Archive note. This report was first published on July 12, 2022 on INTERNACIONALES Radio, the station ZARZA kept on air for four years. We revised it in August 2026 when bringing its content to zarza.com: the writing was polished, the original theses were kept intact, and a final chapter was added on what happened afterward. Wherever the text simply says “today,” it means 2022; anything later is marked as such.
This is a special report on cryptocurrencies, also known as crypto assets. It covers a range of topics to broaden our listeners’ and readers’ understanding of what digital money is and how it works, from several angles that help make sense of how others use it — and that may eventually prove useful for your own purposes.
Contrary to the belief that digital money is a passing fad, we’ll see that the origin of this kind of exchange is much older than most people imagine. Along the way, we’ll learn how to take advantage of technologies that are now within reach of anyone with a phone in hand, technologies that make it possible to trade on a global scale. We’ll also lay out the key concepts behind this form of investment.
The background of digital money
With the mass adoption of digital money, the phenomenon tends to get pinned to something recent — maybe the last decade. That’s the most widespread understanding of cryptocurrencies, and it’s inaccurate. If you go looking for precedents, you can trace things back to bartering; if you stick strictly to the digital side, the most agreed-upon starting point is the use of tokens.
What is a token?
Tokens — fungible or non-fungible — came into use almost as soon as the Internet did, when “activation codes” first appeared: redeeming them, once or several times, granted access to subscriptions or goods, digital or otherwise.
Acquiring those tokens was always tied to some form of payment or labor. They were the first expression, on a small scale, of what we now understand as digital money. Over time they turned into long encrypted strings, increasingly hard to crack, both for security reasons and because of how digital money itself works, as we’ll see.
Cryptography makes crypto assets possible
The earliest known method of cryptography dates back to the 5th century BC and is known as the scytale.
Cryptography (from the Greek κρύπτος, kryptós, “secret,” and γραφή, graphé, “writing” — literally “secret writing”) has traditionally been defined as the branch of cryptology that uses encryption techniques to alter how a message is represented, making it unintelligible to anyone not authorized to read it.
Back to tokens: cryptography is used constantly in passwords. A password written as CursoDerechoComercial3 produces, using MD5 — a 128-bit cryptographic hashing algorithm that was once very widespread — this result:
2f63ed21058fb511c4d54584b5df9ce1
At a glance, it’s impossible to imagine what’s behind it. Digital money doesn’t use MD5, which produces a short token now considered broken for any security purpose; instead, each cryptocurrency uses its own scheme that generates much longer tokens, and therefore much harder to “mine” — concepts we’ll be covering.
What is digital money?
Digital money is a way of trading goods and services without relying on traditional means: cash, checks, or credit and debit cards.
While it pursues a similar goal, it’s also a way to avoid intermediaries. In principle — though not as much as people think, as we’ll see — it’s a transaction with no banks or brokers involved, one that sidesteps the oversight of central banks and other financial authorities.
Its most popular expression is cryptocurrencies: highly varied, with very different names, some entirely dependent on supply and demand and others — stablecoins — backed by traditional goods or financial assets.
Digital money lets two people exchange a token or a transaction, and with it, goods or subscriptions, just as they would with plain old paper currency.
Cryptocurrencies and their tradability
Where there’s demand there’s supply, and legal restrictions drove the use of cryptocurrencies. At first that stigmatized them: on the dark web they’re used to pay for activities ranging from the edge of legality to the outright forbidden.
We won’t get into those activities, since they existed long before cryptocurrencies, and tying their emergence to crypto assets would be a serious mistake. What can’t be ignored is that crypto is also used as a means of payment there.
It’s also important to understand that the law varies a great deal from one country to another. What’s an ordinary contract in one jurisdiction is banned in another; what’s taxed in one country doesn’t even exist as a legal category next door. That divergence between legal systems — not just the technology — is one of the pillars that strengthened the use of cryptocurrencies: they let two people close a deal that the financial system of one of them wouldn’t process.
Short trades: the main use of bitcoin, ether, and other cryptocurrencies
One of the most common mistakes — made by critics and some crypto holders alike — is measuring a crypto’s value by its exchange rate at a single point in time.
Cryptocurrencies make it possible to acquire goods and services that aren’t available on the regular market, or that are sold only in crypto. It’s not an either/or: as the industry has diversified, people now also buy appliances, cars, and real estate with it.
Suppose a buyer wants an item currently worth a thousand dollars but can’t buy it by card because the issuers won’t process that kind of charge — over chargeback risk or internal policy. The seller, though, accepts bitcoin.
That’s where the short trade comes in: the buyer acquires the bitcoin equivalent of those thousand dollars and is paying with it five minutes later. That’s the main use of cryptocurrencies.
In this kind of transaction, it barely matters whether bitcoin cost twice as much yesterday or will be worth half as much tomorrow. When you look at crypto purely as an investment, you lose sight of its core use: being able to buy something that traditional paper money can’t reach. It makes no difference whether bitcoin is at a hundred thousand dollars or one: in a short trade, what matters is the equivalent value needed to make the purchase.
Long-term trades: HODLing
Unlike a short trade, HODLing means holding a crypto investment for the long term.
If you compare investing in crypto to a fixed-term deposit, you’ll find plenty of differences — risk being the first — but they share the fact that the time horizon is what matters most. Over the long term, as with any investment, the bet is that time will yield a return greater than what was put in.
Investing in any venture is speculative: there’s an assumption of success that may or may not pan out. The same goes for HODLing. What’s certain is that bitcoin started out worth a few cents and went on to be worth thousands of dollars: for whoever got in at the right moment, it was a huge investment.
Bitcoin, far from being the only cryptocurrency, is the leading one. New ones are born every day, some with broad appeal and others very niche, so investment success is closely tied to the portfolio’s goal.
Cryptocurrency portfolios
Not putting all your eggs in one basket is a principle investors of every level rely on. On the stock market, you can see how Warren Buffett doesn’t put all his capital into a single company, even the one that performs best for him: splitting the investment splits the risk.
In cryptocurrencies, holding more than one is itself a form of investing: when one drops another rises, and — except during a crypto winter — that swing lets you sell what’s up to buy what’s down.
A varied portfolio also serves the purpose of short trades, because not every good or service accepts the same coin. And over the long term it makes sense too: a small stake in an up-and-coming crypto can pay off big if that coin finds its moment.
Crypto winter: dreaded by some, awaited by others
A crypto winter is what we call the season when several cryptocurrencies lose value. The drop usually starts with the big ones and drags the small ones down with it.
It’s a useful comparison to the airline industry: when there’s an accident with casualties, occupancy drops across every airline, not just the one involved. The same thing happens with cryptocurrencies.
Those who suffer the drop in value of their crypto assets
During a crypto winter, whoever is HODLing finds that the conversion that used to yield a certain amount now yields much less, and they’d need far more coins to reach the same value.
That’s distressing for anyone holding a given stock who watches its value suddenly drop. And it tends to trigger selling: the holder panics and sells for much less than they’d like.
Those who celebrate and take advantage of low prices
On the opposite side are those who only buy during crypto winters. You see the same thing in conventional markets: during the 2008 US housing crisis, many people sold their property at rock-bottom prices while other investors had cash ready to seize the opportunity, ending up with properties that had once cost millions for just a few thousand.
The whales behind crypto winters
In crypto winters, the trigger is often the so-called “whales”: investors holding enormous amounts of cryptocurrency who decide, much as happens on Wall Street, to take advantage of their dominant position and put all or most of their stock up for sale, flooding the market at a lower price.
When a whale sells, it often does so in coordination with others, and the effect spreads: small investors get swept up in the drop and put their own coins up for sale too.
Once the price reaches where the whales wanted it, they use the capital they raised by selling at the start of the “correction” — larger than what small investors sold — to buy back in much cheaper, ending up with the same amount of coins they started with, or more, for less money.
It has happened again and again, and the common thread is that the whales just keep growing. The strategy is there for anyone to see, and yet it’s ignored by anyone who invests without studying the market.
Corrections: the real way to profit from digital money
When a value line on a chart goes up or down, we call that a correction: there are upward ones and downward ones.
Investing in cryptocurrencies isn’t just about buying and selling — it’s about knowing when to do it. Many people make the mistake of overvaluing the exchange rate and believe you only profit when that value is higher, something we already disproved when discussing short trades.
Corrections are the other place where cryptocurrency becomes a profitable investment: whoever keeps a close eye on the charts and the social factors that move the price can recognize when it’s worth selling and when it’s worth buying. A single dip or rise can mean tens of thousands of dollars in a large enough portfolio.
On a small scale: if someone converts a sum at eight in the evening, and at ten past eight a public figure with enough reach posts a message in favor of that coin, the price moves — it’s been proven to happen — and that person can sell at eight-twenty with the trade closed. It’s also the best illustration of just how fragile a market can be when it moves on a single message.
What happened next (2022–2026)
This chapter wasn’t part of the original report: it was added in August 2026.
The piece was published right as the harshest crypto winter to date was getting underway, and what came after put nearly everything above to the test.
The intermediaries fell, not the technology. In November 2022, FTX — at the time one of the world’s largest exchanges — collapsed; its founder was convicted in November 2023. Other lending platforms had already gone under before that. The pattern repeated itself: what failed wasn’t the blockchain, but the intermediaries people used so they wouldn’t have to understand it. The practical lesson — “not your keys, not your coins” — stopped being just a slogan.
Ethereum changed engines. On September 15, 2022, in the upgrade known as The Merge, Ethereum abandoned proof-of-work mining and switched to proof-of-stake, cutting its electricity use by more than 99%. In March 2024, the Dencun upgrade drastically lowered transaction costs on its layer-2 networks. Much of the environmental criticism once leveled at the sector no longer applies to the second-largest coin.
Institutional money arrived. In January 2024, the US regulator approved the first spot bitcoin exchange-traded funds. It’s the deepest shift since this report was written: today, a whale isn’t necessarily an anonymous individual with a huge wallet anymore, but a fund buying and selling according to mandates and schedules. The section on whales still holds true; what changed is who they are.
The rules arrived too. The European MiCA regulation has been fully in force since December 30, 2024, with specific requirements for stablecoins in effect since June of that year. The idea of money existing outside any oversight is now a thing of the past across most of the developed world: anyone dealing in crypto assets in Europe today does so within a framework, with disclosure and reserve obligations.
Bitcoin split its reward again. In April 2024, the fourth halving took place, cutting the issuance of new bitcoins in half. It’s a scheduled event that repeats roughly every four years and is worth keeping on the calendar, since it changes supply.
The country that made it legal tender scaled things back. El Salvador adopted bitcoin as legal tender in September 2021; in January 2025, as part of an agreement with the International Monetary Fund, it amended the law so that accepting it was no longer mandatory.
And the report’s central thesis aged well. What truly took hold over these years wasn’t speculation, but payments: dollar-pegged stablecoins became the rail carrying the bulk of transactions, especially remittances and trade between countries with currency controls. It’s exactly the “short trade” this report described back in 2022 as digital money’s main use — just at a scale that didn’t exist back then. On the other side, the NFT bubble deflated almost entirely.
Before you go
This report is for informational purposes. It is not financial advice or a recommendation to buy: crypto assets are volatile, aren’t covered by deposit insurance, and it’s entirely possible to lose everything invested. Tax treatment and legality vary by country, and change fast. Before moving any money, consult a professional in your jurisdiction.
Originally published by INTERNACIONALES Radio on July 12, 2022. Revised and expanded by ZARZA in August 2026.
