Created by private individuals or groups, cryptocurrency is considered an alternative to fiat money. Originally, virtual currencies were made outside the regulations of state monetary policies so people can use them in exchange for goods and services without worrying about their digital security.
Cryptocurrency uses an online ledger that encrypts and secures transactions with cryptography. This drives the interest of people towards the digital currency because anonymity is maintained when using these unregulated currencies for transactions.
As of February 2021, Bitcoin’s value reached $37,000 and continues to grow along with other top cryptocurrencies in the market such as Ether, Tether, and XRP. However, how did the cryptocurrency industry grow into one of the most promising technologies today?
Get to know how the industry started in this comprehensive timeline at Cryptoshimbun!
History of Cryptocurrency: A timeline of events
The ‘80s and ‘90s: The technical foundations of crypto
Although the first digital currency was first popularized in the 21st century, cryptocurrency’s technical foundations date back to the 1980s when David Chaum, an American cryptographer, invented a ‘blinding’ algorithm.
Chaum’s algorithm allowed secure and unalterable transactions between two parties which became the basis for the modern web-based encryption that cryptocurrencies use today. In the latter years of the decade, he founded DigiCash in an attempt to commercialize his ‘blinding money’ concept.
The company produced units of currency based on the algorithm but unlike modern cryptocurrency, Digicash wasn’t decentralized. Chaum had direct control over the supply, similar to how banks monopolize fiat money.
The cryptocurrency concept was further developed by computer engineer Wei Dai when he published a white paper on B-money in 1998. Although B-money was never officially launched, the concept paved the way for the modern crypto system that includes a collective ledger that rewards miners.
2009: Satoshi Nakamoto and the birth of Bitcoin
In late 2008, a white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System was published under the pseudonym Satoshi Nakamoto. It described the functionality of the Bitcoin blockchain network that paved the way for other cryptocurrencies today.
Four months after the paper’s publication, the first Bitcoin blockchain was mined. This, along with the 49 Bitcoins that followed, is referred to as the Genesis Block. For the first few months of its existence, Bitcoin had no real value and only got up to $0.14 in April 2010.
In May 2010, Laszlo Hanyecz made the first recorded Bitcoin transaction when he bought two pizzas for 10,000 BTC. This event is commemorated up until this day as Bitcoin Pizza Day.
Bitcoin’s price finally took off when Forbes and Gawker published their articles about the cryptocurrency in 2011. During this time, the market cap for Nakamoto’s cryptocurrency was at $130 million. To further promote Bitcoin’s development and uptake, the Bitcoin Foundation was founded a year after.
2011: The emergence of the first altcoins in the market
With the rising popularity and success of Bitcoin, other cryptocurrencies emerged. These virtual currencies were deemed as altcoins during the time since Bitcoin was the pioneer of the industry.
Around October of the year 2011, Charlie Lee created one of the first altcoins in the market. Litecoin was made because Lee wanted to develop a faster and cheaper version of Bitcoin. It’s often referred to as ‘digital silver’ in comparison to Bitcoin’s moniker as the ‘digital gold’.
Namecoin, a primary fork of Bitcoin, was developed as an experimental open-source technology. The creators hoped to improve the following:
- Decentralization
- Security
- Censorship resistance
- Privacy
- and certain components of the Internet infrastructure such as the Domain Name System.
Although it was one of the first altcoins that rivalled Bitcoin, Namecoin lagged behind other tokens when it comes to value and market cap.
In 2012, a new cryptocurrency financed by venture capitalists emerged from the market. Ripple Labs Inc., co-founded by Chris Larsen and Jed McCaleb, created the digital asset, XRP. Unlike Namecoin, Ripple managed to stay afloat and become one of the leading digital currencies in the market.
2013 to 2014: Bitcoin under rocky waters
Amid regulatory and software issues, Bitcoin’s price consistently rose and fell. In October 2013, federal authorities shut down the illegal Silk Road website that used Bitcoin as one of its trading currencies. This led to the crash of the cryptocurrency.
The following year, a huge disaster fell upon Bitcoin when Mt. Gox declared bankruptcy. The Tokyo-based crypto exchange lost around 850,000 BTC due to fraudulent transactions. Many speculate that Bitcoins were stolen and resold in exchange for cash.
It led to the decline of Bitcoin’s market cap, plummeting by 50%. It wasn’t until late 2016 when it was able to recover.
2015: Ethereum enters the crypto market
Currently, Ethereum is one of the top-performing digital currencies in the world in terms of market capitalization. Its coin, Ether, was developed by Vitalik Butarin and was first launched in July 2015.
What makes Ether and its blockchain different from the other cryptocurrencies is its smart contracts feature. It allows the Ether blockchain to run predetermined conditions that cannot be altered once uploaded.
2017 to 2020: Bitcoin’s staggering rise and fall
October 2017 saw the rise of Bitcoin’s value that broke through $5,000 per BTC. Bitcoin doubled its value to $10,000 and continued to rise to $19,783 by December of the same year. Critics attributed this increase to a price bubble.
However, in April 2018, Bitcoin’s price fell to $7,000 and continued to decline until it reached $3,500 by the end of the year. By June 2019, Bitcoin spiked again at $10,000, only to fall to $7,000 by the end of the year.
In 2020, Bitcoin enjoyed a renewed interest among investors. During the pandemic, Bitcoin caught the attention of more people. The increasing dollar inflation due to Covid-19 government spending made people wary of fiat money. JP Morgan, a leading company in financial services, even predicted that Bitcoin would continue to rise until it reaches $146,000.
Although increasingly volatile, the crypto market continues to spark public interest. With payment giants like Paypal and Visa embracing cryptocurrency, there’s a growing chance that digital assets will be a part of daily modern life.
