The genesis of cryptocurrency – Moneyweb

Imagine an investor in 2010, skeptical yet curious, hearing about Bitcoin for the first time when it was valued at just a few cents. Fast forward to 2025, and that same Bitcoin has surged past $90 000, creating a wave of financial disruption. How did we get here? What transformed cryptocurrency from an unclear tech experiment into a trillion-dollar asset class? Let’s take a structured, data-driven journey into this digital frontier.

Cryptocurrency background

The story of cryptocurrency begins with Bitcoin, the first and most well-known digital currency, created in 2009 by an anonymous figure or group known as Satoshi Nakamoto. Bitcoin was born from the ashes of the 2008 financial crisis when trust in traditional financial institutions was at an all-time low. Satoshi’s vision was simple yet revolutionary, to create a decentralised form of money that operates without intermediaries like banks or governments.

But what does “decentralised” mean? In the world of cryptocurrency, it means no single entity controls the network. Instead, transactions are verified by a distributed network of computers (often referred to as “nodes”) using a system called blockchain. This technology is the backbone of cryptocurrency, ensuring every transaction is transparent, secure, and immutable.

The rise of cryptocurrency can be best understood by analysing key breakthroughs and adoption rates. Bitcoin, the pioneer, emerged in 2009 with a market capitalisation of zero. By 2013, its market cap had surpassed $1 billion. Just over a decade later, the total cryptocurrency market cap fluctuates between $2.5 trillion and $3.6 trillion, showcasing exponential growth.

How cryptocurrency works

The efficiency of cryptocurrencies comes from blockchain technology. A 2022 study by Deloitte found that 76% of global financial executives believe digital assets will replace or complement traditional currencies in the next five to 10 years. But how does blockchain achieve this?

At its core, blockchain is a decentralised ledger where transactions are recorded in blocks and linked in a time-ordered chain. Unlike traditional finance, where intermediaries such as banks or payment processors oversee transaction flows, blockchain operates on a peer-to-peer network. This means transactions are verified and stored across multiple computers (nodes) instead of relying on a central authority.

To maintain security and transparency, blockchain uses a consensus mechanism, which ensures that all transactions are legitimate and prevents fraudulent activities such as double-spending. There are different types of consensus mechanisms, but the two most common are:

1. Proof of Work (PoW): This mechanism is used by Bitcoin and requires miners, and specialised computers, to solve complex mathematical puzzles to validate transactions and add them to the blockchain. While PoW provides a high level of security, it requires substantial computing power and energy consumption.
2. Proof of Stake (PoS): Newer cryptocurrencies, such as Ethereum, are shifting to PoS, which allows users to validate transactions based on the number of coins they hold and “stake” as collateral. This system is more energy-efficient and scalable compared to PoW, making it a more sustainable option for future blockchain networks.

Why cryptocurrency matters 

Cryptocurrency represents a critical shift in how we think about money. Unlike traditional currencies, which are issued and regulated by central banks, cryptocurrencies are governed by code and consensus. This decentralisation offers key advantages:

1. Financial Inclusion: Cryptocurrencies can be accessed by anyone with an internet connection, bypassing the need for traditional banking infrastructure. This is particularly powerful in developing countries where access to banking is limited.
2. Transparency: Every transaction on a blockchain is publicly recorded, making it nearly impossible to manipulate or falsify records.
3. Security: Cryptocurrencies are secured by cryptography, making them resistant to fraud and hacking (assuming proper security practices are followed).
4. Ownership: With cryptocurrency, you truly own your money. No bank or government can freeze your account or seize your assets (as long as you keep your private keys safe).

The risks and challenges

While the promise of cryptocurrency is exciting, it’s important to recognise that it’s still a developing and highly volatile market. Prices can swing dramatically in a matter of hours, and the lack of regulation means that scams and fraudulent schemes are not uncommon. Here are some key risks to be aware of:

1. Volatility: Cryptocurrencies are known for their price swings. While this can create profit opportunities, it also means that losses can be just as dramatic.
2. Regulatory uncertainty: Governments around the world are still figuring out how to regulate cryptocurrencies. Regulation changes could have a significant impact on the market.
3. Security risks: While blockchain technology is secure, individual users can still fall victim to hacks, phishing attacks, and other forms of cybercrime if they don’t take proper precautions.
4. Liquidity issues: Not all cryptocurrencies are created equal. Bitcoin and Ethereum are highly liquid, however, many smaller cryptocurrencies can be difficult to buy or sell quickly.

How to trade crypto CFDs

For those interested in crypto but are hesitant about direct ownership, trading cryptocurrency contracts for difference (CFDs) is a great alternative. CFDs allow investors to speculate on price movements without owning the underlying asset. Here’s how to get started:

1. Educate yourself: Before trading, understand the fundamentals of blockchain technology, crypto assets, and the risks associated with CFD trading. Unlike direct crypto investment, CFDs involve leverage, which amplifies both gains and losses.
2. Start small: Given the volatility of crypto markets, it’s wise to trade with small positions initially. Set stop-loss orders to manage risk effectively.
3. Understand leverage and margin: CFDs offer leverage, meaning traders can open positions larger than their initial deposit. While this can enhance potential returns, it also increases risk exposure.
4. Secure your trades: Unlike owning crypto, CFD trading doesn’t require a wallet. Managing risk through hedging strategies, such as pairing long and short positions, can help manage losses.
5. Diversify your portfolio: Just like traditional investing, it’s important not to rely on a single cryptocurrency. Trading CFDs on Bitcoin, Ethereum, and altcoins can help spread risk.
6. Stay informed: Crypto markets are highly responsive to news and regulatory updates. Follow market trends and use technical analysis tools to make data-driven trading decisions.

Final thoughts

Cryptocurrency is more than just an investment; it’s speculation on the unknown. It’s a chance to be part of a movement that is reshaping the global financial system. Whether you’re a seasoned investor or a curious newcomer, the cryptocurrency world offers something for everyone. So, take the plunge, but do so with your eyes wide open. The journey may be unpredictable, but for those who are prepared, the rewards can be extraordinary.

As part of this evolving financial environment, BROSKTOCK will be adding cryptocurrency CFDs in the coming months. This expansion aims to provide investors with more options to engage with the crypto market through regulated instruments, allowing for speculation on price movements without the complexities of direct ownership. With crypto markets continually evolving, such offerings present new opportunities for investors to explore this decentralised world with structured risk management.

Disclaimer:

Investing in cryptocurrencies involves substantial risks including high volatility, lack of regulation, security threats, technological vulnerabilities, market manipulation, liquidity concerns, legal uncertainty, absence of guarantees, limited recourse, and unpredictable future developments. Investors must conduct thorough research and seek professional advice before engaging in cryptocurrency transactions. These instruments are available exclusively as CFDs (Contracts for Difference). BROKSTOCK SA (Pty) Ltd. Trading as BROKSTOCK. An authorised Financial Services Provider – FSP 51404, T&Cs and Disclaimers are applicable: https://brokstock.co.za/