A Brief History of Cryptocurrency - ELLIPAL

A Brief History of Cryptocurrency

Cryptocurrency has been with us for more than 10 years and it is now a very common concept. Everybody knows what is Bitcoin but does everyone knows that cryptocurrency can be traced back to the 1980s when they were called cyber currencies? In this article, we will explore the brief history of cryptocurrency and how it evolved to become the most exciting asset in the world.

The Idea of Crypto - 1983

The idea for cryptocurrency emerged in 1983 when American cryptographer David Chaum published a paper outlining an early form of anonymous cryptographic electronic money. His concept and goal were to have a currency that can be sent untraceable and does not require centralized entities such as banks. In 1995, Chuam developed Digicash, a prototype cryptocurrency. It uses software to withdraw funds from a bank and encryption keys to send funds. 

Later in 1998, another developer called Nick Szabo developed Bit Gold, the direct precursor to Bitcoin. It is the first form of mining where users must have dedicated computers to solve cryptographic puzzles. These puzzles then provide rewards.

Nonetheless, Nick Szabo could not solve the infamous double-spending problem without the use of a central authority. 

Satoshi Nakamoto - 2008-2010

It was not until a decade later, after Nick Szabo, that a mysterious person or group, using the pseudonym Satoshi Nakamoto, published a white paper called “Bitcoin – A Peer to Peer Electronic Cash System”, that solves the double-spending problem. The white paper describes the functionality of the Bitcoin blockchain network.

Satoshi Nakamoto mined the first block of the Bitcoin network on January 3, 2009. This first block is called the Genesis block and it resulted in 50 bitcoins being mined. Although this would be worth over a million dollars now, back when it first started, Bitcoin had no value. Not until six months later that Bitcoin became tradeable at around 14 cents per BTC.

Birth of the Crypto Market - 2010

While it wasn’t yet worth much, Bitcoin was showing real-world value as the price kept rising. In the Spring of 2011, a Forbes story covered Bitcoin and "Crypto Currency", and the price took off. From early April to the end of May, the value of Bitcoin rose from 86 cents to $8.89. It was gaining real interest. 

On June 1, after Gawker published a story about the currency’s appeal in the online drug dealing community, the price more than tripled in a week, to about $27. The market value of bitcoins in circulation approached nearly $130 million. It shows the usability of Bitcoin in all kinds of applications, both good and bad.

In October of that same year, other currencies started appearing. One of the biggest and most popular ones was Litecoin which was the fork of Bitcoin. It became the second-largest cryptocurrency by market cap. These new currencies quickly became known as "Altcoins".

In 2012, Bitcoin prices grew steadily, and in September of that year, the Bitcoin Foundation was established to promote Bitcoin’s development and adoption. The famous XRP Ripple was also launched that year, with the project attracting venture capital the next year.

Scams and Exchanges (2014-2016)

As Bitcoin and cryptocurrency became more popular for trading, exchanges were being created left and right. However, anonymity and lack of centralized control of cryptocurrency make digital currency highly attractive to criminals.  

The most infamous case of exchange Hacking was the Mt. Gox hack in 2014 where the hacker stole 850,000 BTC. The hack was said to be done over time since 2011 until one day Mt. Gox checked their wallet and it was empty. It was a mysterious case and shows how dangerous keeping crypto on exchanges can be. 

Exchange hacking and other scams became more and more common in the crypto space ever since it became popular. Users are advised to use hardware wallets and cold wallets to store their assets for better security.

The Cryptocurrency of Today - 2016 Onwards

At this point, Bitcoin kept reaching new All-Time-High and attracting more users. Ethereum, which was launched in 2015, also quickly became the second-largest cryptocurrency in the world. Other large currencies such as Cardano, Tezos, Neo, and more were also launched during this same time, each possessing its own strengths.

Bitcoin has now been with us for a long time and most people now understand how it works quite well. We have seen the Bitcoin market Boom and Bust many times and accepted how this unique market works, nonetheless, we all know that it is still only early days, and Bitcoin will get even bigger from here.

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