The financial storm of 2007 remains shocking even in retrospect.

The story begins with a seemingly harmless decision: between 2001 and 2003, the Federal Reserve kept interest rates at 1%. Cheap capital flooded into the housing market, causing home prices to soar, and everyone thought it was a guaranteed profit. But there’s no such thing as a free lunch.

Starting in 2004, the Fed began raising interest rates, eventually reaching 5.25%. For those leveraging borrowed money to buy homes, this was like a thunderbolt—monthly payments jumped from thousands to tens of thousands, and many people chose to abandon their homes. The problem was, these high-risk loans had long been packaged into MBS (Mortgage-Backed Securities) and flowed into banks and funds worldwide in complex financial products. No one truly knew how many bad debts were hidden in their assets.

In April 2007, New Century Financial was the first to declare bankruptcy—this signal was like the first domino to fall. Home prices started to reverse downward, and a wave of defaults followed. Frozen liquidity caused hedge funds under Bear Stearns to collapse, and global central banks were forced to intervene to stabilize the markets.

The real disaster struck in 2008. Lehman Brothers collapsed suddenly, and Fannie Mae and Freddie Mac were taken over by the government. The US government allocated $700 billion in emergency rescue funds in an attempt to stop the bleeding. But the damage was already done—by 2009, US GDP contracted by 2.6%, and the economy transmitted the shock from the financial sector to credit, then to investment, and finally hit the real economy. The total global loss exceeded $50 trillion.

This crisis changed the underlying logic of global finance. It was in this context that a new form of currency emerged. As people began to question the reliability of the traditional financial system, the narrative of decentralized, tamper-proof new assets started to gain vitality.