By Alissa Yoon
Boston University News Service
Technology has revolutionized fields like medicine, electronics and transportation, but one area has remained largely untouched until now: money.
President-elect Donald Trump’s pro-crypto stance has led to a 45% surge in the value of Bitcoin since the election, with the world’s largest trade recently reaching $102,900, according to Reuters.
Gary Gensler, former Securities and Exchange Commission chair during President Joseph Biden’s administration, brought actions against cryptocurrency businesses for fraud and laundering money, according to the Associated Press.
This ultimately diverted investors and hindered the potential growth of crypto, Wes Jorgorgensen, a junior at Boston University majoring in computer science and economics, said. However, with a pro-crypto government in place next year, the possibility of a legal and regulated crypto industry could now be on the horizon, he said.
Satoshi Nakamoto’s 2008 paper, “Bitcoin: A Peer-to-Peer Electronic Cash System,” also known as the Bitcoin Whitepaper, established the currency and outlined ideas about the potential growth of crypto. To this day, speculation about Nakamoto’s hidden identity remains rampant, with theories suggesting that they could be an individual or a group, according to Bitpanda, an Australian financial tech company.
The Bitcoin Whitepaper “was based on a lot of libertarian ideas and was very anti-government,” Jorgorgensen said. The Whitepaper aimed to help people during the 2008 financial collapse, which resulted from various factors, including the closure of investment and regional banks across the nation and a record-high unemployment rate, according to Investopedia, an online financial news source.
A decentralized financial (also known as DeFi) system is a peer-to-peer network that eliminates the need for third parties, such as banks, in financial transactions, wrote Rakesh Sharma for Investopedia. Blockchain follows the DeFi system and supports currencies like Ethereum and Bitcoin.
The Whitepaper aimed to provide a solution to the financial crisis by eliminating banks and enabling direct money transfers and ownership, Michael Sun, a sophomore at BU majoring in business, said.
Traditionally, Sun said, sending money through banks can take days or even weeks for both the sender and recipient, making the process cumbersome. Sun said blockchain operates differently, allowing the sender to transfer funds directly to the recipient without the involvement of a third party, such as a bank.
Concerns about Bitcoin originally stemmed from fears that it could challenge the U.S. dollar, said Jorgensen. However, Sun said both the government and major banks like J.P. Morgan and BlackRock are supporting crypto.
People are not solely using Bitcoin, but rather a digitized U.S. dollar, called Central Bank Digital Currency, CBDC. “So, it’s helping the U.S. dollar sustain its power as a currency,” said Sun. These benefits have translated into pro-crypto government support.
“I’m laying out my plan to ensure that the United States becomes the crypto capital of the planet and the Bitcoin superpower of the world,” Trump told attendees at Bitcoin 2024, a conference held in July. “We’ll get it done.”
Looking to the future, the rise of Bitcoin raises questions about the beneficial possibilities the crypto space has to offer. Jorgensen said he thinks that government acceptance will lead to a rise in crypto-related entrepreneurship, investment capital and the integration of blockchain technology into people’s daily lives.
Earlier this year, the California Department of Motor Vehicles digitized 42 million car titles onto the blockchain to combat fraud, a move that signals growing institutional confidence in blockchain technology, according to Reuters. By next year, California residents may have digital car titles when the DMV completes development of an accessible app for consumers, writes Akash Sriram, sector specialist reporter for Reuters.
Crypto differs from the U.S. dollar in that its value is determined by investors’ purchasing behavior and does not follow traditional monetary processes, according to Freeman Law Firm. As a result, minimal legal resources are available in cases of ownership and transaction disputes, since regulations are not clearly defined, Freeman Law said.
Jorgensen said: “We’re trying to apply regulations from the 1990s to today’s computers. It just doesn’t work anymore.”