Cryptocurrencies are the newest step in a long tradition of currency evolution. While cryptocurrency may seem like a giant leap to many, every new innovation in currency made waves and had naysayers. What many people miss is that cryptocurrencies and their underlying technology are a work in progress. The innovation is relatively new, and it is going through constant changes. This is thanks to new innovations in coins and blockchain.
Let’s briefly go over the steps that led to cryptocurrencies. Then we’ll go ahead and delve into the early days of Bitcoin, and the exciting times that followed.
The Evolution of Currency
Before currencies, bartering was conducted in place of money. The oldest forms of currency were items that were easy to barter. Grains, cattle, whale teeth, and other items become defacto currencies.
Fast forward to approximately 600BC, and the first coins were minted in what is now Turkey. Since then, many coins have been minted, with their values attached to the precious metals they are made with. Later, banknotes became the main form of currency. Instead of metals being carried, there were now notes representing a value in silver or gold held in central banks. This development could be a leap in currency’s history more significant than the invention of cryptocurrencies. Objects of value had been replaced by objects that only derive value from what they represent.
The modern era saw an explosion in the evolution of currencies. While credit had existed long before, the first credit card was used in 1946. Now we have all become familiar with concepts like digital banking and payment options such as Apple Pay. Now non-cash payments have grown globally and are expected to reach 725 billion by 2020. This is a growth from 2015’s 433 billion, according to World Payments Report.
This is all happening at the exact same time as the cryptocurrency revolution. The crypto market’s value has been holding steady at around USD $200 Billion, after peaking to over $800 Billion at the beginning of 2018.
The Early Days of Crypto
Bitcoin was first used for a real transaction in 2011. Despite this news, the idea of cryptocurrencies goes back a few decades.
Bitcoin has existed since 2009 and attempts to create a cryptocurrency go back to the 90s. There have been previous attempts to create online currencies with encryption-secured ledgers. Bit Gold and B-Money are examples of cryptocurrencies that were put together, but never properly developed.
Before Bitcoin, however, the greatest attempts at creating something close to the modern definition of a cryptocurrency were web-based money systems. The world of cryptocurrency is very young.
Enter Bitcoin. In 2008, a new paper was published that would soon change the cryptocurrency world. The paper was titled “Bitcoin – A Peer to Peer Electronic Cash System”. It had been posted online by someone going by the name of Dr. Satoshi Nakamoto. The writer’s real identity remains a mystery to this day. Despite this, the white paper that was authored under this name had shaped the future of Bitcoin and crypto as a whole.
In 2009, Bitcoin software was made available to the public. Mining began at the same time. For the duration of 2009, very little happened. Bitcoin was mined, but never actually traded. Because of this, it was not yet possible to assign a fiat price to Bitcoin that stuck.
Everything changed in 2010 when the first Bitcoin transaction was made. Someone decided to use 10,000 Bitcoins to buy two pizzas. At this point, that much Bitcoin is enough to bring you to an early retirement.
Bitcoin grew in popularity shortly after. By 2011, the competition had arrived.
In 2011, the first alternative cryptocurrencies to Bitcoin emerged. The term altcoin is a blanket term covering every coin apart from Bitcoin. The first altcoins were Namecoin and Litecoin. Since then, there have been over a thousand more. Now, new coins are coming out all the time.
Some altcoins offer a new improvement on the base that Bitcoin offered. Many altcoins have already failed, or are going nowhere. Take Monero for example. Monero is a coin that centered its mission on privacy. The coin is in most ways just a regular cryptocurrency, but unlike Bitcoin, it doesn’t reveal many details on its blockchain. It is still a strong cryptocurrency because it brought something new to the table.
Other altcoins have changed the nature of the crypto industry and spread blockchain technology to new industries. A great deal of this was made possible by Ethereum and the Ethereum blockchain.
The Ethereum Blockchain has opened the door for many innovations and projects in cryptocurrency. Other platforms have also launched a lot of them. However, it is Ethereum’s arrival that can best be linked with the emergence of ICOs.
ICOs (Initial Coin Offerings) are essentially fundraising platforms that allow investors to get involved in startup ventures. They are the cryptocurrency world’s stocks and shares. When a project has enough support to kick off, the development team can decide to launch an ICO. Once the ICO has raised enough money and proven its worth, it can get itself listed on exchanges.
This development also took place during the years that the cryptocurrency world was mired in scandal. Many ICOs were revealed to have been shortsighted and caught up in the mess that is ICO politics. Early investors and whales took advantage of many projects by conspiring to create pump-and-dump scams. Many other ICOs were revealed to be scams by design from the start. The list of challenges is endless, and these unfortunate realities caused the cryptocurrency space to lose face. The American SEC warns investors of the lack of regulation and prevalence of scams associated with them. The Chinese government went so far as to ban them altogether.
The bright side is that it led the blockchain technology that allowed Bitcoin to exist to expand.
Explosion & Expansion
In January 2018, the market cap exploded, and the crypto market’s value passed the $600 Billion mark. Bitcoin reached a price of $20,000, and most altcoins peaked to record prices as well. The subsequent crash left many confused.
Since Ethereum and the peak in January, there have been many new developments. New coins like EOS, TRON, and Ripple are making new waves. Blockchain startups are applying blockchain technology to different industries. Ridesharing, agriculture, eCommerce, and gaming are just a few examples. Going forward, it will be interesting to see where the cryptocurrency space goes.