A cryptocurrency is a secured decentralized digital medium of exchange developed to facilitate secured peer to peer transactions. While many people have heard of cryptocurrencies and some are involved in the purchase and sale of cryptocurrencies and cryptoassets, only a few are aware of the history behind this potentially world-changing application of cryptographic technology.
As such, compiled below is the history of cryptocurrency. This history will be both useful for newcomers to the cryptocurrency and cryptoasset worlds as well as those that are more seasoned - understanding the history of a topic or technology almost always is useful in terms of adding context and grounding to one's understanding.
The late 1980s to Early 1990s - Foundations begin to Form
In the 1980s people began conceiving the idea of the creation of digital cash and/or virtual currency. These people then began to seek ways to bring this idea to fruition. However, none of their efforts and/or the results was reported.
In the year 1990, American cryptographer David Chaum invented DigiCash, the first form of electronic currency. This new "e-cash" gained tremendous publicity and sparked interests in various diverse intellectual quarters, including libertarians, anarcho-capitalists, and those interested in the applications of cryptography. Chaum's DigiCash was however later found to have some faults and subsequently, was no longer used.
1998 - A Precursor to Bitcoin
In 1998, Wei Dai, a computer engineer created and published an article on "b-money". Dai regarded b-money as an anonymously distributed electronic cash system which allows for senders to directly communicate with buyers over “an untraceable network”.
Also in 1998, computer scientist Nick Szabo, designed the mechanism for a decentralized electronic currency he termed "bit gold". To use bit gold, a person would have to solve cryptographic puzzles whose solutions would be sent to a registry and then assigned to a designated public key representing the solution provider. Each solution would then become a part of a subsequent challenge which would then help to create a growing chain of new property for the solution provider. This design was created to help validate new coins.
Although bit gold was never implemented, it is regarded as the precursor to Bitcoin - those who know anything about Bitcoin mining will see the somewhat shared intellectual DNA between Bitcoin and Szabo's bit gold.
2009 - The First Truly Decentralized Digital Currency, Bitcoin
The year 2009 can be said to be the year the concept of cryptocurrency became established. Although much work (both technical and non-technical in nature) had been done in the previous two decades pertaining to digital currency and the potential application of cryptographic methods to make them effective, 2009 can easily be considered the genesis of cryptocurrency proper.
In 2009, Bitcoin was established. This establishment and its subsequent use can be attributed to Satoshi Nakamoto, who is a pseudonymous individual (or more likely, a group) that developed Bitcoin. Nakamoto articulated the concept of Bitcoin in a white paper published in the same year. Per his white paper, Nakamoto called Bitcoin a peer-to-peer cash payment system - little did the initial readers of the white paper (and possibly Nakamoto himself/herself) know what Bitcoin would become over the course of the coming decade.
This system was able to actualize true decentralization which was a feature many before him/her could not achieve. He was able to achieve this such that there could be a consensus between parties without the need for a central authority (eg. a financial firm or a government). Additionally, Nakamoto's Bitcoin was able to seemingly solve the double spending problem, something that seemed unachievable without a proper centralized network or clearinghouse.
Bitcoin has since gone beyond being the first cryptocurrency to also be the most popular, most sought after, and most used cryptocurrency with over 16 million in circulation (out of a total of 21 million that will ever exist per Nakamoto's original design).
2009 to Present - Altcoins, Proliferation, and Investing
Since the creation of Bitcoin in 2009, over 850 cryptocurrencies (often referted to as altcoins) have been developed and are now in circulation. Some of these altcoins are Litecoin, Peercoin, Robocoin, Ethereum, Salt, Cardano, Iota, Viacoin, Siacoin, Bitcoin Cash, Ripple, and Dogecoin.
Many of the new cryptoassets or altcoins that are on the market today are not considered high-quality cryptoassets like Bitcoin but are instead considered frauds, scams, gimmicks, or schemes that allow the creators of the coins to make a quick profit (through the use of what are called initial coin offerings or ICOs).
Other cryptoassets or altcoins, however, seem useful and add capabilities beyond what Bitcoin is currently capable of. For example, Bitcoin is generally only used for payments while Ethereum has the capability for use in what are called "smart contracts" and Iota is created to assist with the creation of an internet of things (IOT) world.
The concept behind cryptocurrencies is now being researched by financial institutions and governments, its’ monetary value is on a steadily rising (in terms of fiat currency such as the USD or the Euro) and many are beginning to see cryptocurrency as an investment option.
Foggy Future - Where will cryptoassets go from here?
Given the past 30 years in cryptocurrencies, cryptography, and the concept of decentralized digital cash (and especially the last 10 years since the creation of Bitcoin), it's a fool's errand to try to predict in any meaningful way where things will go in the cryptoasset space. However, it is likely that many of the early trends seen today will continue on. Specifically, it is likely that cryptoassets will consume more mindshare globally, will break into Wall Street (eg. futures, ETFs, hedge funds, etc.), and that a broader infrastructure (both in support of and in use of crypto assets) will be built up over the coming years and decades.
And now, given the rise of cyrptocurrencies and crypto assets to quasi-mainstream financial assets, we're dedicated to providing quality, relevant, and interesting material on cryptocurrencies and cryptoassets. Articles on Bitcoin, Ethereum, Ripple, Cardano, and many more cryptocurrencies and cryptoassets can be found on Pennies and Pounds - all that in addition to a plethora of information on what cryptoassets are, how the entire crypto industry came to be, blockchain/immutable ledger technology, mining, proof of work, proof of stake, and how to prudently invest in crypto if you are so inclined (based on your risk tolerance and ability to withstand the volatility that will come with a crypto portfolio).