NEW YORK– Born from the ashes of the 2008 global financial crisis, bitcoin came after confidence had eroded in the financial system and in Washington’s ability to protect those who must participate in it. Now it is Washington’s embrace by bitcoin that helps to send it price to records and lining the pockets of its believers.
Bitcoin briefly rose above $103,000 after the president’s election Donald Trump he said plans to nominate Paul Atkinsa former regulator considered crypto-friendly, as the next chairman of the Securities and Exchange Commission. He would replace Gary Genslerwhich critics say has been overly aggressive in its oversight of crypto.
It’s the latest leg in an astonishing run for bitcoin, whose price swings are already notoriously extreme.
Bitcoin has more than doubled this year, with a particularly big jump after Election Day, when the price was below $70,000. During his campaign, Trump called for the making of the United States “the crypto capital of the planet.”
The crypto industry, meanwhile, has done its part to bring digital currency-friendly politicians to Washington. Crypto companies have invested more than $119 million in influencing the 2024 federal election, mainly in a political action committee dedicated to electing pro-crypto candidates and defeating crypto skeptics, according to a recent review by PublicCitizen.
It’s a large amount. According to the consumer group, crypto companies accounted for 44% of all corporate money contributed during this year’s election.
Such a tight embrace marks an interesting twist from Bitcoin’s early days, when someone or a group of people going by the name Satoshi Nakamoto created a type of electronic money that would not be beholden to any government or financial institution.
In the white paper announcing bitcoin, Namakoto says the traditional way of doing business on the Internet “works well enough for most transactions.” But, Nakamoto says, “it still suffers from the inherent weaknesses of the trust-based model,” which requires a third party such as a bank to process payments.
Instead, Nakamoto proposed harnessing computing power around the world as a way to create a digital currency that cannot be double-spent. “What is needed is an electronic payment system based on cryptographic proof rather than trust, allowing two willing parties to transact directly with each other without the need for a trusted third party.” That’s what the Bitcoin network became.
Since then, Bitcoin has moved from the financial fringe to the mainstream, in fitful fits and starts. While it hasn’t yet taken off as a way to pay for groceries, it has found popularity as a kind of “digital gold,” or a way to store value in something that isn’t subject to the direct influence of a federal government or a central bank. .
In its early days, it had a reputation for being used by drug dealers, scammers, crypto enthusiasts, libertarians, and others who wanted to transfer money without government oversight. Now it has also found its way into more investor portfolios. Earlier this year, the SEC approved exchange-traded funds that track the spot price of bitcoin. Such ETFs offering investors a relatively easy way to buy bitcoin directly into their existing trading accounts.
Over its lifetime, Bitcoin has gone through a series of manic bull runs and “crypto winters” that have seen extreme declines. It went from just over $5,000 at the start of the COVID-19 pandemic to almost $69,000 by the end of 2021, before crashing below $17,000 after Federal Reserve rate hikes and the collapse of the crypto exchange FTX in 2022.
With Bitcoin in its latest bull run, the man about to roll into the White House seemed to be taking at least some credit.
“CONGRATULATIONS BITCOINERS!!!” Trump said this in a message on his Truth Social network. “$100,000!!! DON’T MENTION IT!!!”