A Brief History of Cryptocurrency

    Simar Marwaha
    Simar Marwaha

    Updated on March 09, 2023 04:18 PM

    Published on December 13, 2022 06:26 PM

    The origins of cryptocurrencies may be traced back to the 1980s, and we shall educate you on the subject today.

    A Brief History of Cryptocurrency
    Source: Unsplash

    Cryptocurrencies are a sort of decentralized, non-government-regulated digital currency. Cryptocurrencies have a long history; in the 1980s, they were known as "cyber currencies." With the release of Bitcoin, which was developed by an unidentified programmer or group of programmers under the moniker Satoshi Nakamoto, these coins began to acquire prominence.

    Cryptocurrencies have gained popularity since the release of Bitcoin in 2009. Their appeal has increased as more and more individuals invest in them over the last several years. What are they, though? And from where did they originate? We'll look at the development of cryptocurrencies and their history in this article.

    Start of Cryptocurrency (2008-2010)

    • The Bitcoin white paper, outlining the operation of the Bitcoin blockchain network, was released on October 31, 2008, by Satoshi Nakamoto. When Satoshi bought on August 18, 2008, they formally started working on the bitcoin project. Although it's not the focus of this article, it's important to note that blockchain technology, which at its most basic level is constructing immutable data structures, is essential to the existence of Bitcoin (and all other cryptocurrencies).

    • The development of Bitcoin was in progress. On January 3, 2009, Satoshi Nakamoto mined the first block of the Bitcoin network. In this first block, they included a headline from The Times, providing a permanent allusion to the economic circumstances—involving bank bailouts and a centralized financial system—that Bitcoin was in part a response against.

    • The Genesis Block is the current name for this initial block, which led to the mining of 50 bitcoins. During this time, as well as the first several months of its existence, bitcoin had essentially no value. In April 2010, six months after bitcoin first became tradable, one BTC was worth a little under 14 cents. The cost "rise" to 36 cents by early November before leveling down at about 29 cents.

    • It was inconceivable to put a monetary value on the units of the newly developing cryptocurrency because it had never been exchanged, just mined. For the first time, someone chose to sell theirs in 2010, exchanging 10,000 of them for two pizzas. At today's pricing, the buyer's Bitcoins would be worth more than $100 million if they had been kept.

    2011: Competing cryptocurrencies start to appear

    • The first rival cryptocurrencies start to emerge as Bitcoin's popularity grows and the concept of decentralized and encrypted money gains traction. These, sometimes referred to as "altcoins," aim to enhance the original Bitcoin design by providing faster processing, greater privacy, or some other benefit. 

    • Namecoin and Litecoin were among the first to appear. Over a thousand cryptocurrencies are now in use, and more are constantly being created.

    • By market cap, Litecoin quickly overtook PPCoin, Namecoin, and several other cryptocurrencies, leaving them in the dust. These cryptocurrencies, some of which split off from Bitcoin and others based on new code, were rapidly termed "altcoins."

    Bitcoin's significance

    Although there have been numerous conversations and disputes over the world's first decentralized cryptocurrency, it is difficult to say exactly when Bitcoin initially gained popularity. Many people think that it rose in 2017, going from $1,000 to $20,000 and then dropping back to under $10,000.

    Others contend that cryptocurrency exchanges, which made it simpler for those with little or no technical expertise to acquire and sell cryptocurrencies, are to blame for Bitcoin's meteoric rise in popularity.

    Whatever the cause, one thing is certain: as more people learn about Bitcoin's values of decentralization and anonymity, their popularity will only increase.

    While its value stayed below previous heights, a steady expansion of the venues where Bitcoin could be used contributed to its sustained development in popularity. As more and more applications were apparent, it became evident that more money was entering the Bitcoin and cryptocurrency ecosystem. The market capitalization of all crypto coins increased during this time from $11 billion to its current high of nearly $300 billion.

    Banks including Barclays, Citi Bank, Deutsche Bank, and BNP Paribas have stated that they are looking at possible methods to collaborate with Bitcoin. The financial sector (and beyond) is now experiencing a transformation that was ignited by the blockchain technology that underpins Bitcoin.

    Crypto Frauds in the Air (2014-2016)

    Although it's not their purpose, thieves find digital currency very alluring due to its anonymity and lack of centralised oversight. The largest bitcoin exchange in the world at the time, Mt.Gox, failed and filed for bankruptcy in January 2014 after losing 850,000 bitcoin. 

    Although the specific circumstances are unknown, it's likely that the lost Bitcoins were taken over time, starting in 2011, and then sold for cash on several exchanges (including Mt.Gox), until one day Mt.Gox checked their wallets and discovered they were empty. CEO Mark Karpeles was accused of embezzlement in 2017, but was cleared of all charges in 2019. As a result, it is still unknown where the stolen BTC went.

    Even while the attack was not an isolated incident, it served as a lesson learned, and exchange security has significantly improved. Although smaller exchanges are still often breached, larger platforms now offer stronger assurances on their reserve holdings. This includes, for instance, the Safe Asset Fund for Users on Binance, which serves as an emergency fund.

    Crypto traders are encouraged to properly store their bitcoin using a hardware or software wallet rather than an exchange. These kind of wallets were not as widely available during the beginning of the cryptocurrency era which led to these frauds.

    Ethereum and ICOs in 2016.

    This year, one cryptocurrency came dangerously close to dethroning Bitcoin as interest in the Ethereum platform rose. This platform makes use of the cryptocurrency Ether to enable apps and smart contracts that run on the blockchain. Initial Coin Offerings (ICOs) came into being to signal Ethereum's advent (ICOs). Similar to how people may invest in and trade cryptocurrencies, these fundraising platforms provide investors the option to trade what are frequently basically stocks or shares in fledgling businesses.

    Due to a lack of regulation, the US Securities and Exchange Commission (SEC) issued a warning to investors that ICOs might easily be used as Ponzi schemes or other forms of fraud. The Chinese government took it a step further and officially banned them.

    Rise of Bitcoin as a Global Phenomenon (2016-2018)

    From $434 in January 2016 to $998 in January 2017, the price of bitcoin increased substantially each year. A software update for Bitcoin was authorised in July 2017 with the intention of supporting the growth of the Lightning Network (a layer-two scaling solution) and enhancing security.

    A week after the update was implemented in August, Bitcoin was trading at roughly $2,700. Bitcoin soared to a record-breaking high of slightly about $20,000 by December 17, 2017.

    At the same time, Ethereum, a brand-new blockchain initiative at that moment, was creating waves in the cryptocurrency community. Since its inception in July 2015, Ethereum has swiftly risen to the position of second-largest cryptocurrency by market cap. It introduced smart contracts to cryptocurrencies, producing over 200,000 separate projects and offering up a wide range of potential use cases (and counting). 

    In contrast to Bitcoin, Ethereum allows for the establishment and operation of other platforms, each with their own coins and use cases, on their own chain. This was a paradigm extensively imitated by other emerging blockchains, with Cardano, Tezos and Neo (to name only three) created during this era.

    Sustainability of Cryptocurrency

    • Bitcoin's record-high price of $68,789.63 was not able to be maintained. Like Bitcoin, Ethereum was unable to sustain its current level for very long after reaching its own ATH of about $1,400 in January 2018. Due to security issues brought on by semi-regular exchange breaches and financial restrictions, the market as a whole fell, and by the end of 2018, bitcoin was trading at about $3,700.

    • Prices didn't stay low for very long, either. Bitcoin saw somewhat of a revival beginning in late 2020, starting with MicroStrategy's disclosure in August that it had purchased bitcoin for $250 million. This started a bull market that the rest of the market soon joined, and prices were further raised by Tesla's early 2021 purchase of $1.5 billion in bitcoin. The month of November of that year saw bitcoin achieve its all-time high price of $69,000.

    • Since this peak, the market has dropped once again, pulled down by macroeconomic worries brought on by soaring inflation, increasing interest rates, and the threat of war. Nevertheless, the concomitant decline of cryptocurrency in 2021 and 2022, together with the decline of the global stock markets, demonstrates the growing integration of this industry with the conventional financial markets.

    • The blockchain technology that powers all cryptocurrencies has the ability to transform many facets of our society, despite the tempting and sometimes disastrous volatility of cryptocurrencies. 

    • Blockchain technology has the potential to be utilized in practically every sector of the economy, whether it is to offer accessible and reasonable financial exchange choices, secure your personal money so that only you have access to them, or provide correct data for your insurance quotation.

    • It's simple to become enthused about cryptocurrencies and their potential from an investing and technology standpoint as the market becomes more steady with better understanding and the launch of new sectors like stablecoins and decentralized finance (DeFi). Regardless of whether Bitcoin or another blockchain project piques your curiosity, this is true.

    Cryptocurrencies vs. Traditional Currencies

    Cryptocurrencies vs traditional currencies

    Source: Medium

    Consider a situation where you wish to reimburse a buddy who bought you lunch by sending money to their account online. Something might go wrong in a number of different ways, including:

    • It's possible that the financial institution is experiencing a technical problem, such as a system outage or malfunctioning equipment.

    • There may have been a hack on your or your friend's account, such as a denial-of-service attack or identity theft.

    • It's possible that the transfer caps on your or your friend's accounts were surpassed.

    This is why cryptocurrencies are the form of money of the future. Imagine a similar exchange taking place between two users of the bitcoin app. A notice asks the user if they are certain they are ready to send bitcoins. If so, processing begins: The system verifies the user's identification, determines whether they have the necessary balance to complete the transaction, and other steps. Following that, the payment is transmitted, and the funds are deposited into the recipient's account. This everything takes place in a couple of minutes.

    Hence, cryptocurrency solves every issue with contemporary banking: Your accounts cannot be hacked, there are no restrictions on the amount of money you may send, and there is no single point of failure. As previously said, there are more than 1,600 cryptocurrencies in existence as of 2018; some of the most well-known ones are Bitcoin, Litecoin, Ethereum, and Zcash. Also, a new cryptocurrency is created every day. There's a fair likelihood that there will be a lot more given the development they're now seeing.

    Top 5 Cryptocurrencies At the Moment

    1. Bitcoin (BTC): The first cryptocurrency, Bitcoin, was created in 2008 and released in January of the same year. uses a proof-of-work consensus process, meaning that to validate transactions and create new blocks for the blockchain, computational power is utilized. According to a current calculation on CoinMarketCap, it has a market capitalization of $330,458,066,814.
    2. Ethereum (ETH): Decentralized and open-source, Ethereum is a blockchain that supports smart contracts. The platform's native cryptocurrency is Ethereum. According to a recent computation on CoinMarketCap, Ether has the second-highest market capitalization among cryptocurrencies, behind only bitcoin with $155,981,647,046. 2013 saw the creation of Ethereum by programmer Vitalik Buterin.
    3. Tether (USDT): A stablecoin with asset backing is called Tether. 2014 saw the introduction of it by Tether Limited Inc. The market capitalization of Tether is $65,712,908,249, as determined by a recent calculation on CoinMarketCap.
    4. Binance (BNB): The cryptocurrency known as Binance Coin, which trades under the sign BNB, was created by the Binance exchange. Although BNB is currently the native currency of Binance's own blockchain, the Binance chain, it was originally built on the Ethereum network. BNB was first released in July 2017 as an Ethereum currency and then migrated to the September 2020-released Binance Smart Chain (BSC). A recent computation by CoinMarketCap found that BNB's market capitalization is $46,441,214,915.
    5. USD Coin (USDC): A digital stablecoin linked to the US dollar is called USD Coin. Launched on September 26, 2018, is USD Coin. There were around 127 million USDC in circulation, according to its initial report published in October 2018. There will be more than 55 billion by 2022. According to a recent calculation by CoinMarketCap, the market capitalization of USD Coin is $42,752,618,642.

    The top 5 cryptocurrencies' numerical data is taken from Coinmarketcap, as noted above. If you are considering investing, you can go to the website to discover more about the same.

    Cryptocurrency FAQs

    Who launched cryptocurrency first?

    The first cryptocurrency to be established, Bitcoin is today the most popular and traded. Under the alias Satoshi Nakamoto, it was initially introduced in January 2009 by an individual or group of computer programmers whose real identity has never been established.

    Why was cryptocurrency created, and by whom?

    The person or individuals who contributed to the creation of the initial bitcoin software and published the 2008 paper that popularised the idea of cryptocurrencies are known by the moniker Satoshi Nakamoto.

    How Many Different Cryptocurrencies Exist?

    Around 12,000 cryptocurrencies exist currently, and the growth rate is incredible. The number of cryptocurrencies more than doubled between 2021 and 2022. The market added almost 1,000 new cryptocurrencies every month by the end of 2021.