The Origins of Digital Currency
David Chaum, a pioneer in cryptographic privacy, laid the groundwork for digital currency in the early 1980s. Concerned about financial surveillance, he feared that as society transitioned to digital banking, individuals would lose their financial privacy. This vision feels eerily reminiscent of George Orwell’s totalitarian predictions—if Chaum hadn’t been around, would Orwell’s dystopian future have become reality?
Chaum’s response was to create a digital equivalent of cash that preserved privacy while ensuring secure transactions. His key innovations included:
- 1982 – Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups. (Chaum, 1982).
- Proposed decentralized trust systems, influencing later blockchain development.
- 1983 – Blind Signatures for Untraceable Payments. (Chaum, 1983).
- Introduced blind signatures, which allowed banks to issue digital money while keeping transactions private.
- Became the basis for eCash and later inspired Bitcoin’s cryptographic principles.
- 1985 – Security Without Identification (Chaum, 1985).
- Discussed how digital transactions could occur without revealing users’ identities.
- First mention of cryptographic solutions for anonymous payments.
Chaum founded DigiCash in 1989 to implement eCash, the first attempt at private digital money. However, it still required banks to issue digital currency, preventing full decentralization. Ultimately, DigiCash failed due to a lack of adoption from banks and governments, but its cryptographic principles inspired later developments in cryptocurrency.
The Birth of Bitcoin
While DigiCash didn’t succeed, Chaum’s ideas influenced cryptographers like:
- Nick Szabo (Bit Gold, 1998–2005) – Proposed a decentralized currency system. (Szabo, 2005).
- Wei Dai (B-Money, 1998) – Built upon Chaum’s concepts in a proposal for digital cash. (Dai, 1998).
- Satoshi Nakamoto (Bitcoin, 2008) – Solved the double-spending problem and launched the first successful decentralized cryptocurrency. (Nakamoto, 2008).
In 2008, amid the global financial crisis, an anonymous entity known as Satoshi Nakamoto published the Bitcoin whitepaper. This introduced the first cryptocurrency that eliminated the need for a central authority while ensuring security, transparency, and immutability through blockchain technology.
Bitcoin officially launched in 2009, and in 2010, the first real-world transaction occurred when Laszlo Hanyecz paid 10,000 BTC for two pizzas (worth over 1.5 trillion AUD today). Over the years, Bitcoin evolved from an experimental asset to a recognized store of value, peaking at nearly $175,258 AUD in 2021. (Hanyecz, 2010).
My Cryptocurrency Experiments
HODLing: Long-Term Investment
Since early 2023, I’ve periodically invested in various assets, including cryptocurrency. Some of my investments have been profitable, while others resulted in losses. A notable success was buying XRP when it was below 80c AUD and selling before its mid-2024 bull run. Despite my lack of trading knowledge at the time, I managed to profit. Over time, my portfolio has grown by approximately 10-15% through long-term holding.
Trading: Short-Term Experiment
Recently, I started day trading and swing trading to test short-term profitability. Using Binance, I learned strategies such as technical analysis, stop-loss management, and market indicators. The biggest challenge? Fees and currency conversion costs (AUD to crypto). Even with these hurdles, I managed to profit 1% after all costs.
Key takeaways:
✅ Trading requires constant learning, strategy, and emotional control.
✅ Profitability is possible, but fees and spreads reduce margins.
✅ Unlike HODLing, trading demands active involvement and quick decision-making.
Common Mistakes Crypto Traders Make
Many beginners fall into common traps that lead to losses. Through my trading experiment, I learned to avoid:
1️ Overtrading – Too many trades lead to unnecessary losses and high fees.
2️ Ignoring Risk Management – No stop-loss orders or too much capital on a single trade.
3️ Emotional Trading – Buying high due to FOMO, panic-selling during dips.
4️ Lack of Strategy – Trading without a clear plan or relying on gut feelings.
5️ Neglecting Fees & Spreads – Underestimating transaction costs that eat into profits.
6️ Using Too Much Leverage – Borrowing funds excessively, increasing risk.
7️ Ignoring Market News & Trends – Not staying updated on regulations and major industry shifts.
How People Make Money in Blockchain
The blockchain industry offers multiple income streams, including:
1️ HODLing & Long-Term Investing – Buying and holding cryptocurrencies like Bitcoin and Ethereum.
2️ Trading – Short-term buying and selling based on market movements.
3️ Staking & Yield Farming – Earning passive income through DeFi platforms.
4️ Blockchain Development – Writing smart contracts, building dApps.
5️ NFTs & Gaming – Creating, buying, selling NFTs, or participating in play-to-earn games.
6️ Mining & Validator Nodes – Supporting networks by mining or staking assets.
7️ Web3 Jobs & Content Creation – Working in blockchain-related roles.
Having experimented with both HODLing and trading, I realized that each approach suits different levels of involvement and risk tolerance
Long-Term Crypto Adoption Trends
Crypto is evolving beyond speculation and integrating into real-world use cases:
1️ Institutional Adoption – Tesla accepted Bitcoin for a time; BlackRock launched a Bitcoin ETF. (BlackRock, 2024)
2️ Regulation & Compliance – Governments like El Salvador legalized Bitcoin; the SEC scrutinizes crypto exchanges. (Bukele, 2021).
3️ DeFi & Web3 Growth – Platforms like Uniswap and decentralized social media are changing the internet.
4️ Crypto Payments – Businesses like Starbucks and Microsoft accept Bitcoin.
5️ CBDCs – Governments developing blockchain-based national currencies. (Bank of International Settlements, 2023).
6️ Layer 2 Scaling – Innovations like the Lightning Network are improving blockchain efficiency.
Crypto as a Job vs. Traditional Investing
Many wonder if crypto can be a full-time career. The difference between crypto as a job and traditional investing lies in time commitment, risk, and skill requirements.
1️ Crypto as a Job – Requires constant engagement and expertise.
- Day Trading – Pro traders analyse charts daily.
- Blockchain Security – Ethical hackers audit smart contracts.
- Crypto Content Creation – YouTubers and bloggers educate others.
2️ Traditional Investing – Long-term wealth-building with less daily involvement.
- Stock Market Investing – Buying and holding stocks or ETFs.
- Crypto HODLing – Betting on long-term price appreciation.
From my experience, holding stocks and ETFs has performed equally well, if not better, than my crypto holdings. However, crypto’s volatility means high risks come with the potential for high rewards.
Final Thoughts: Is Crypto a Hobby, Skill, Job, or Luck?
Crypto, from my experience, can be all four:
🔹 Hobby – Casual investing, collecting NFTs.
🔹 Skill – Day trading, blockchain development.
🔹 Job – Full-time trading, blockchain security, content creation.
🔹 Luck – Timing plays a significant role.
For me, a hybrid approach seems most sustainable—HODLing for long-term gains while learning trading for active income. Would I consider crypto a full-time job? Not yet. But it’s a fascinating space where skill and strategy can turn it into one.
That said, crypto isn’t just about numbers on a screen—it’s built on security, anonymity, and problem-solving. And as I move into my next challenge, I’ll be stepping into a field where those skills are critical.
What do you think? Is crypto a job, hobby, skill, or just luck? And more importantly—how much of success in any field comes down to knowledge vs. strategy vs. luck?
References
- Bank of International Settlements. (2023). Central Bank Digital Currencies.
- BlackRock. (2024). Bitcoin ETF Approval Report.
- Bukele, N. (2021). Bitcoin Law. Government of El Salvador.
- Chaum, D. (1982). Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups. Communications of the ACM, 25(2), 120-130.
- Chaum, D. (1983). Blind Signatures for Untraceable Payments. Advances in Cryptology: CRYPTO ’83, 199-203.
- Chaum, D. (1985). Security Without Identification: Transaction Systems to Make Big Brother Obsolete. Communications of the ACM, 28(10), 1030-1044.
- Dai, W. (1998). B-Money. Unpublished Proposal.
- Hanyecz, L. (2010). Bitcoin Pizza Day. Bitcointalk Forum.
- Nakamoto, S. (2008). Bitcoin: A Peer-to-Peer Electronic Cash System. Bitcoin.org.
- Szabo, N. (2005). Bit Gold. Unpublished Blog Post.
