A Brief History of Cryptocurrency

A Brief History of Cryptocurrency

  • Posted on 1616-0909-2021
  • by Gareth McCauley

Cryptocurrency provides a modern way of paying for goods and services. It’s a form of payment that’s making a huge impact on how countries and entities use the currency.

The current number of cryptocurrencies is multiplying as they’re being incorporated into this digitalised world. Here’s a brief history of cryptocurrency to further understand how it works:

The Cryptocurrency Timeline

Cryptocurrency started back in 1983 when cryptographer David Chaum developed a digital transaction system called eCash. It was considered the pioneer in cryptocurrency that transferred funds anonymously, and it also featured a secure transaction for people who use the internet for micropayments. eCash was created under David Chaum’s company called DigiCash that eventually filed for bankruptcy in 1998.

Although large banks were interested in the platform, DigiCash and the eCash patents were sold off. However, in 2018, David Chaum launched a new start-up that focused on cryptography. Although the term “cryptocurrency” was not coined until the 1990s, Chaum’s works created important frameworks for the future of exchanging goods and services.

During the 2008 global economic downturn, Satoshi Nakamoto, whose real identity is still anonymous to this day, created a whitepaper regarding the potential of cryptocurrency and made the first Bitcoin transaction. He also invented blockchain technology, which serves as the public transaction ledger of Bitcoin and other cryptocurrency platforms.

After about two years, developers had successfully managed the blockchain that increased the number of Bitcoin transactions and paved the way for new cryptocurrency platforms that helped improve the footprint of digital tokens. Although it had some setbacks around the mid-2010s, the value of 1 Bitcoin reached $10,000 in November 2017 and it became the top cryptocurrency choice around the world. In March 2021, the total value of Bitcoin surpassed $1 trillion.

history-of-cryptocurrency

Types of Cryptocurrency

Aside from Bitcoin, there are plenty of other cryptocurrency platforms like Ethereum, Dogecoin, Litecoin and Cardano that are considered important players in the crypto space. They have become a vital, central discussion in most finance-related topics and have gained acceptance as an alternative to the daily government-issued currency.

Here are some important cryptocurrency alternatives to Bitcoin:

  • Ethereum

Ethereum creates decentralized financial products that can be accessed for free anywhere in the world, making it appealing to countries with no state identifications or infrastructure. It also allows Smart Contracts and Decentralized Apps to be operated without any interference, fraud, or downtime. It comes with its own programming language that runs on blockchain technology.

  • Dogecoin

Dogecoin is an open-source cryptocurrency considered a sarcastic meme coin. It was initially created as a joke in 2013 with an image of a Shiba Inu dog as the logo. It has since gained popularity in the cryptocurrency space in 2017, with notable features like unlimited supply, low price, and technology derived from Litecoin.

a-history-of-crypto

  • Litecoin

This peer-to-peer cryptocurrency was created by Charlie Lee in 2011. It shares a lot of similarities with Bitcoin as it’s based on Bitcoin’s original source code. It is used for cheaper transactions and has a higher coin limit market cap than Bitcoin. Because the transactions are quicker and cheaper, the mining process is also faster.

  • Cardano

Charles Hoskinson, one of the founding members of Ethereum, developed Cardano in 2015. It’s a blockchain platform that runs on Ouroboros, and it aims to be a decentralized application development platform. Its main applications are in traceability and identity management. Traceability is used to track a product’s manufacturing processes and eventually remove the market for counterfeit goods. Identity management is used to simplify processes that need data collection from multiple sources.

  • Polkadot

Polkadot is a proof-of-stake cryptocurrency that aims to deliver information exchange between blockchains. It is founded by Gavin Wood, another founding member of Ethereum. Its protocol is designed to connect oracles and permissioned and permissionless blockchains to let systems work together.

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