The History of Cryptocurrency

The history of cryptocurrency, in which the idea first began in The late 1980s, when the currency for money could be sent untraceable and in a manner that did not require centralized entities (like banks). In 1995, American cryptographer David Chaum implemented an anonymous cryptographic electronic money called Digicash. It was an early cryptographic electronic payment that required users to withdraw from a bank with required specific encrypted keys that were sent to a recipient.

Let’s look at the timeline.

The Beginning (2008-2010)

In 2008, Satoshi Nakamoto published the white paper called Bitcoin – A Peer to Peer Electronic Cash System, describing the functionality of the Bitcoin blockchain network. Satoshi formally began work on the bitcoin project on August 18th, 2008, when they purchased Bitcoin.org. While it is not the subject of this article, it is worth noting that Bitcoin, and all cryptocurrencies, would not be possible without blockchain technology.

Satoshi Nakamoto mined the first block of the Bitcoin network on January 3, 2009.  This first block of 50 Bitcoins is now referred to as the Genesis Block. Bitcoin had almost no value for the first few months of its existence. Six months after they started trading in April 2010, the value of one Bitcoin was less than 14 cents. By early November it surged to 36 cents before settling in at around 29 cents (don’t cry).

The Cryptocurrency Market Begins to Form (2010-2014)

While it was not worth much yet, Bitcoin was showing it had real-world value. In February 2011 it rose to $1.06 before coming back down to 87 cents or so. In the spring, in part due to a Forbes story on the new “cryptocurrency,” the price took off. From early April to the end of May, the cost for a Bitcoin rose from 86 cents to $8.89.

On June 1, Gawker published a story about the currency. the price more than tripled by about $27. The market value of bitcoins in circulation was nearly $130 million. By the time September 2011 came around though, the value had dropped back down to around $4.77. In October 2011, Litecoin appeared, as had other spin-off conceptualizations of Bitcoin, often referred to as altcoins. Litecoin was second in market cap with Namecoin and 7 others trailing in the distance.

In 2013, amid federal, criminal, regulatory, and software-related issues, Bitcoin’s price constantly rose and crashed. This was the beginning of another long-term crash that ended with Bitcoin dropping back down to $152 by January 2015.

Scams Dominate Headlines (2014-2016)

Though intentional, anonymity and lack of centralized control make digital currency a lucrative venture and opportunity for criminals. In January 2014, Mt.Gox, the world’s largest bitcoin exchange at the time, collapsed and declared bankruptcy, having lost 850,000 bitcoin. 

While the hack was not a singular event, it has served as a cautionary tale, and security on exchanges is much improved.  Wallets such as these were not as easily accessible during this period.

Bitcoin Ascends to Worldwide Phenomenon (2016-2018)

Bitcoin prices rose steadily year over year, trading around $2700, and by December 17, 2017, it reached an astronomical all-time high of just under $20,000.

During this same time, a new blockchain project called Ethereum was making noise in the cryptocurrency sphere and was the number two cryptocurrency on the market. It brought smart contracts to cryptocurrency, opening a wide array of potential use cases and generating over 200,000 different projects and counting. All of them use the Ethereum blockchain. All these projects have their own cryptocurrencies with their own purposes and goals which are often different from Bitcoin’s. There are now also other blockchains trying to compete with Ethereum, such as Cardano, or Tezos, and the cryptocurrency world continues to expand and grow in market cap.

 

Bust and Eventual Recovery (2018-Present)

While the volatility of cryptocurrencies is both attractive and potentially devastating, the underlying technology behind them all, blockchain, has the power to change many sectors of our society. As the market becomes more stable with increased knowledge, and with the introduction of concepts such as stable coins and decentralized finance, it is easy to be excited about the investment and technological potential, whether its Bitcoin or another blockchain project you think is interesting.

 

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