The Green Sheet Online Edition
June 6, 2025 • 25:06:01
Money, from pucca shells to bitcoin: a primer
Money has always been about an exchange of value. In prehistoric times, someone might have requested a handful of pucca shells in exchange for a wheel or cutting implement. Today, that exchange of value might involve cash, a check, or a credit/debit card. Or, it could involve a cryptocurrency – a digital or virtual currency that is secured by cryptography.
Bitcoin, the first cryptocurrency, was introduced sixteen years ago. At the time, it was valued at well under $1. In late May 2025, the market assigned a value of nearly $112,000 to a single bitcoin. Now that's real value, and a lot of people are using it to purchase cars, yachts and more. One ISO recently described calling on a gun shop that wanted to accept cryptocurrencies.
But the vast majority of people use Bitcoin as an investment.
When addressing the Bitcoin 2025 conference on May 28, Vice President J.D. Vance estimated 50 million Americans now own Bitcoin, and he predicted that number will double "before too long," according to reporting by crypto journalist Benjamin Nijiri. "Crypto is a hedge against bad policymaking from Washington, no matter what party is in control," Vance told the crowd. "It's a hedge against skyrocketing inflation, which has eroded the real savings rate of Americans."
This article is the first in a series on digital money—cryptocurrency—how it began, how it is used, public opinion and governmental policymaking.
Blockchain is not crypto, but underpins crypto
Bitcoin was introduced in 2009 by an individual or group using the pseudonym Satoshi Nakamoto. Bitcoin pioneered the use of blockchain as a ledger system that underpins most cryptocurrencies.
But blockchain has evolved well beyond cryptocurrencies, as its core features—decentralization, transparency, immutability and security—render it useful in a wide range of industries. Decentralization means that the data is stored on multiple computers across any given network, making it resistant to single points of failure or tampering.
It's a digital ledger that provides a record of transactions, just like a paper ledger, except that it is distributed and shared. A digital ledger entry is a block (a collection of validated and cryptographic links to previous blocks that have been verified by the network) and thus form an immutable ledger entry. Blocks typically contain information such as a time stamp, and a block header with additional meta data. Blocks can vary in size; a Bitcoin block is typically four megabytes.
Blockchain has applications well beyond Bitcoin. For example, it is used in supply chain management to track goods and ensure authenticity. It has been considered and tested as a means for securing elections. Screven county in southeastern Georgia, in fact, became the first jurisdiction in the United States to secure election results using blockchain technology in 2024.
Additional applications include real estate and land title management, digital art and non-fungible tokens (NFT), smart contracts, and auditing and compliance.
Bitcoin: supply is limited
Unlike traditional currency, cryptocurrency does not roll off a printing press. Bitcoins, for example, are created through mining, which involves the solving of complex mathematical equations to verify transactions on the blockchain network, explained the Bitcoin Mining Council, a forum of Bitcoin miners. This takes time and requires massive amounts of computing power.
The New York Times reported in 2021 that Bitcoin mining consumed approximately 91 terawatt-hours (TWh) of electricity annually, surpassing the annual electricity usage of Finland, a country with about 5.5 million residents
The process could be greener, and some miners are said to be experimenting with alternatives, but no one knows the extent of that because the very nature of bitcoin is a decentralized currency created by anonymous miners.
There are only 21 million bitcoins available to be mined. To date, 19 million have been mined and are in circulation. The Bitcoin Mining Council estimated that all bitcoin will be mined by 2140. If a bitcoin is lost or destroyed, it cannot be recovered, which will decrease the total supply and increase the overall value.
There is a complex fee structure around Bitcoin mining. Suffice it to say that a successful miner receives a block reward—currently about 3.125 bitcoins—plus transaction fees. Miners earn both: the reward for validating a new block and the fees paid by users to have their transactions confirmed.
Once all bitcoins are mined, miners will rely solely on transaction fees for compensation. These fees vary based on the size of the transaction and the level of demand for block space.
The faster a user wants their transaction confirmed, the more they are willing to pay in fees, River.com, a bitcoin-only financial services company, noted on its website.
Crypto galore and wallets, too
While bitcoin was the first cryptocurrency to enter the mainstream, there are literally thousands of cryptocurrencies in existence today.
Ethereum is the second largest cryptocurrency by market capitalization. But unlike Bitcoin, which primarily functions as a digital currency, Ethereum is a decentralized platform that allows developers to build and run smart contracts and decentralized applications.
Cryptocurrencies are totally digital; they have no physical form. However stablecoins, a form of digital currency, are pegged to physical forms with intrinsic value, such as the U.S. dollar and gold.
Cryptocurrencies are held in crypto wallets. They are designed to store an individual's private key, keeping crypto accessible at all times. They also allow for sending, receiving and spending cryptocurrencies like Bitcoin.
Unlike normal wallets, which can hold actual cash, crypto wallets technically don't store crypto. Instead, crypto wallets keep an individual's private keys—the passwords that allow an individual to access their cryptocurrencies. If you lose your private keys, you lose access to your money.
"That's why it's important to keep your hardware wallet safe," stated the cryptocurrency exchange Coinbase. (Coinbase was recently added to the S&P 500, replacing the spot held by Discover, which was acquired by Capital One.)
Crypto wallets range from user-friendly apps to more complex security solutions. They include:
- Paper wallets, where keys are actually written on a physical medium, like paper, and stored in a safe place. "This, of course, makes using your crypto harder, because as digital money, it can only be used on the internet," Coinbase noted.
- Hardware wallets, in which keys are stored in thumb-drive devices and kept in a safe place. They are only connected to a computer when you want to use your crypto.
- Online wallets are keys stored in an app or other software.
Each type of wallet has distinct tradeoffs. Paper and hardware wallets are harder for malicious users to access because they are stored offline, but they are limited in function and risk being lost or destroyed. Online wallets, offered by the major exchanges, like Coinbase, provide more security. But there is a downside. Because an individual's private information is stored online, protection against hackers is dependent on the wallet provider's security measures.
What about stablecoins?
Stablecoins are a type of cryptocurrency intended to have a stable value because they are pegged to a stable asset, like the dollar. Unlike traditional cryptocurrencies, like Bitcoin, which can be extremely volatile, stablecoins minimize price fluctuations, making them more suitable for transactions and store of value.
One of the most popular stablecoins is the U.S. Dollar Coin (USDC), which is pegged to the U.S. dollar. Tether is another popular stablecoin, which is also pegged to the U.S. dollar. Both Visa and Mastercard have taken steps to put in place the technologies and capabilities needed to allow consumers and businesses to make and receive stablecoins.
The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act now pending in Congress aims to create the first comprehensive federal regulatory framework for stablecoins.
Stablecoins have their detractors. Paul Krugman, who won the Nobel Prize in 2008 for economics, asserted that stablecoins do not have any practical utility. "Retail crypto looks, in particular, a lot like the 'numbers racket,' which siphoned millions of dollars from generations of working-class Americans, until it was largely supplanted by state lotteries," he wrote in a recent blog post.
Krugman likened stablecoins to banknotes issued before the Civil War and before the United States started printing currency. At the time, many banks issued paper currency, which they promised to redeem for gold and silver coins on demand.
"Unlike antebellum bank notes, however, stablecoins don't serve any clearly useful function," he wrote. "They can't be used to make ordinary purchases, and there's nothing you can do with them that can't be done more cheaply and more easily with debit cards, Venmo, Zelle, wire transfers, etc."
The ownership and distribution of stablecoins, unlike the ownership and distribution of bank deposits, is anonymous, Krugman pointed out. "This is a highly valuable feature for those who want to engage in money laundering, extortion, purchase of illegal drugs, and so on," he said. "In other words, the only economic reason for stablecoins is to facilitate criminal activity."
Patti Murphy is senior editor at Green Sheet and president of ProScribes Ink, www.proscribes.net. You can also follow her blog, Today in Payments, at Todayinpayments.com, and her podcast, Merchant Sales Podcast, co-hosted with James Shepherd at www.ccsalespro.com/podcast.
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