Donald Trump once called cryptocurrency a scam. Now it has made him more than US$1 billion – and created a new channel for conflicts of interest, special favours and institutionalised corruption.

US President Donald Trump once called cryptocurrency a “scam”. It’s now a major moneymaker for him: his just-released annual financial disclosure shows he made more than US$1 billion from cryptocurrency last year.

This news has raised the ire of Trump’s critics. Juliana Stratton, the Illinois lieutenant governor and a Democratic Senate candidate, accused Trump of using his public office “to make billions while American families struggle to afford their basic needs. His infinite greed is disgusting.”

The White House denied Trump or his family has engaged in conflicts of interest. Deputy press secretary Anna Kelly said “all actions by President Trump and his administration are taken in the best interest of the American people”.

But how exactly has Trump earned so much money from cryptocurrency?

How does cryptocurrency work?

A cryptocurrency is simply digital money. It differs from traditional money in two ways.

First, traditional currencies are issued by central banks of each country, while cryptocurrencies are issued according to rules written in computer code.

The computer code behind crypto may be controlled by a company. Or the code may be predefined ahead of time (for example, in a “white paper” that sets up the algorithm behind crypto) and controlled by no one at all.

Second, transactions in traditional money happen via the banking system, while transactions in cryptocurrency happen on blockchains, which are databases that store information on who owns what.

Bitcoin is the........

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