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A Brief History of Cryptos

crypto history

December 5, 2020 | 

JOHN K MWANIKI |  0 Comments| 

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Bitcoin is trading at some of the best rates in recent years. It has also become integral in the financial ecosystem. Here is the history of cryptos to get to this point.

Before Cryptos 

Bitcoin was not the first attempt at cryptocurrencies. Several other projects came before but fell short on some components. These concepts were available as early as the 1980s. By then, the top concern was the double-spending problem. There was no way to ensure a sender wouldn't transact twice using a single node.

One of the earliest coins in the history of cryptos B-money. It was a concept introduced by computer engineer Wei Dai in 1988. 

Dai was the first to introduce the decentralized payment system concept. He fronted a digital currency that would transact with untraceable digital pseudonyms. 

Bit Gold was another earlier digital currency introduced in 1988. It was Nick Szabo's idea to solve the inefficiencies in the traditional financial system. He was looking to reduce the need for metals for coins and relying on trust for transactions.  

While these coins never made it through, they formed the basis for the crypto world

The launch of Cryptos (2008 – 2010) 

Satoshi Nakamoto published a paper called Bitcoin; A peer-to-peer electronic cash system. This marked the launch of the first digital currency. It was at the same time that someone registered the Bitcoin.org domain. Even though Satoshi Nakamoto's real identity remains a mystery, Bitcoin has been a success. 

It would take another four months before Bitcoin became operational. Some experts believe it was a tactical move by Satoshi. He preferred the low-key period once people almost forgot about the whitepaper. 

This part of the history of cryptos is shrouded by other activities. People concentrate on the traditional festivities. 

The Bitcoin launch marked the start of a new financial order. 

It allowed for transactions recorded and verified through the blockchain. The first 50 blocks of Bitcoin are Genesis Blocks. 

Bitcoin stayed valueless throughout the first months of the history of cryptos. It then started trading in April 2010 at rates of less than 14 cents. The coin became viable as a medium of exchange in 2010. This was when someone exchanged 10000 BTC tokens for pizza. The pizza remains to be the most expensive in history. The amount it was in current rates is worth $187,270,000.

Crypto Development (2011 – 2014) 

The successful launch of Bitcoin was the start of a wide range of virtual currencies to follow. 2011 saw the emergence of competing cryptocurrencies. The new coins were looking to correct the issues that came with Bitcoin. They were offering improved transaction speeds and anonymity.

Namecoin and Litecoin were some of the earliest coins to come up. They paved the way for several other digital currencies. The crypto market has since grown to reach thousands of such assets. Several other digital currencies keep on coming up as the market becomes lucrative.

An increase in cryptocurrency came with an increased focus on blockchain technology. Bitcoin kept on gaining market share. It reached $1000 for the first time in 2013. It then reverted to a bearish run to hit the previous lows of $300.

Crypto Scams and Theft (2014 – 2015)

Bitcoin had become a hit among the users due to its anonymity. The decentralization meant it had no central controlling authority. These are the same features that made it attractive to criminals.

Mt. Gox, the largest crypto exchange, went offline in January 2014. The prominent exchange by then was running more than 70% of the crypto trades. It applied for bankruptcy within the year, citing hacking. Traders lost more than 850,000 BTC in the process. The investigations following the fall of the exchange never amounted to anything. The money lost by today's standards would be 15,300,000,000 USD.

Several other cases of scams and Ponzi schemes were prevalent at this point. Most people joined the schemes with making quick money in mind.

The Emergence of Ethereum and ICOs (2016 – 2017)

In the history of cryptos, only Ethereum gives Bitcoin a run. The crypto's token Ether is the second most traded in the crypto exchanges. It is also the second most valuable.

The rise of the coin was due to its supporting role. Bitcoin might have been valuable but only as a medium of exchange. Ethereum otherwise provided for a platform for developing other crypto projects. 

It made it possible for developers to create decentralized applications. It would also support other financial crypto projects. 

The platform was breaking the monopoly of the play stores. It was also liberalizing the other traditional financial services and institutions.

Ethereum also introduced the age of Initial Coin Offering (ICO). Before, fintech projects relied on private investors. The process would favor established companies offering shares through Initial Public Offering (IPO). It was hectic as it involved documentation with regulators and auditors. ICOs allowed upcoming projects to gain funding beforehand. It is easy to create and is not limiting on prospective investors.

Crypto Boom and Fall (2017 – 2018)

The market became crypto-friendly, and several virtual currencies were gaining value. Bitcoin was still leading as it rose to hit the highs of $20,000. All the other markets had a good run during the crypto boom until May of 2018.

The market then started correcting as the prices fell again. 

The Launch of Central Bank Digital Currencies (2020 – Onwards) 

The cryptos are in the latest growth trajectory. The governments have realized they cannot fight the crypto growth. For that, they are looking to join the blowing sector. It seeks to gain a foothold through the central bank digital currencies (CBDCs).

The CBDCs remains the sure way for the governments to keep their influence. It is more like traditional currencies online. The central bank would still manage the supply of the coins. The commercial banks remain the distributors and money retailor.

Experts have expressed the possibility of CBDCs overtaking digital currencies. The traditional economy operates on the trust of the traders. The centralization means there is always someone responsible. It can thus solve the cryptocurrency volatility and security issues.

The CBDCs are also a result of the growing distributed ledger technology. It means they will provide the very best in transactions. 

Countries like the Bahamas have already released their national digital currency. Several other countries are in the advanced stages of releasing theirs. China looks to become a world superpower through digital yuan. Within a few years, all coins will be digital.

Bottom Line

The history of cryptos is ever-evolving. This brief history of cryptos shows how much it has changed over the years. It's also a sign to expect more in the future.

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