Cryptocurrency: Ying or Yang?

Bitcoin, Web3, Ethereum, Binance, HODL, Dip, Blockchain, Ledger, Wallet, DeFi, Altcoins, Shitcoins, Mining, NFT, and many more. To you, some of these words might sound like a mumble jumble of nonsense; actually, this shows how wild and wide the world of Cryptocurrency is! 

Surviving more than a decade, crypto has grown to become a worldwide currency. This post will explore the positivity and Negativity of the world of Cryptocurrency, the Ying Yang, and the Good and Bad of Cryptocurrency.

What is a Cryptocurrency?

Crypto is a special kind of currency that doesn’t exist physically; you can’t touch it like you could with your traditional currency: Naira, Dollar, or Pounds. But at the same time, these conventional currencies also exist digitally, which makes them different from the cryptocurrency.

Cryptocurrency is decentralized, which means it doesn’t have a board of chairmen, and it doesn’t have any issuing or regulating authority. It just exists online, and it stays online! You could perform transactions online, send money to people, and receive money simultaneously. Every transaction you conduct occurs and is recorded on a public database describing these transactions. 

In the same way, we have various types of currencies, XAF, Yuan, Naira, Dollars, and different kinds of Cryptocurrency like Bitcoin, which birthed Crypto as we all know it today. At the same time, there are Dogecoin, Tether, and Solana, all examples of Cryptocurrencies.

The History of Cryptocurrency

Bitcoin, the first cryptocurrency (there were other currencies before this), was released in January 2009 by a programmer named “Satoshi Nakamoto.” no one knows his real identity to this day as this was a pseudonym. The real identity of Satoshi Nakamoto is another entire topic to be covered, maybe in my following publication.

After building this newly found currency and technology, on October 31, 2008, Satoshi released a whitepaper on a cryptography mailing list, metzdowd.com. This whitepaper titled; “Bitcoin: A Peer-to-Peer Electronic Cash System.” outlined in detail the intricacies and the technology behind this newly found currency, how it works, and how it doesn’t need the control of a central authority.

During the launch of Bitcoin in 2009, Satoshi mined the first 50 Bitcoins, which was the first block in the Bitcoin Blockchain and is referred to as the “Genesis Block.” Mining is the process of validating transactions and registering these transactions on the blockchain system.

For example, you have a couple of friends come over to your house for dinner, and after eating, one of them couldn’t find his car keys, and you have to search all over the house to look for them. Let’s say this car key is a Bitcoin. 

Now, to find this key, you need to search, maybe turn the couch over and just perform a few search routines, and then your friend promises to give $10 to the first person to find the key. In the same sense, mining is verifying transactions (searching for the car keys) and getting a fraction of Bitcoin in return (the $10 promise)

While building this new type of currency, Satoshi designed it for one purpose: a medium of exchange that isn’t controlled by any authority, as a way to take financial control back from financial elites; for this reason, he made Bitcoin open-source, thus giving any individual of any race, nationality, religion to participate in a decentralized financial system.

The Rise of Bitcoin

Currently, as of the time of writing this, 1 Bitcoin is worth about $51848.00, but if this was been 10-14 years ago, in 2009, Bitcoin was only worth $0.00099, according to Bankrate. I know you are wondering how something worth less than a dollar rises to over $60,000. Yes, it’s insane, and as I mentioned earlier, Crypto is wild and wide.

A couple of things generally control the worth of a cryptocurrency; these things determine the rise and fall in the value of the coin;

• Supply

While releasing a coin, a total number of coins or tokens can exist, which means there is a limited supply for every cryptocurrency. For example, Bitcoin has a total cap of 21 Million, which means that the total number of Bitcoins ever to exist is 21 Million. Of this, approximately 19 Million are mined already, leaving Bitcoin with just 2 Million to be mined.

This limited supply sometimes leads to scarcity, as most investors end up buying a large number of the coin, thus driving up its value. A good case study will be in 2021, when Tesla, an EV company founded by Elon Musk, purchased over $1.5 Billion worth of Bitcoin and announced it would start using the coin as a payment method for its cars. This announcement led to a 10% increase in the price of Bitcoin and other investors to purchase huge amounts of it, thus driving its value further up.

To explain better how supply leads to the rise in the value of a coin, imagine you have a jar of candies, and there will only ever be 21 candies inside this jar. 

Now, let’s say the President bought about 15 candies from you, and because of this, other people wanted to buy them too, so when there are a few candies left in the jar, everyone wants them. It becomes very precious, and the value of each candy goes up.

• Demand

This is almost still related to supply; remember, there is a limited supply of coins. But a limited supply does not mean a limited demand. When more people are willing to buy a particular cryptocurrency, the value of the crypto increases, and it becomes more valued, and people are willing to pay more to have a portion of the coin. This can also be well explained by Tesla’s action in 2021. Elon Musk, a crypto enthusiast, made the announcement of Tesla purchasing over $1.5 Billion worth of crypto, bringing media attention to this action, and everyone wanted to buy a bit of Bitcoin; now, this is an increase in demand that led to the rise in the value of Bitcoin.

It’s adoption and saturated ecosystem can also influence the demand for a coin; let’s say X (formerly Twitter) thinks it would only accept a particular coin for the payment of it’s premium, and everyone wants to pay for X Premium; this means more people would like to get the coin to make payments on X and as the saying goes, increase in demand of the coin, leads to the increase in value of the said coin.

• Production Cost

Cryptocurrency can’t exist if anyone isn’t anyone mining it, ensuring that the transactions happening are validated and registered. For this, mining these coins requires a lot of energy to set up machines and hardware called ASICs (Application-Specific Integrated Circuits) or GPUs (Graphics Processing Units). 

The costs of this hardware and the energy to power them increase over time, leading to an increase in the production price, affecting the coin’s value on the market.

Is Crypto Decentralized

This is a fascinating and stupid argument; everyone knows Cryptocurrency is a decentralized finance system; who doesn’t know that, but is that true?

• What is Decentralization

The term decentralization in cryptocurrency just refers to taking control of transactions from an entity, individual, or organization and distributing this control across a network of computers (miners) instead of being controlled by a central authority.

One of the most popular features that caused the widespread acceptance of crypto was its perception of anonymity; every transaction performed on the blockchain is kept anonymous, and both the receiver and sender are just identified by a unique token or ID not attached to their identities. This anonymity is what most people will sometimes regard as decentralization, but crypto isn’t all that decentralized and anonymous. 

Shockingly, only some types of cryptocurrency are decentralized; while currencies like Bitcoin are, stablecoins like USDC and USDT are not genuinely decentralized because a central entity, Tether Limited, controls them. Even if we all agree that every crypto is centralized, some situations and events make me and maybe others doubt the decentralization of these currencies;

• Concentration of Wealth

This might not fit directly into the definition of cryptocurrency, but somehow, in this case, an entity has control. The purchase of over $1.8 Billion worth of Bitcoin in 2021 sent the currency’s value into a frenzy. This is an action carried out by a single entity that affected the say and the worth of the coin; even Tesla didn’t have total control over the coin after they bought it, but they were able to dictate what could happen to the coin as to the common knowledge of what decentralization means. 

Another case scenario is the rumor that the creator of Bitcoin, Satoshi, actually holds more than one million Bitcoins in his possession. This is speculated to be a part of the first blocks of Bitcoin Satoshi mined: the Genesis Block. This is because those bitcoins have never been spent, leading to widespread speculation that Satoshi still possesses and controls them.

How does this even relate to decentralization? Let’s say the rumor is accurate, and Satoshi, out of the blue, decides to sell all the Bitcoins in his possession; this would significantly impact the price of Bitcoin and could lead to a decrease in the coin’s value. This act would also lead to an interpretation that Bitcoin isn’t worth it anymore, and due to this, many people would want to ditch Bitcoin as even one of the founding fathers is ditching it already. High supply, low demand, and reduction in Bitcoin value.

Satoshi’s possession of this gives a sense of control; he could take an action that could make or break the Bitcoin market; therefore, maybe Crypto isn’t all that decentralized.

• Government Regulation

In February 2021, the Central Bank of Nigeria issued a law prohibiting financial institutions from facilitating cryptocurrency transactions. This ban showed how crypto can still be partly controlled and restricted to some groups of individuals, which is directly opposite to the reason Satoshi created the Bitcoin, a way to take financial control back from economic elites; for this reason, he made Bitcoin open-source, thus giving any individual of any race, nationality, religion to participate in a decentralized financial system.

The government prohibited Banks and financial institutions from providing services to cryptocurrency exchanges. This sentence brings about a whole new level of argument. Somehow, Cryptocurrency can’t survive or be used as a medium of exchange in some events unless converted to a traditional currency.

The ban on Crypto in Nigeria affected the general public’s complete access to a system designed for the public, controlled by the public, and decentralized.

• Decentralized – Anonymity

Yes, we all believe there is anonymity in how the blockchain works. I can perform a transaction, and no one can trace my wallet address. But maybe they can!

There are various ways in which anti-money laundering organizations (partly the government, lol) are developing to be able to trace wallet addresses back to their owner. Remember, the blockchain or crypto ledger of every coin is public, so that means anyone and everyone could easily have access to these transactions and be able to retrieve the wallet addresses of those transactions, which could later be used in tracing back to the user through;

• Searching for Public Personal Information

I’d have to admit, if you are caught this way, it’s your fault. Here is how it works: let’s say you saw a cool airdrop on X (formerly Twitter), and you use a personal account with all your details and pictures to comment on your wallet address to the airdrop post.

Anyone who gets your wallet address from the public ledger could easily paste that on Google, and Google, as a badass search engine, will recommend your X post with the same wallet address, exposing your identity.

• IP Addresses

Every transaction is associated with an IP address, often from the device used to authorize the transaction.

You can’t immediately link an IP Address and a wallet address. Still, with multiple investigations assisted by tools like Blockchain Explorers, which are online tools that can allow anyone to browse through the blockchain, and transaction analysis tools,  a correlation of a transaction from an IP address can be linked. It’s likely to be able to identify the owner of the wallet address.

An excellent example of how the face behind a wallet address could be identified is from the YouTube Private Investigator Coffeezilla; he used this to determine someone’s identity while investigating a crypto crime. Watch here.

Crypto: The Get Rich Quick Scheme! 

Twice in this publication, I mentioned what Satoshi Nakamoto created the Bitcoin and the crypto world to be: a way to take financial control back from economic elites; for this reason, he made Bitcoin open-source, thus giving any individual of any race, nationality, religion to participate in a decentralized financial system.

But now, that isn’t the case; the primary use of crypto has been swept off and converted to a means of financial income, leading to Bitcoin and crypto being used for what they weren’t built for. A personal experience is trying to pay for my tuition. Still, I couldn’t just use a crypto coin because it wasn’t accepted due to government restrictions, which takes us back to whether crypto is actually decentralized.

Cryptocurrency has been used in many wrong ways and in some good ways (in making money, lol); this is the time we will dive deep into the Ying Yang of Cryptocurrency.

Crypto Scams

• Logan Paul; CryptoZoo Scam

For most people they got to know about CryptoZoo, a crypto project the famous YouTuber Logan Paul plans to launch through his then-popular podcast, ImPaulsive. This was after a failed coin Logan launched earlier called Dink Doink.

 Logan widely refers to this project as a “Game” because it works like a game; you are required to play games and then make money by playing those games. CryptoZoo was designed to work this way:

Before you can perform any action, you need to start by buying a coin called $ZOO, which is the in-game currency of the CryptoZoo project. These Zoo coins are then used to purchase eggs, which can be later hatched to become animals that can be used as NFTs. You then can breed those animals to become hybrid animals, and the rarer the NFT, the higher the yield of the Zoo coin that animal will earn you daily. You also have the option to burn your animal and turn it back into a Zoo coin and then cash out.

During the podcast, Logan admitted that all the animal art NFTs on the platform were handmade and not AI-generated. Still, it later turned out that all of the hybrid and animal art was digitally altered with Photoshop.

After this project was pre-launched in November 2021, people bought over $2.1 Million worth of eggs on the first day of the launch, and the Zoo coins reached a market cap of $2 Billion; this is because Logan is a famous influencer and he has access to a large audience, a group of audience that trusts him and believe that whatever he is releasing is authentic and can’t scam them because he has enough money already. He doesn’t need to scam anyone.

Well, it turns out that wasn’t the case. On hatch day, the supposed day, you could hatch your egg and turn it into NFTs. Shockingly, on launch day, nothing worked; you couldn’t hatch or have any passive yield, and everything was turned down. Everyone who has spent thousands and millions of dollars on this coin so they could invest could not perform any action, and each time a support ticket is been sent, they were always told that the site was down for the moment and it would be back up soon, but, “sike”, it’s still not back up till this day.

After these errors and failure on launch day, the Zoo coin price fell by 63%, and the founder, Logan Paul, went utterly silent. The CryptoZoo project failed terribly; many people lost their money, over millions, and to this day, they haven’t been refunded. 

It was later revealed through Coffeezilla that the project was mismanaged by a team of engineers developing the project, the board of advisors, and many others. It turns out the project has in-house intricacies that contributed to its failures. 

You can get the full story on how it failed and the reason from Coffeezilla on YouTube.

• Paradox Crypto Scam

This was a play-to-earn cryptocurrency built for Paradox Metaverse. The coin supports a gaming experience where gamers receive rewards while they are either playing a game or exploring somewhere in the metaverse.

The project was first introduced in 2022 by Amio Talio and Fasil Tariq and after launch in 2022. The paradox scam was first exposed on a live stream by a famous streamer, iShowSpeed, whom the founders of Paradox paid to advertise their Ponzi scheme. In contrast, the popular streamer tricked his viewers into believing he brought the football star Christiano Ronaldo to his stream.

The stream later went sideways as many viewers began spamming the chat and calling Paradox a scam and iShowSpeed a sellout. This made iShowSpeed mute his mic and tried to talk to the founders, but unknowingly, his mic wasn’t fully muted, and every one of their conversations was being streamed live.

One of the clearest offers that made many people believe that Paradox was a scam was the crazy offers it had. They promise their users a gain of 10x to 100x, which is completely impossible in any financial investment. Some of the information online regarding Paradox is misleading and full of lies. One popular one was that it was stated in one of the online articles that the UK FCA regulates Paradox, but it isn’t. It is suspected that the Paradox founders paid online blogs to publish articles about them so they could have a solid and positive online presence if anyone tried to search for them.

One of the founders was later reported threatening a small TikToker for calling out Paradox as a scam and also posting the tiktoker’s address on Snapchat and offering £5,000 to anyone who would kidnap the Tiktoker and bring him to him and also requesting the address of the tiktoker’s mother. It’s not the kind of thing you would do if you were not a scam.

The Paradox Metaverse was later analyzed by Certik, a leading security-focused ranking platform for analyzing and monitoring blockchain, and it was flagged under a significant issue of centralization when we all know that the strong bone of the blockchain is decentralization.

After these issues and Coffeezilla investigating them, the Paradox coin or $PARA has always been down 95% of the time and is now a total failure. As of when writing this, the Paradox market cap sits at just $309,828—a more explained story by Coffeezilla here.

• Sam Bankman Fried and FTX

I don’t know if I will be wrong if I consider this the greatest crypto scam of all time. 

Once a member of the Forbes 40 under 40, Sam Bankman Fried went from being very influential in the crypto space to being convicted of fraud and financial-related crimes in November 2023. 

Sam Bankman Fried was the founder of FTX Exchange. This cryptocurrency exchange platform has its token called FTT and also allows different trading options, including spot trading, futures trading, and tokenized stocks. This quickly became one of the most popular exchange platforms and raised funds from various investors. In August 2020, it raised $900M at an $18 Billion valuation from 60 other investors. In January 2022, it raised $400 Million in its Series C funding at a $32 billion valuation; later on, FTX was closed in November 2022.

FTX was quickly adopted because of its founder, Sam Bankman Fried; he has a different character; he doesn’t dress like a wealthy man, even though he controls a business that has an evaluation of $32 Billion; he dresses in tees and shorts, but he has a lot of celebrities promoting his platform, from the likes of Shaquille O’Neal, Snoop Dog, Kevin O’Leary, Tom Brady, to Stephen Curry. 

It had advertisements on the Super Bowl featuring Larry David, a popular and well-known actor. This made everyone invested and trusted the platform as they’ve received some social proof from the celebrities and the founder’s character.

Sam became the wealthiest person under 30 in the world; he made it to the Forbes 30 under 30 list; he has the character of a tech nerd stereotype; the way he dresses and the way he behaves, the type of car he uses, and most importantly, how he gives, something called Altruism. He was so invested in giving his wealth away and making the world a better place that he got featured in one of NAS Daily’s videos, which later received backlash.

After all these, in November 2022 came the crashing down of Sam Bankman Fried as FTX filed for bankruptcy; it was because of how the price of Bitcoin started declining in 2021/2022, and many crypto platforms were shutting down. Still, FTX continued operating, but in 2022, CoinDesk published a paper that exposed how the funds on FTX were being mismanaged and used to sponsor another SBF (Sam Bankman Fried) business, Alameda Research. 

A leaked balance sheet containing all of FTX’s transactions and numbers revealed that there was no differentiation between the two companies; the sheet listed $9 billion in liabilities and $900 million in assets with poorly labeled entries. Alameda borrowed a lot of capital from FTX, and it was revealed that this capital was funded mainly through FTX customer assets.

A few days after its balance sheet was leaked on CoinDesk, Binance, who initially planned on selling FTT tokens on its platform, dropped the deal as a part of a risk management strategy since FTX could no longer be trusted, the value of FTT dropped, which prompted lots of it’s customer to withdraw their money.  This led to FTX losing billions of dollars, and SBF and it’s co-founders are looking for ways to patch these up by trying to sell assets in Alameda Research to cover the capital needed for withdrawals, as most of the customer assets have been given off to Alameda Research.

Later, FTX blocked users from taking out their money, making thousands of customers worldwide lose their life savings and forget about getting their money back. FTX and SBF, on the other hand, couldn’t cover the $8 billion gap between what was owed and what could be paid and had to file for bankruptcy. 

FTX failed due to the mismanagement of customer assets by the founder, especially SBF; he used FTX funds to buy luxury items, finance elaborate adverts, and make political donations.

Jame Jani did a deeper dive into the FTX and Sam Bankman Fried story on YouTube.

Apart from these crypto scams, crypto has been used in many more detrimental ways; most ransomware payments are now carried out through crypto since they cannot be tracked.

Crypto has been repeatedly sold as a way to get rich, not to decentralize the finance industry worldwide; anyone interested in crypto now sees it as a way to financial freedom both as a founder and a user. 

Until the world widely accepts crypto as a satisfactory means of exchange, What’s the use of a currency I can’t spend unless I exchange it for the same type of currency I am trying to stop using?

I can’t tell you whether Crypto is bad or good; you are left to figure that out. 

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