"I bought a Bentley from Crypto"

Some cryptocurrency traders have become millionaires, and there's also a great number of people who have lost significant sums. Like crypto trader Javed Khan’s investment success in 2020, he cashed in his crypto profits and bought a Bentley.

What is the fancy technology behind crypto that created Cinderella stories like “I bought a Bently from Crypto” to become reality?

What is cryptocurrency

A cryptocurrency is a decentralised digital currency that’s based on blockchain technology. It is designed to work as a medium exchange through the computer network that is not reliant on any central authority, such as a government or bank.

Why is cryptocurrency created?

It was created by a man who wants his financial transactions to be done without exclusively relying on banks or governments.

The man was Satoshi Nakamoto, he created the first decentralised cryptocurrency in 2009. It was a very interesting period as we know the Subprime Mortgage Crisis happened in 2008. This crisis happened because the government ignored excessive real estate speculation, and also the bank executives and credit rating companies put the public’s interest out of the equation for their own sake. In conclusion, the people/party involved to cause this crisis is the government, financial institutions, and credit rating companies.

1. Government - to consolidate the political position, the government allows for the high-risk loan, as high cash flow in the market will also increase the GDP.
2. Financial Institution - design and offer a different kind of high-risk product and cause bubbles to become bigger in the market.
3. Credit Rating Agencies - Credit Rating agencies didn’t rate the company/loan/assets according to its actual risk, because they fear they will lose their customers (e.g. banks) if a good rating is not provided to those sub-par assets.

After Lehman Brothers' bankruptcy, the public realised how serious this crisis was, the bank also stopped providing loans, and many defaulters were bankrupted because of the subprime mortgage. The cash flow decreases in the market. The US executes QE and begins money printing. Because of US dollar hegemony, the majority of products are using USD settlement. Therefore, when the total volume of USD increases, the bigger the bubbles for USD. As a result, the crisis affected the whole world's economy.

From the series of events above, we know that in actual fact the centralised authority did not put their interest in protecting the public interest but just focused on the interest of putting more money into their pockets. Centralised authorities did not stop the foreseeable crisis instead of that, they created a humongous financial bubble, where the bubbles burst, leading to the financial crisis. We can observe that it was precisely this event that fuels the public to have the intention to create a new decentralised currency, that is not reliant on any central authority, government or banks.

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