Bitcoin to download it, and is even planning “Bitcoin City,” powered by geothermal energy from a volcano.
The move has been controversial. Critics argue Bitcoin’s volatility makes it a poor substitute for cash. Citizens have complained about wallet bugs and transaction errors. On the other hand, the government sees it as a way to attract foreign investment and reduce dependence on traditional banks.
Despite rumors to the contrary, there is no evidence that the US is using Bitcoin to pay El Salvadore to imprison US deportees.
More recently, the Central African Republic is in the process of declaring Bitcoin legal tender, but with far less fanfare and infrastructure than El Salvador. Other countries, like Ukraine, have legalized the use of crypto for payments but stop short of declaring it legal tender. Most other nations take a cautious or skeptical approach.
Is It Real Money?
That depends on how you define money.
Cryptocurrency satisfies some of the classic definitions: it’s a medium ofexchange, a store of value, and (sometimes) a unit of account. But most governments still don’t recognize it as “money” in the legal sense. In the U.S., the IRS treats crypto as property for tax purposes, not as currency. That means every time you buy a coffee with Bitcoin, you technically owe capital gains tax if it’s gone up in value since you bought it.
The Federal Reserve and other central banks are exploring Central Bank Digital Currencies (CBDCs) as an official alternative. These would be government-backed digital dollars, unlike Bitcoin, which is decentralized. Think of it as crypto with guardrails.
Final Thoughts
Cryptocurrency is still in its Wild West phase. It’s a fascinating mix of finance, technology, and ideology. While it’s unlikely to replace national currencies anytime soon, it’s already reshaping how people think about money, investing, and even trust in future assets.
Will more countries follow El Salvador’s lead? Will governments roll out their own digital currencies? Or will crypto remain a fringe asset class for techies and risk-takers? That’s still up in the air—but one thing’s for sure: crypto is no longer just a financial experiment. But I must wonder how good an investment it is if you can buy crypto from a vending machine in a convenience store.
Am I ready to jump into the crypto market? I don’t think so — at least not yet. Well, maybe a few dollars just for fun.