What is Cryptocurrency’s History?

May 15, 2020

It’s been called one of the “great technological breakthroughs since the Internet” (Reuter News, 2014). In its brief history, crypto has had a significant reach across the financial world. In this article, we take a quick trip through the crypto industry’s beginnings, increasing global buzz, and recent growth.

Who Introduced the Idea of Digital Currency?

Our story started in 1983 when American computer scientist David Schaum introduced the idea of encrypted electronic money (e-cash). He eventually rolled out an early form of digital currency called DigiCash. In 1997, Microsoft offered Schaum $180 million for his company, which he turned down. DigiCash filed for bankruptcy in 1998, but Wired magazine still named Schaum “the father of online anonymity” in 2016.

When Did Online Payments Reach the Masses?

Consumers would soon have more ways to pay than ever before. In 1998, financial technology (fintech) start-up PayPal launched a web-based payment platform via email, leveraging Schaum’s electronic money concept. Soon after, PayPal secured a partnership with the largest e-commerce website in the world, eBay, and by 2004, PayPal reached annual revenue of $1.4 billion.

When Was Cryptocurrency Conceived and Created?

In October 2008, pseudonymous software developer Satoshi Nakamoto turned the heads of bankers everywhere with the idea for the world’s first cryptocurrency, Bitcoin (BTC). In his legendary whitepaper, “Bitcoin: A Peer-to-Peer: Electronic Cash System,” Nakamoto introduced blockchain as a decentralized network that “timestamps transactions by hashing them into an ongoing chain of hash-proofed work.”

The ink was barely dry on his whitepaper when Nakamoto performed the first mining of crypto in early January 2009. He initially mined just 50 Bitcoins. Within two years, Bitcoin was traded on a handful of cryptocurrency exchanges, such as Kraken.

Bitcoin traded at $1.00 by 2011 – after launching two years prior with no value ($0.00). The same year sees the birth of alternative cryptocurrencies, called altcoins, which ride on Bitcoin’s blockchain. Litecoin (LTC) launched in 2011 – followed by hundreds of other coins.

When Did Crypto Coins Begin to Scale?

Cryptocurrency continued to spark global interest, and by 2013, Bitcoin had more than 11 million coins in circulation. When BTC’s price hit $92, Bitcoin surpassed a market capitalization of $1 billion. And there was a new kid on the block. Vitalik Buterin, a 19-year old programmer, launched Ethereum (ETH) in 2013. ETH runs on Buterin’s new blockchain, making coins programmable – powering smart financial contracts in 2015.

When Did Cryptocurrency First Create Global Buzz?

The cryptocurrency industry continued to surge throughout 2016, but in 2017 the world really took notice. Bitcoin’s price skyrocketed, reaching nearly $20,000. Ethereum also exploded – starting the year at $8 and finishing above $755 – a more than 9,000% return on investment. In December 2017, the search terms Bitcoin and Ethereum both reached all-time highs on Google Trends.

When Did Governments Begin to Regulate Crypto?

Running beneath the headlines were new regulations that recognized the burgeoning asset class. One of the first policies came in 2013 from the Financial Crimes Enforcement Network (FinCen) of the U.S. Department of the Treasury. These guidelines require businesses with certain virtual currency activities to register as money services businesses and comply with anti-money laundering rules.

In 2015, the New York Department of Financial Services (NYDFS) followed, adopting a regulation requiring virtual currency businesses to have a BitLicense. Then, in 2018, the Japanese government formed the Japan Virtual Currency Exchange Association (JVCEA) to police the industry.

When Did Global Companies Enter the Crypto Industry?

As regulators engaged with the crypto industry, multinational corporations also moved in. In 2018, Samsung manufactured chips specifically for crypto mining. Ripple established a relationship with global bank Santander to facilitate international money transfers. Across the U.S. financial sector, Citigroup, Goldman Sachs, and J.P. Morgan Chase all publicized their plans to enter the crypto marketplace in 2019. By 2020, digital assets were available to more consumers around the world than ever before.

Three Takeaways

  • The cryptocurrency industry continues to grow and mature and is no longer just a trading ground for tech insiders.
  • Cryptocurrencies can offer tangible benefits to consumers, including investing, trading, income generation, cash management, foreign exchange, and global payments.
  • No one can predict the future, but cryptocurrency and the blockchain may potentially transform financial services.

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