We have all heard about cryptocurrency, but where did it come from? Who invented digital assets like Bitcoin that are currently valued at a whopping $46,000? Read on as we provide you with a brief history of cryptocurrency and blockchain technology, where they originated from, and the developments we have seen in recent years.
Origins of Cryptocurrency
A lot of people believe that cryptocurrency is a new concept. This isn’t true. If we trace the history of cryptocurrency, we find that several iterations of cryptocurrencies were put forward in the 1980s in the United States and the Netherlands. However, these ideas were not received well and failed to capture public attention. Some examples of online currencies that were theorized but did not get developed include Bit Gold, Hashcash, B-Money, and Flooz.
Modern cryptocurrencies were initially discussed in a paper by Wei Dai in 1998. However, it wasn’t until 2008 that a whitepaper was posted to a mailing list that laid the foundations of bitcoin and blockchain technology. Labeled “Bitcoin – A Peer to Peer Electronic Cash System,” the paper was written by someone who called themselves Satoshi Nakamoto. It was an alias and no one knows the real identity of the paper’s author.
Some people say that David Chaum, a mathematician and a computer scientist, played a vital role in developing cryptocurrency. Chaum created DigiCash, one of the earliest electronic currencies, in 1989. It is an important predecessor of the digital currencies we know today.
Emergence of Bitcoin
After the paper on Bitcoin was published in 2008, Bitcoin software was launched in 2009. This was also when people first started mining Bitcoin. For the uninitiated, mining is a process where you can create new cryptocurrencies.
In 2010, Bitcoin was assigned a value. Previously, people had only mined this cryptocurrency. No one had tried to trade it. Then, a bitcoin holder used 10,000 bitcoins to buy two pizzas. This was the first instance where bitcoin was used to conduct a transaction, but it wouldn’t be the last. At the time, Bitcoin was valued at only a fraction of a penny.
New Cryptocurrencies Come to the Fore
Bitcoin was the first cryptocurrency to be introduced to the world. However, it wasn’t long before other cryptocurrencies were launched. These cryptocurrencies were based on the same idea of a decentralized and encrypted currency that runs on a blockchain network.
These alternative cryptocurrencies have attempted to differentiate themselves from Bitcoin on account of things like better speed, smart contracts, anonymity, more security, etc.
At present, we have over a thousand cryptocurrencies that are in circulation. Here are the most popular ones:
- Ethereum
- Ripple
- Litecoin
- Cardano
- Bitcoin Cash
- Polkadot
- Binance Coin
- Stellar
- Dogecoin
- Tether
Bitcoin Crashes and Rises Again
After 2010, Bitcoin’s price continued to rise steadily. In 2013, its value reached $1,000. However, things quickly went south and the digital token started to lose its value. Bitcoin went as low as $300 at this point, and those who had invested in this digital asset suffered heavy losses.
Despite the temporary setback, Bitcoin was able to recover, and in 2015, it was valued at $1,000 again. Unlike the last time, though, Bitcoin did not crash. Instead, it steadily increased in value. This was attributed to several factors, such as an increase in the type of places where you could spend Bitcoin and finding new uses for this cryptocurrency.
As people invested more in this Bitcoin, its value continued to rise, and in 2018, the market cap of Bitcoin was over $70 billion. Currently, its market cap is at $885.82 billion.
A Brief History of Ethereum
Ethereum is Bitcoin’s biggest rival. It is essentially an open-source public service that makes use of blockchain technology and facilitates cryptocurrency trading in a secure way without involving a third party. Ethereum also offers smart contracts.
This cryptocurrency was originally described in a whitepaper by Vitalik Buterin. Buterin is a programmer and the co-founder of Bitcoin Magazine. The paper focused on building decentralized applications. Buterin then worked with Gavin Wood to develop Ethereum.
In 2014, the co-founders of Ethereum initiated a crowdsourcing campaign. They sold Ethereum tokens to participants and were able to raise over $18 million. Currently, Ethereum is valued at $3,761.63.
Unlike Bitcoin, Ethereum is a platform that can trade more than just cryptocurrency. Some of the key ways that Ethereum differs from Bitcoin are:
- Ethereum facilitates multiple methods of exchange such as smart contracts, the Ethereum Virtual Machine (EVM), and cryptocurrency. In comparison, Bitcoin only trades in cryptocurrency.
- Ethereum makes use of a “proof of stake” system as part of its security protocols. In comparison, Bitcoin utilizes a “proof of work” system.
- Ethereum has a shorter average block time that enables miners to get more block confirmations and receive more Ether (Ethereum tokens).
A Brief History of Binance Coin
Binance Coin was initially on the Ethereum blockchain. However, it then went on to become the Binance chain’s native coin. The cryptocurrency was launched in an Initial Coin Offering in July 2017. It is issued by Binance Exchange and Trade. Binance Exchange is also the largest cryptocurrency exchange that supports over 1.4 million transactions every second.
Binance Coin is currently priced at $524.75.
Compared to Ethereum, Binance Coin is a lot faster and more efficient. It is also subjected to regular burns that help maintain a maximum of 200 million tokens. Moreover, holding Binance Coin can also translate into lower transaction fees on the exchange. However, Ethereum is a lot more accessible than Binance Coin and has more potential. It also has a higher market cap.
Wrapping It Up
The history of cryptocurrency is a complicated one. Despite its shaky beginning, cryptocurrency has established itself as one of the most valuable digital assets that can transform the financial industry and lead to new innovations. With new cryptocurrencies being added to the market every day, it is clear that this asset is here to stay.
Are you interested in learning more? Keep following The Crypto World for more updates and news on cryptocurrencies and how you can invest in them.
