Wednesday, May 28, 2025 | 2 a.m.
Editor’s note: “Behind the News” is the product of Sun staff assisted by the Sun’s AI lab, which includes a variety of tools such as Anthropic’s Claude, Perplexity AI, Google Gemini and ChatGPT.
The Bitcoin Conference, running through Thursday at the Venetian Convention and Expo Center, is the world’s largest gathering of the Bitcoin industry.
Bitcoin was the world’s first decentralized cryptocurrency, launched in 2009 by an anonymous creator using the pseudonym Satoshi Nakamoto.
It operates as a peer-to-peer digital currency, allowing users to send and receive value without the need for a central authority or intermediary.
Bitcoin’s foundational technology is the blockchain — a public, distributed ledger that records all transactions and is maintained by a network of computers (nodes) worldwide[2].
How does Bitcoin work?
Bitcoin transactions are processed and validated through a combination of cryptographic techniques and a consensus mechanism called “proof of work”:
Transaction initiation: A user creates a transaction, specifying the recipient’s address and the amount to transfer.
Digital signature: The sender uses their private key to sign the transaction, proving ownership of the funds.
Network broadcast: The transaction is broadcast to the Bitcoin network, where miners verify its validity.
Mining and confirmation: Miners compete to solve complex mathematical puzzles. The first to solve it adds the transaction (and others) to a new block on the blockchain. Each new block further secures previous transactions through additional confirmations[2].
Decentralized ledger: Every node maintains a copy of the blockchain, ensuring transparency and security without centralized oversight[2].
How Bitcoin’s blockchain ensures security
Security and transparency are foundational to Bitcoin’s blockchain. These are achieved through a combination of cryptography, decentralization, consensus mechanisms and immutable record-keeping.
Security mechanisms:
Cryptographic hashing and digital signatures: Every transaction on the Bitcoin blockchain is secured using advanced cryptographic techniques. When a transaction is initiated, it is signed with the sender’s private key, creating a digital signature that verifies the transaction’s authenticity. The transaction is then bundled into a block, which is encrypted using a cryptographic hash. Each block contains its own unique hash and the hash of the previous block, forming a secure, tamper-resistant chain[3][4][5].
Consensus mechanism (Proof of Work): Bitcoin uses a consensus protocol called Proof of Work (PoW). Miners compete to solve complex mathematical puzzles, and the first to solve it validates the block of transactions. This process ensures that only legitimate transactions are recorded and that altering any transaction would require an attacker to redo the proof of work for all subsequent blocks — a computationally infeasible task[2][3][6][7][8].
Decentralization: The Bitcoin blockchain is maintained by a distributed network of nodes (computers) around the world. Each node has a full copy of the blockchain, and no single entity controls the network. This decentralization eliminates single points of failure and makes it extremely difficult for any malicious actor to manipulate the ledger[2][3][6][8].
Immutability: Once a block is added to the blockchain, its data cannot be altered without changing all subsequent blocks, which would require the consensus of the majority of the network’s computational power. This immutability ensures that transaction records are permanent and tamper-proof, significantly reducing the risk of fraud[4][5][6][7][8].
Transparency features:
Public ledger: The bitcoin blockchain is a public ledger, meaning anyone can view the entire transaction history using blockchain explorers or by downloading the blockchain itself. While the details of each transaction (such as the amount and wallet addresses) are visible, the identities behind the addresses remain pseudonymous unless voluntarily disclosed[4][5].
Traceability: Every transaction is traceable from its origin to its destination. This transparency allows for the tracking of funds, which can be useful in forensic investigations and in holding actors accountable for illicit activity[4].
Is it safe to invest in bitcoin?
Bitcoin investments carry unique risks and considerations:
Security risks: Cryptocurrency can be targeted by hackers or lost through user error. Best practices include using secure wallets (especially “cold” wallets not connected to the internet) and enabling two-factor authentication[9].
Regulatory risks: Bitcoin is not insured like traditional bank deposits, and regulatory stances vary globally, sometimes resulting in bans or restrictions[9].
Volatility: Bitcoin’s price is highly volatile, and it has experienced dramatic swings, which can lead to significant gains or losses[9].
Long-term storage: Experts recommend moving bitcoin off exchanges into personal wallets for better security[9].
While bitcoin can be a lucrative investment, it is riskier than many traditional assets. Due diligence, secure storage and awareness of evolving regulations are essential[9].
Why are GOP, Trump supportive of Bitcoin?
The Republican Party recently adopted a pro-cryptocurrency platform, pledging to defend the right to mine bitcoin and to ensure Americans can self-custody their digital assets. This aligns with libertarian values — favoring financial autonomy and reduced government oversight[10].
President Donald Trump, who was previously skeptical of bitcoin, has shifted to a more favorable stance. His administration is signaling reduced regulatory friction and even floated the idea of a federal bitcoin reserve, which could legitimize bitcoin’s role as a global asset. This shift is partly driven by the crypto industry’s significant political spending and the desire to appeal to a growing base of crypto-enthusiastic voters[10][11].
What does Trump stand to gain with crypto?
Trump has launched a meme coin — a type of cryptocurrency token — marketed as a symbol of support for his movement. While the coin’s website claims it is not an investment, its price has soared, and it has the potential to boost Trump’s net worth and visibility[12]. The Trump meme coin is managed by a subsidiary of the Trump Organization, which earns revenue from trading activity. This venture allows Trump:
To mobilize supporters: The coin serves as a rallying symbol for his base.
Monetary gain: If the coin’s value rises, it can generate significant income for Trump-affiliated entities[12].
Political leverage: The coin’s popularity signals endorsement from the crypto community, potentially translating into political capital[12].
However, critics warn that such coins can be risky, volatile and susceptible to manipulation or misuse by outside interests[12].
How can someone invest in bitcoin?
There are several ways to invest in bitcoin[13]:
Cryptocurrency exchanges: The most common method, suitable for beginners, allowing direct purchase and withdrawal of bitcoin.
Traditional stockbrokers: Some brokers offer bitcoin exposure, often through funds or derivatives.
Bitcoin wallets: Many wallets now allow users to buy Bitcoin within the app, though fees may be higher.
Bitcoin ETFs: Exchange-traded funds approved in 2024 allow investors to buy shares that track bitcoin’s price, making it easier for traditional investors to participate without holding bitcoin directly.
Peer-to-peer apps and bitcoin ATMs: Alternative methods, though often with higher fees[13].
After purchase, it is recommended to transfer bitcoin to a secure, personal wallet for long-term storage[9][13].
Safe steps to start investing in Bitcoin
To safely start investing in bitcoin globally today, follow these best practices and steps:
Choose a trusted platform:
Cryptocurrency exchanges: The most common and beginner-friendly way to buy bitcoin is through a reputable crypto exchange. Look for platforms with strong security measures, regulatory compliance and positive user reviews[2][14][15].
Traditional stockbrokers and ETFs: Some traditional brokers now offer bitcoin ETFs or direct crypto trading, providing an extra layer of regulatory oversight[2][13].
Peer-to-peer apps and bitcoin ATMs: These can also be used but often come with higher fees and less protection for beginners[2].
Secure your account:
Enable two-factor authentication (2FA): Always activate 2FA on your exchange account for added protection against unauthorized access[9][16].
Use a private, secure internet connection: Avoid public Wi-Fi when making transactions to reduce hacking risks[2][16].
Fund your account:
Use secure payment methods: Most exchanges allow funding via bank transfer or debit card. Credit cards are discouraged due to fraud risks and high-interest debt[2][16].
Avoid overleveraging: Don’t use borrowed money or margin accounts unless you are an experienced trader aware of the risks[17].
Make your purchase:
Once your account is funded, you can purchase bitcoin. Consider starting with a small amount, especially if you’re new to crypto investing[2][16].
Store your bitcoin safely:
Cold storage (hardware wallets): For maximum security, transfer your bitcoin to a hardware wallet (cold storage) that is kept offline. This greatly reduces the risk of hacking compared with leaving your coins on an exchange or in a hot wallet (connected to the internet)[1][9][16].
Backup and secure recovery phrases: Write down your wallet’s recovery phrase and store it in a safe, offline location. Never share it with anyone or store it digitally where it could be compromised[9].
Monitor and comply with regulations
Use crypto tax software: Track your transactions for tax reporting and compliance in your country[18].
Understand local laws: Cryptocurrency regulations vary by country. Stay informed about the legal status and reporting requirements in your jurisdiction[18].
How does bitcoin affect the stock markets?
Bitcoin’s influence on traditional stock markets is growing:
Correlation with tech stocks: Bitcoin’s price movements are increasingly correlated with tech and risk assets, especially during periods of market volatility.
Institutional adoption: As more companies and funds add bitcoin to their portfolios, its price can affect broader market sentiment.
ETF approval: The launch of bitcoin ETFs has integrated bitcoin exposure into mainstream investment vehicles, linking its performance more closely with equity markets[13][19].
Bitcoin’s volatility can sometimes amplify risk sentiment in stock markets, but it is also seen as a diversification tool by some investors[19].
How does stability compare to stocks?
Bitcoin’s volatility:
Crypto prices are highly sensitive to regulatory news, technological developments and market sentiment[20][21].
The crypto market is less regulated and operates 24/7, contributing to unpredictable and rapid price swings [21].
Lower market capitalization and a retail-heavy investor base amplify price movements[22].
Stock volatility:
Stock prices are generally tied to company performance, earnings and broader economic trends[20][21].
Stocks are more regulated, with mandatory disclosures and investor protections in place[20].
Liquidity is typically higher in large-cap stocks, reducing the impact of individual trades on price[20].
Bitcoin is a decentralized digital currency with global reach, growing political support and increasing integration into mainstream finance. While it offers significant opportunities, it also carries unique risks, and its evolving relationship with politics and markets continues to shape its future trajectory. By following best practices for security, storage and responsible investing, individuals can safely participate in the bitcoin ecosystem while managing the inherent risks.
