Chapter 2

The World Wakes Up

It began with the banks scoffing – and ended with them writing reports.

In the first years, Bitcoin and the blockchain were something moving on the outskirts of the financial world. Prices jumped wildly, volumes were small, and those who cared most were cryptographers, libertarians and tech nerds. But as the price rose, trading sites emerged and the first real crashes and listings in the crypto ecosystem occurred, the traditional institutions began to realise that this was not just an internet fad. Suddenly there was a globally, round-the-clock traded “asset class” that did not pass through the usual pipes.

First came the warnings. Central banks, supervisory authorities and international bodies such as the BIS and the IMF began issuing short analyses with the tone: “interesting, but small and risky”. They saw speculative bubbles, money-laundering risks and consumer risks – but also a technology that appeared to manage what no one had previously succeeded with: maintaining a global payment ledger without a central operator. It was at this turning point that the major banks began building their own small blockchain labs. Deutsche Bank, JP Morgan and other giants set up working groups, not to become “bitcoin banks”, but to understand whether the same technology could streamline their internal settlement systems, securities handling and cross-border payments. Officially, they were sceptical of “crypto”. Unofficially, they were curious about “blockchain”.

At the same time, the central banks had worries of their own. In just a few years, billion-dollar markets grew up for stablecoins – private digital “dollars” on blockchains – and new payment actors moving fast, outside the narrow regulated bank-to-bank corridors. Somewhere here, a realisation awoke: if we do nothing, the public monopoly on money risks being gradually eroded. The idea of central banks’ own digital currencies, so-called CBDCs, went from academic papers to concrete projects.

In Europe, the ECB began investigating the Digital Euro. Officially, it was about “future-proofing the euro” and giving citizens access to digital central bank money even in a world where cash is used less and less. Beneath the surface there were further motives: retaining control over the payment infrastructure, not leaving the arena to American Big Tech payments and private crypto dollars, and creating tools for more direct monetary policy should it be needed. The discussion revolved around difficult trade-offs: How much anonymity is acceptable? Should there be amount limits? Should banks act as intermediaries, or should citizens have accounts directly with the central bank?

In Sweden, the questions were even more tangible. Cash had already more or less disappeared from everyday life. Swish, cards and the banks’ own solutions carried almost all retail trade. The Riksbank’s e-krona project grew out of a fairly concrete concern: what happens if private payment infrastructure fails, or becomes concentrated among a handful of actors? What role should the state have in a society where “money”, for the ordinary citizen, is in practice just bank debts in a mobile app? The e-krona was defined as a conceivable complement: a digital form of cash issued directly by the Riksbank, intended to work in everyday commerce but also to stand as a backup if other systems go down. While Europe and Sweden were taking their first cautious steps with CBDC pilot projects, crypto began to take a place in political rhetoric. In the US, the tone shifted over time: cryptocurrencies were long seen chiefly as a risk asset and a potential threat to financial stability, but as voter groups, companies and states became more crypto-friendly, politicians in various camps began talking more about innovation, competitiveness and the need for clearer rules rather than outright bans. Some high-profile leaders, including former presidents, have at times expressed support for crypto-related innovation and emphasised that the US should not fall behind other jurisdictions, whilst authorities and supervisory bodies have continued to raise concerns about consumer protection, money laundering and market manipulation. Crypto thus never became fully mainstream, but certainly a clear political marker: for some a symbol of economic freedom and technological edge, for others a challenge to established regulation that must be handled with caution.

At the same time, another powerful narrative kept growing outside parliaments and central bank buildings: that of the tech barons. No one symbolises it better than Elon Musk. With a few tweets he could make Bitcoin soar – or fall – by double-digit percentages. When Tesla announced that they had bought large amounts of bitcoin for their balance sheet, it was seen as a breakthrough: one of the world’s most high-profile tech companies suddenly using a crypto asset as part of its financial strategy. When Musk later openly discussed energy consumption, changed his mind, and promoted Dogecoin jokingly but with real price impact, it became clear how vulnerable the narrative was to the opinions of individual profiles.

This also affected how authorities viewed the phenomenon. When the world’s richest entrepreneurs and major listed companies began experimenting with crypto, it could no longer be dismissed as a marginal hobby. It forced deeper analyses: what does it mean for financial stability if more companies hold volatile crypto assets? How are tax systems, accounting rules and supervision affected when the border between “technology project” and financial product blurs?

The language shifted as well. Where “bitcoin” had once been the loaded word, “blockchain” became the politically more saleable term. Politicians and bank executives who did not want to be associated with volatile speculation happily talked about using “blockchain technology” to improve the settlement of securities, tracking goods in global supply chains or issuing digital identities. The same basic technology – distributed, cryptographically secured ledgers – but now packaged as an efficiency tool and engine of innovation rather than as an alternative monetary system.

A clear duality emerged. On the one hand, an open, permissionless ecosystem around Bitcoin, Ethereum and other public chains, where the ideals were censorship resistance, open access and resilience to state or corporate control. On the other hand, state and institutional initiatives where certain technical building blocks – hash chains, distributed consensus, smart contracts – were taken, but placed behind licensing controls, KYC and central governance. Two different visions of what the blockchain could be: either a new “layer 0” for a freer economic internet, or a new generation of more efficient, but also more traceable, official financial infrastructure.

This created new lines of conflict. Privacy advocates and crypto enthusiasts warned that state digital currencies – the e-krona, the digital euro and the like – could become powerful tools for surveillance and behavioural steering. Central banks, for their part, emphasised the need for traceability to combat money laundering and terrorist financing, and simultaneously tried to calm concerns with designs for limited anonymity or technical safeguards against abuse. In the middle stood legislators who had to weigh innovation against risk: how much control must the state have over payments, and how much freedom must citizens have for a digital monetary system to be perceived as legitimate?

As the dust begins to settle after the first decade of hype, crashes and innovation, we therefore stand in a peculiar situation. The blockchain is still the technology born in an anonymous white paper and cultivated in nerd forums – but it is also something discussed in central bank committees, in government offices and in major banks’ strategy documents. The very properties that attracted early cypherpunks – immutable history, global reach, the absence of a central counterparty – make the technology interesting to both those who want more freedom and those who want more governance.

This shift is what the chapter “The World Wakes Up” depicts: how something that began as an experiment among enthusiasts forced serious discussions at the highest national level. From Deutsche Bank’s analyst team to the Riksbank’s e-krona pilots, from Trump’s supportive speeches to Musk’s tweets, from warning reports to concrete legislative proposals on the digital euro. The next step remains perhaps the hardest question: will the open crypto systems and the state digital currencies coexist, compete – or try to absorb one another?