History of cryptocurrency: Digital coins as we know them today

Since the birth of Bitcoin in 2009, countless cryptocurrencies have emerged in the market. Although met with doubt and controversy, the crypto market has come a long way and now boasts more than 6,700 altcoins and tokens in circulation.

As the crypto movement continues to gain traction, you might be wondering how exactly this revolution started. Find out more about the history of cryptocurrency here at BTC Post!

Early beginnings of digital coins

Digicash and B-Money: Blueprints of cryptocurrency

Before the birth of Bitcoin in 2009, theories on digital coins already existed in the late 80s to the early 90s. The history of cryptocurrency roots back to David Chaum, an American cryptographer that experimented with a different form of electronic cash through what he called a ‘blinded cash’.

The concept behind the formula became the foundation of cryptocurrency. In 1989, Chaum founded DigiCash following the blinded cash formula. It was a token currency that used encrypted information to safely and seamlessly transfer money from one individual to another.

By 1998, another developer named Wei Dai proposed B-Money that would be operated through a synchronous and unjammable broadcast channel. It also included contract-based transactions through its network without requiring a third party application.

Bitcoin: The first cryptocurrency in the market

Considered the first cryptocurrency, Bitcoin is the most influential in paving the way for the history of cryptocurrency. It started as a whitepaper titled Bitcoin: A peer to peer electronic cash system published under the pseudonym, Satoshi Nakamoto.

The cryptocurrency was designed to circumnavigate traditional banking processes after the 2008 American economic crisis caused people to lose trust in financial institutions. Bitcoin proposed an alternative means for people to exchange money without regulations and intermediaries through its decentralised system powered by blockchain technology.

By January 2009, the first block from the Bitcoin network was mined. In its infancy, Bitcoin had no real value and was only priced at US$0.14 in April 2010.

The first-ever real-world transaction using Bitcoin was made by Laszlo Hanyecz who purchased two slices of pizza for 10,000 BTC on May 22. Nowadays, the date is commemorated and celebrated by crypto enthusiasts as Bitcoin Pizza Day.

A year after the first Bitcoin transaction, Forbes published several articles about the cryptocurrency industry that helped increase the popularity of Bitcoin among investors, causing it to reach a market capitalisation of US$130 million in 2011.

The Bitcoin Foundation was founded in 2012 to further promote the digital coin to the public. This foundation was also created to improve the digital coin’s development in the years to come.

Emergence of altcoins

Litecoin and Ripple enters the market

As Bitcoin continued to dominate the crypto market, other cryptocurrencies emerged to rival its success. By October 2011, Charlie Lee created Litecoin to provide crypto users and investors with a cheaper and faster alternative to Bitcoin. This earned Litecoin the moniker ‘digital silver’ to Bitcoin’s ‘digital gold.’

By 2012, venture capitalists Chris Larsen and Jed McCaleb founded Ripple Labs, Inc. and developed their own cryptocurrency. Their network’s digital coin, XRP, remains one of the leading cryptocurrencies in the market until today.

Ethereum: The dawn of smart contracts

Launched in 2015, the Ethereum blockchain was created to make noteworthy improvements to the basic architecture of the Bitcoin network. Its native coin, Ether, was developed by Ethereum co-founder Vitalik Buterin.

Users can use the blockchain as a self-managing smart contract that can automatically enact agreements between two parties.

With additional features written in the blockchain, Ethereum became one of the most actively used blockchains in the market. It’s also second to Bitcoin in terms of market capitalisation.

Cardano’s Proof-of-Stake Ouroboros protocol

One of the most pressing issues both Bitcoin and Ethereum are facing is the energy used in mining cryptocurrencies. To combat some of the scalability issues of crypto, Cardano was launched in 2017. It allows peer review that scales down on resources compared to proof-of-work consensus verification from other crypto networks.

Through its Ouroboros proof-of-stake protocol, Cardano uses a multi-layer architecture that separates ADA transactions from smart contracts. This way, the blockchain can validate multiple transactions at once.

Bitcoin price volatility over the years

In 2013, Bitcoin experienced a consistent rise and fall in terms of its market value. The digital coin slumped amid regulatory issues from the US federal government. Its price fluctuated from US$13.40 at the start of the year to shooting up US$220 by April and then sharply falling to US$70 by the end of the month.

Scam and theft incidents didn’t help Bitcoin’s price either. In 2014, Mt Gox, the largest Bitcoin exchange of its time, suddenly went offline causing the loss of 850,000 BTC.

It was only by 2016 when Bitcoin was able to recover from its losses from past incidents. From its US$807 value in December 2016, Bitcoin surged 20 times that price and breached the US$20,000 mark by the end of 2017.

Although the bull run pushed Bitcoin to the limelight, it was proven unsustainable and the digital token’s value suffered for two years. Bitcoin’s price continued to decline until it wasn’t able to move past the US$10,000 mark by the end of 2019 up to the beginning of 2020.

However, as the COVID-19 pandemic disrupted the economic situation in various countries, an increased public interest in cryptocurrency caused another bull for Bitcoin in mid-2020. It ended the year on a good note with a value of US$29,000.

Cryptocurrency today: Movement to mainstream adoption

At the dawn of the new decade, Bitcoin tripled in value from its initial price of US$29,000 in January 2021 to its current all-time high of US$64,000 in just a span of three months.

However, influential people and events including China’s crackdown on cryptocurrency as well as Tesla’s Techno King Elon Musk’s statements on digital coins dragged Bitcoin’s price down to US$38,557 in May 2021.

As the crypto market continues to experience volatile prices in its top-performing digital coins, the public remains interested in what it can do in the future.

There is no denying that digital assets will become a huge part of the world’s daily transactions especially with major American companies like Paypal, Mastercard, and Visa slowly accepting cryptocurrency into their payment systems.

Get to know the latest cryptocurrency news and cryptocurrency updates here at BTC Post!