A white paper from 2008, authored by Satoshi Nakamoto, outlined the basics of a new peer-to-peer technology that would go on to disrupt the financial industry: Bitcoin.
The name Satoshi Nakamoto is widely accepted to be a pseudonym for a person or group of people. No one knows the paper’s actual author. He blamed legacy financial institutions for the Great Recession, one of the largest financial crises of the past century, and presented Bitcoin as a potential solution.
For Nakamoto, a decentralized peer-to-peer financial platform would allow individuals to transfer money freely without the burden of regulation, national borders, or centralized control. It would also insulate investors from large economic swings.
Opinions vary on whether Bitcoin lived up to its promise. But without a doubt, it has come a long way since its beginnings on the fringes of the Internet. Early users would use Bitcoin to purchase illicit substances on the Dark Web or scam other users out of their money, resulting in a stigma that burdens the platform until this day. But some of the biggest financiers in the world now recognize crypto as a legitimate, if imperfect, financial tool – and are investing accordingly.
“We’ve gone from Bitcoin being used to buy drugs, to Blackrock’s CEO calling it digital gold,” said Jack Sadek, Assistant Professor of Entrepreneurship at IE University in Spain, and a McGill University alumnus.
While completing his PhD at McGill, Sadek traced the growth of cryptocurrencies from an informal to a formalized industry. He found that, while most new markets and product categories find legitimacy through collaboration, crypto followed a different path. Crypto enthusiasts would advocate for their favourite digital currency on social media, debate features and capabilities, and denigrate currencies they viewed as inferior.
And yet, despite this infighting, cryptocurrencies still managed to transition from an illegal form of Internet money to widespread adoption, charting a new – and unconventional – pathway towards market legitimacy.
Legal grey areas
Bitcoin is the first “official” peer-to-peer digital payment system, built on blockchain technology. A limited number of digital coins are available on the platform. Users can then trade these coins online, no matter where they are in the world. The exchange occurs between two computers, and a decentralized network records the transaction to a digital ledger. This process allows users to trade digital coins pseudonymously, traceably, and without a mediator (such as a bank). Since its inception, Bitcoin has experienced several price rallies, reaching as high as 125,000 USD per coin in 2025.
The very nature of Bitcoin puts it at odds with regulators. It enables a new, stateless currency to flow freely inside and outside national borders. This currency untraceable, extremely volatile, and difficult to tax.
Regulators in the United States have been slow to catch up to cryptocurrencies, partially because it’s an ill-defined product category, said Sadek. According to the United States Securities and Exchange Commission, Bitcoin behaves like a security – it involves an exchange of assets that represent monetary value. But it is different from a traditional security (like a stock), in that it’s not tied to a real-world asset (like a publicly traded company). The Commission has since deemed Bitcoin out of its jurisdiction.
Bitcoin also behaves like a commodity, but it is a purely digital asset. It has no existence in the physical world. So, the United States Commodity Futures Trading Commission doesn’t have jurisdiction, either.
Product categories are essential for understanding markets and determining regulatory jurisdictions, said Sadek. But the nebulous nature of cryptocurrencies makes this difficult to do. It’s a product that exists across categories, challenging traditional understandings of financial assets.
And to clearly define crypto as a product category, there would have to be some consensus as to what cryptocurrencies are, who they are for, and how the technology works. But as we’ll see, crypto’s online advocates also make it difficult to define the asset consistently.
Keyboard warriors
The rise of Bitcoin sparked excitement among tech enthusiasts. Not only did it promise to disrupt the global financial system, but it was also the first popular application of blockchain technology.
It wasn’t long before technologists dreamed up all sorts of other use cases for blockchain. For example, it can help track the flow of perishable goods on global supply chains, transfer medical records internationally, or even auction off a house as an NFT.
The 2010s also saw the creation of several other cryptocurrencies, such as Ethereum in 2015 and Tether in 2014. But instead of celebrating each other’s success, supporters of each currency were divided, taking shots at each other online. Bitcoin was often framed as the “purist” cryptocurrency, while others hailed Ethereum’s technological superiority.
“There was a lot of fighting and arguments among these people,” said Sadek.
This is different to how nascent industries usually operate, he said. Even the fiercest competitors realize that, when their industry is finding its footing, it’s often beneficial to support each other.
That’s what happened when the commercial space sector went through similar growth pains in the 2010s. A Virgin Galactic test pilot died in a crash, drawing much unwanted scrutiny to the industry. Instead of distancing themselves from Virgin Galactic, the company’s competitors came to its defense, protecting the collective legitimacy of their endeavors.
New product categories also require lots of public education to garner legitimacy. And that’s easier to do when all the key players agree on what to say. But for crypto, that was far from the case, said Sadek.
Supporters of one currency would celebrate the failures of the other on social media. They would also argue about what constitutes “true” decentralization, and whether alternate cryptocurrencies truly lived up to the spirit of Nakamoto’s white paper. And for the Bitcoin purists, other digital currencies would often be considered a “bastardization” of the technology. Crypto enthusiasts were often too busy fighting among themselves to properly explain the legitimacy of their tech to the public and to regulators, said Sadek.
Interestingly, this intra-industry conflict has not interfered with cryptocurrencies’ widespread adoption. Sadek’s research falls short of explaining why – more research is needed in that area. But he suspects the conflict may have helped in this regard.
Cryptocurrencies are decentralized, meaning there’s no unified entity controlling the platform and its messaging, he said. So users are free to express what they want in public online forums – whether they’re singing its praises and hurling scathing critiques. The participatory nature of cryptocurrencies could be part of the draw.
Sadek also credits the success of crypto to its original reason for existing, outlined in Nakamoto’s white paper: empowering vulnerable people.
“It’s important to remember is that crypto is a technology that can make the world a better place,” said Sadek. “Especially helping people in low- and middle-income countries who don’t have access to traditional banks, to transact seamlessly. That’s the true power of crypto.”
This article was inspired by Jack Sadek’s PhD thesis at McGill University, “Out of the shadows: cryptocurrency and category emergence in the informal economy.” Access it here.
