A Brief History Of Cryptocurrency

A little over a decade ago, a new technology emerged that would eventually go on to take the financial world by storm.

Since this pivotal moment, a huge amount of ground has been covered, with Bitcoin — and cryptocurrencies in general — having their fair share of meteoric rises and dramatic falls.

But putting aside all the drama that usually gets reported on when we talk about cryptocurrency prices, what is the history of this revolutionary technology, and how did we get here?

The idea of Bitcoin

Although 2009 is most often pointed to as the origin moment for Bitcoin and cryptocurrency, the basic idea for this technology actually emerged quite some time before this.

In fact, 10 years before we ever saw reports on Bitcoin or the Luna price in the news, a computer engineer by the name of Wei Dei published an academic paper where he discussed the idea of ‘B-Money’. This was a digital currency which could be sent to receivers along a group of untraceable digital aliases.

Following this, another early blockchain futurist wrote about the idea of ‘Bit Gold’, which was a digital, decentralized currency system.

The birth of Bitcoin

Although the idea of a fully digital currency not bound by the traditional centralized international financial system had been around for some time, it wasn’t until 2009 that Bitcoin emerged as the world’s first cryptocurrency.

This came about when a mysterious figure named Satoshi Nakamoto published a ground-breaking white paper titled ‘Bitcoin: A Peer-to-Peer Electronic Cash System’, which set out the basic functionality of the Bitcoin network.

Just a few months after this was published, the first block on the Bitcoin network was mined, which essentially gave birth to cryptocurrency as a functioning sector.

The emergence of the cryptocurrency market

Shortly after the ‘genesis’ block was mined on the Bitcoin network, there was growing demand from interested investors for platforms where they could easily buy and sell this novel new technology.

This gave birth to the now defunct bitcoinmarket.com, as well as the infamous Mt. Gox exchange. During this time, the popularity of and demand for Bitcoin rose sharply. This led the price of Bitcoin to reach parity with the US dollar for the first time.

It was also during this time that several other digital assets were created, including Ripple and Litecoin.

Disaster strikes: Scandal at Mt. Gox 

In 2011, the cryptocurrency sector experienced its first major scandal when the Mt. Gox exchange was hacked for the first time. This resulted in over 2,000 Bitcoin being stolen.

This initial hack was followed up in 2014, when approximately 850,000 BTC were lifted from the platform. At the time, this was valued at around $460m, although at today’s prices it would be in the billions of dollars!

This was particularly scandalous as the Mt. Gox exchange handled around 70% of all BTC transactions in 2013.

Ethereum and ERC-20: Next gen crypto

The next major step in the history of crypto came with the emergence of the Ethereum network in 2015.

Now the second most popular digital asset in terms of total market capitalization, the Ethereum network represented a major innovation in crypto technology. What was so revolutionary about Ethereum is that it is less a ‘currency’ and more a system on which applications can be built. This gives it a potentially limitless number of potential applications.

Cryptocurrencies that have been launched on the Ethereum network are known as ERC-20 tokens.

The emergence of Ethereum also gave rise to other important industry developments, including the rise of decentralized finance and decentralized applications. These technologies have helped to generate considerable interest in the technology underlying cryptocurrencies, which has resulted in significant institutional investment.

The future of crypto

Looking beyond these major developments, the cryptocurrency sector has continued to be an incredibly dynamic, fast-moving space.

While the prices of cryptos have experienced dramatic rises and falls — as we see in the Smooth Love price, for example — this has not slowed down development within the industry.

In fact, despite the many scandals that have gripped the crypto sector and the ebb and flow of prices, cryptos have slowly but surely become a global phenomenon. Even celebrities such as Kim Kardashian have attempted to move into the space!

Today, governments around the world are finally coming around to the potential uses of cryptocurrencies in managing their economies, with new regulations being announced regularly. This is in addition to the many businesses and sectors around the world that are exploring ways to utilize blockchain technology in their own operations.

Despite the humble history of Bitcoin, cryptocurrency looks to be an idea whose time has finally come.