Updated: Sep 6
Author: Marie Gerland
Date of Publication: 01/09/2022
A cryptocurrency is a digital currency used exclusively online, which is independent from banking networks. In fact, a cryptocurrency is based on the blockchain technology. A blockchain enables to store and to pass information. In particular, the first cryptocurrency appeared in 1989 with the creation of DigiCash by David Chaum. Since then, few cryptocurrencies have appeared. However, the interest in cryptocurrency investments is important. Thus, we are going to go through the history of cryptocurrency.
1) 1989 – 2009: From the creation of the first cryptocurrency to Bitcoin
In 1989, David Chaum created the first cryptocurrency: DigiCash. DigiCash was an early form of cryptographic payment. Transactions on DigiCash were anonymous. But DigiCash went bankrupt in 1998. After the creation of DigiCash, other cryptocurrencies, such as Bit Gold and B-Money, appeared. Indeed, in 1998 Nick Szabo created Bit Gold. Bit Gold users had to solve cryptographic puzzles to receive digital currency. This cryptocurrency appeared as the Bitcoin precursor. However, during this period, the interest in cryptocurrencies was still low and this interest grew with the creation of Bitcoin.
2) 2009: The arrival of Bitcoin, a great interest in cryptocurrencies
Bitcoin appeared for the first time on the 3rd of January 2009. Indeed, on this date, Satoshi Nakamoto mined the first 50 Bitcoins (it was the Genesis Block). However, at the beginning, Bitcoin was almost worthless. But the value of Bitcoin started to rise progressively. In April 2010, a Bitcoin was worth 14 cents, in February 2011 $1.06 and then in May 2011, the price went up to $8.89.
Moreover, there exists a funny anecdote about Bitcoin. Indeed, Laszlo Hanyecz bought two pizzas for 10,000 Bitcoins. And if we take the actual value of Bitcoin, the cost of these two pizzas would be more than $600 millions. It was one the first Bitcoin transactions.
3) 2011 – 2018: The development of cryptocurrencies and the emergence of massive hacks
Following the success of Bitcoin, many cryptocurrencies arrived on the market. These new digital currencies were seen as alternatives to Bitcoin. Therefore, they were called Altcoins. These Altcoins are similar to Bitcoins, but with improvements. And one of the first Altcoins was Litecoin, created in 2011. Moreover, in 2015 the Ethereum project appeared and the improvement of Ethereum was smart contracts. Smart contracts enable the automation of all types of transactions.
In parallel with the emergence of new cryptocurrencies, the Bitcoin price has largely increased. Indeed, in January 2013, it reached $1,000 for the first time. It was the creation of a bubble. Unfortunately, with the development of those new cryptocurrencies arrived massive hacks of exchanges. For example, in 2018, $534 million (523 million of NEM coins) disappeared from Coincheck. It was the biggest cryptocurrency hack in history. Since then, cryptocurrency exchange platforms are more secure but there are still security breaches.
4) 2018 – Until now: The krach and the return to reality
The bubble, created in 2013, burst in 2018. Indeed, the Bitcoin had reached $20,000 at the end of 2017. Its value has increased very rapidly, leading to a huge krach on the cryptocurrency market. What are the consequences of this krach? Almost $500 million and 394 digital currencies disappeared. However, some cryptocurrencies survived to the krach, but the value of these cryptocurrencies has decreased. Indeed, Bitcoin and Ethereum prices have decreased. At the end of 2018, Bitcoin value was $3,700 (compared to $20,000 at the beginning of the year). Yet since 2019 prices have grown up and are now stabilizing. Indeed, cryptocurrencies are based on stronger technologies and knowledge about cryptocurrency markets.
Cryptocurrencies are more and more popular and used through the years. These cryptocurrencies are revolutionizing the financial system around the world. Indeed, digital currencies are easy to use online. So, people who don’t have access to the banking system could have cryptocurrencies. Therefore, cryptocurrencies are playing a major role to provide financial independence to everyone.