A Brief History of Cryptocurrency
The Blockchain is the revolutionary technology behind Bitcoin and other crypto currencies invented by Satoshi Nakamoto. The Bitcoin blockchain is a chain of blocks that are connected by cryptographic processes. All transactions ever made over the Bitcoin network are stored in the blockchain. However, since the digital revolution and the breakthrough of the Internet, human life has continually shifted to the digital realm. Proposed by Wei Dai, a computer engineer, Cypherpunk, and cryptographer and is referenced in the Bitcoin whitepaper. The trend towards “algorithmic governance” preexisted the blockchain. In the course of 2017, numerous other Bitcoin Hard Forks followed, but apart from Bitcoin Gold, they are no longer significant and were predominantly classified as scam. To some the blockchain was inherently non-scalable and one alternative was “directed acyclic graphs” or DAGs. Usually, criminals are the first ones to benefit from a collapse of the state, as proven over and over again in places like Iraq and Libya. 2008 was a prominent year in the history of international finance. With an increasing number of businesses adopting digital currency solutions, Bitcoin has become a word for the history books. Mathematicians were working on cryptography and on ways to improve security on networks of computers even before the Internet existed, and of course the problem became more impellent after the World-wide Web was launched on the Internet in 1991. With more individuals seeing the opportunity in Bitcoin more and more applications that assist with ease of use of being created. The blockchain network is easily accessible from anywhere in the world as long as an internet connection is available. Neither transactions nor accounts are attached to any meaningful personal information. Everything is encrypted, allowing for Bitcoin wallets to still be held accountable without giving away sensitive information. How does Bitcoin Mining work? This was a digital analogy to the work (i.e., energy) required to mine gold in the real world. In 2017 blockchain technology became almost mainstream because Mastercard, the Bank of England and the Australian Stock Exchange began experimenting with it, and China declared it a strategic technology. These events were followed in 2018 by Kodak’s ICO and Telegram’s “private” ICO, while Robinhood, the mobile app for trading stocks, began trading cryptocurrencies and Andreessen Horowitz launched its first crypto-focused fund. In 2018 Circle and Coinbase formed the Centre Consortium which issued a stablecoin called USD Coin . Ross Ulbricht was arrested by the the US government in October 2013 and eventually sentenced to life in prison. Just like Napster, an illegal operation, had proven the power of P2P communications, Silk Road proved the power of bitcoin commerce. The possible applications of cryptocurrencies in global finance are endless. Currently we are seeing incredible amounts of FinTech start-ups being created, around the many applications of digital currency. Many large banks are also beginning to see the applications of digital currency and some bankers are projecting Bitcoin to increase to anywhere from $2,000-$10,000 USD. Satoshi Nakamoto Appears In 2020 both Compound and Balancer issued government tokens, highlighting a parallel trend towards shifting control of the project towards the users. The next mathematical component of the blockchain is the digital signature. When users submit transactions to the network, they must sign the transactions with digital signatures before miners can create the blocks recording those transactions. Digital signatures are implemented via a system of so-called “public-key cryptography”. The first one to be recognized by the US government was the Digital Signature Algorithm , invented by David Kravitz again at the NSA in 1991. Because blockchains aren’t controlled by a central authority, nobody in particular is in charge of recording a transaction in a blockchain system. In 2004, Hal Finney, also a Cypherpunk, tried to improve upon Bit Gold and create a cryptocurrency system that he called reusable proof of work . Finney’s RPoW system reduced some of the complexity in the Bit Gold proposal and similarly used Hashcash’s PoW to mint new tokens. However, the system traded decentralization for simplicity by relying on a centralized server to protect against the double-spending problem. It would be another five years before Bitcoin would weave all of the various developments of Szabo, Dai, Back, and Finney together into viable, trustless, and fully-decentralized digital money. How the blockchain relates to the idea/ideal of freedom is also debatable. Buy Cryptocurrencies In March 2012 the Israeli investment broker Yoni Assia posted on his blog about “colored coins”, coins that could represent the ownership of things in the real world. Assia transferred the fundamental idea behind the blockchain, of providing a secure distributed database, outside the world of money into the world of physical and financial things. Anything that is representable as a digital asset and that can be owned by only one person at a time can be encoded in a blockchain. Other protocols started distributing their tokens via liquidity mining. By the end of 2021, Wax had become the most used blockchain in the world by daily transactions and daily users. Currently Bitcoin users are generally younger tech savvy individuals. This is in large part due to the complexity that comes with owning and using Bitcoin. What happens when all 2 million Bitcoins are mined? Proof of Stake, introduced in 2011 by user “QuantumMechanic” on bitcointalk.org and first implemented in 2012 by an anonymous “Sunny King”, replaces miners with validators. These have a power that is proportional to the amount of coins they own. The disadvantage is that it may recreate the aberration of the physical world in which a small number of people exerts great influence, the exact opposite of the egalitarian ideals that fueled the P2P and cypherpunk movements. In addition to creating trustless, digital money, Bitcoin has ushered in a movement to decentralize existing, centralized financial services. Bitcoin was not, however, the first attempt at creating digital money. It was built upon the shoulders of giants that came before it and it’s hard to imagine that it would have been successful if not for the lessons learned and
