Bitcoin was launched in 2009 by the pseudonymous Satoshi Nakamoto, a fact that you may already know, given that the topic has been endlessly debated. However, if we were to pinpoint it contextually, the preeminent Bitcoin was launched a handful of months after Lehman Brothers, a major underwriter of mortgage-backed securities (many of which were based on risky subprime mortgages), collapsed. Furthermore, this very bankruptcy triggered a global financial crisis, simultaneously exposing vulnerabilities in traditional banking. Although governments and central banks intervened massively, devotedly trying to stabilize the system, public trust in banks and centralized financial institutions plummeted, thereby creating a fertile ground for alternative visions of money. Consequently, the timing and rhetoric suggest that Bitcoin emerged as a bold response to the failures highlighted by Lehman’s collapse. In short, it is not that Lehman’s collapse caused Bitcoin, but we can still argue that the crisis created the conditions, urgency, and ideological backdrop for Bitcoin to emerge as a radical experiment in decentralized money.
As any visionary would have naturally anticipated, a vast number of other cryptocurrencies were further developed alongside Bitcoin, each seeking to carve out its own niche in the burgeoning digital economy. Over time, platforms such as Binance became central to their circulation, providing the infrastructure for trading, speculation, and liquidity, while even tokens like Shiba Inu saw their prices skyrocket, demonstrating how investor enthusiasm, platform accessibility, and social-media-driven hype intertwined to shape the unpredictable rhythms of the market. Ultimately, a Pandora’s box has been opened, and now the magnitude of capital in the DeFi sector stands at USD 51.22 billion.
Figures Holding Most Power In The Decentralized Dream
So, the consensus-driven systems that shape crypto governance, the ones that suggest that decision-making doesn’t occur through an executive board but rather through a dominant vote count of crypto token holders, are overall presented as a means of making finance more democratic. However, when the scenario shifts and crypto tokens are concentrated in only a few hands, it means that those automated mechanisms, supposedly in charge of distributing control and other decision-making responsibilities, can, in fact, wield undue power, largely prioritizing a select few preeminent investors. Furthermore, these large holders are organically inclined to wield their power, choosing to do so in matters such as setting terms, manipulating prices, and securing larger returns.
Yet, regardless of this consolidation of influence, there are limits to the ambitions of these crypto magnates. Evidence suggests that even when a handful of actors hold enough tokens to seize control, potentially being close to executing what is known as a 51 percent attack, they often refrain from actions that would compromise the platform’s integrity. However, nobody said anything about holding back from leveraging systems for gain. For this reason, it is about time we mention FTX and evidence its actions as a lender of last resort, which, nevertheless, were less acts of benevolence than calculated moves to consolidate control across the crypto ecosystem. Furthermore, by leveraging strategies such as bailing out struggling platforms, acquiring stakes in other companies, and expanding into equity and derivatives trading, Alameda and Bankman-Fried systematically expanded their reach, transforming FTX from a crypto exchange into a multifaceted financial empire.
Moreover, in a concluding gesture of “altruism”, FTX sought to shape the regulatory landscape in its favor, lobbying for rules that would preserve profit-making while appearing compliant. Largely, FTX’s regulatory and strategic maneuvers included:
- Advocating for the Community Futures Trading Commission to have greater oversight of crypto, instead of the more aggressive SEC.
- Using loans to distressed platforms such as BlockFi and Voyager, overall aiming to acquire control options.
- Presenting its bailouts, acquisitions, and market maneuvers as efforts to stabilize straggling platforms and safeguard investors from catastrophic losses, yet ostentatiously expanding FTX’s own reach and control, exactly over the very networks it claimed to shield.
Blockchain Dreams And The Spectacle Of Collapse
The rise of crypto finance represents the latest evolution of financial innovation under capitalism, combining technological ingenuity with the same underlying tendencies toward instability and wealth concentration. Just as securitization fueled shadow banking before the 2008 crisis, tokenization, the digital representation of conventional assets, enables liquidity, fractional ownership, and speculative trading, extending the reach of blockchain into real-world assets from treasury bonds to art, real estate, and carbon credits. Platforms like JPMorgan’s tokenized treasuries demonstrate how blockchain can circumvent regulatory constraints while amplifying liquidity, embedding crypto more deeply into conventional finance; meanwhile, upgrades such as Ethereum’s Merge, with proof-of-stake validation, further accelerate concentration of assets. Consequently, central banks, recognizing the transformative potential, are experimenting with digital currencies to retain control, even as geopolitical competition, exemplified by China’s e-yuan, challenges the dollar’s global hegemony.
Yet this convergence of private speculation and state intervention intensifies systemic vulnerability. As crypto markets expand, future crises may compel central banks to backstop critical stablecoins, perpetuating a doom loop in which larger bets generate larger rescues, intertwining state authority and private financial power ever more tightly.
The Doom Loop
Overall, both the rise and metamorphosis of crypto finance evidenced financial innovations that are increasingly merging with capitalism, while highlighting their inherent tendency to nurture instability. Furthermore, while blockchain and tokenization promise decentralized and democratized access, they have, in fact, deepened the concentration of wealth and influence. Thus, cryptocurrency, conceived as a libertarian escape from centralized control, paradoxically reinforces the state’s pivotal role, as central banks and governments navigate the systemic risks posed by digital assets. In this landscape, technological breakthroughs like Ethereum’s Merge or tokenized treasuries expand liquidity and efficiency, yet also intensify systemic fragility.
Far from heralding a democratic financial revolution, crypto has magnified existing hierarchies, entwining private ambition, state intervention, and speculative excess in a feedback loop that ensures both innovation and instability coexist, with the stakes of collapse growing ever higher.
Image source freepik
