A cryptocurrency, or more commonly known as a coin, is a digital currency designed to be used as a medium of exchange through a computer network that is not tied to any central authority, such as a government or bank, to support or maintain it.
History of Cryptocurrency
Although the first crypto currency known to everyone was Bitcoin, the foundation of crypto and history of cryptocurrency began to be laid in the 80s. In 1983, American cryptographer David Chaum devised an anonymous cryptographic electronic money called “ecash”. This was the initial idea foundations of a digital currency.
Later, Chaum implemented it in 1995 through Digicash, an early form of cryptographic electronic payment systems. Digicash needed some extra software to pull notes from a bank and identify the encrypted keys before they were sent to a recipient. This encryption process made the digital currency untraceable by the bank, government or any third party. It was one of the first and simple steps for decentralized transfer.
After the first ancestors of cryptocurrencies, states began to be interested in this subject in a short time. In 1996, the U.S. Department of Homeland Security issued a paper, “How to print anonymous cryptocurrencies,” describing a cryptocurrency system and first published on an MIT mailing list and then in 1997 in The American Law Review. He published an article entitled
The perfection and development of cryptocurrencies has come along with a process. In 1998, Wei Dai published a definition of “b-money”, characterized as an anonymous, distributed electronic cash system. Shortly after, Nick Szabo gave the definition of “bit-gold”. Like Bitcoin and other cryptocurrencies to follow, bit-gold has been defined as an electronic currency system that requires users to complete a proof-of-work function and solutions are cryptographically put together and published. This is actually the first state of the blockchain, the registry, as well as the reward system that exists today.After a slow succession of technological advances, in 2009, the first decentralized cryptocurrency, Bitcoin, was created, possibly by the pseudonymous developer Satoshi Nakamoto. It used SHA-256, a cryptographic Hash function in its proof-of-work scheme.
Namecoin was founded in April 2011 as an attempt to create a decentralized DNS that would greatly circumvent internet censorship. Shortly after, in October 2011, Litecoin was released, which uses “scrypt” as its hash function instead of SHA-256. Another notable cryptocurrency, Peercoin, used a proof-of-work/proof-of-stake hybrid.
With the increasing number and slow popularity of crypto exchanges now established as a system, on 6 August 2014, the UK announced that the Treasury had launched a study on cryptocurrencies to explore what role they could play in the UK economy. The study was also to find out and report whether a regulation was necessary. The final report was published in 2018, and another revision on cryptoassets and stablecoins was published in January 2021.
The intervention of states on cryptocurrencies has also produced some good results for cryptocurrencies. El Salvador became the first country to legally adopt Bitcoin after the Legislature in June 2021 passed a bill introduced by President Nayib Bukele, classifying cryptocurrencies as legal currency, by a vote of 62-22.
After that, in August 2021, Cuba announced that the Cuban Central Bank would enable the recognition and regulation of cryptocurrencies such as Bitcoin and determine how crypto-related services are licensed.
With cryptocurrencies, good developments come with bad developments. In September 2021, in China, the largest market for cryptocurrencies, the state, which had previously increased pressure on middlemen and miners, declared all cryptocurrency transactions illegal.
Questions Answered by the Blog:
- When did cryptocurrencies appear?
- History of Cryptocurrency
- When did Bitcoin appear?
- Are cryptocurrencies legal?
- Who Invented Bitcoin?
