The Rise of Cryptocurrency: A Brief History and Evolution of Digital Currency

Crypto adoption is still growing, and only some selected countries have fully adopted it. The rise of Cryptocurrency is now glaring, this article will give a breakdown of how Crypto rose to become acceptable. 

 

The history of Cryptocurrency isn’t lengthy, but the rise of cryptocurrency is undoubtedly one of the most fascinating stories of the 21st century. 

 

Bitcoin became a household name from very obscure beginnings, and the whole crypto market cap topped the $3 trillion level in 2021.

 

Here is a little something to refresh our minds on what Crypto is.

 

What is Cryptocurrency?

Cryptocurrency is a decentralized digital currency that any government agency does not control. 

 

Cryptocurrencies have existed since the 1980s, when they were called cyber currencies. 

 

In 2008, Bitcoin, which was made by an anonymous programmer or group of programmers using the name Satoshi Nakamoto, made these coins more famous.

 

The Cryptocurrency Idea

Many people are astonished to hear that the concept of Cryptocurrency predates the 2008 Bitcoin whitepaper by decades. 

 

Although Bitcoin is the most successful Cryptocurrency to date, it was created due to numerous failed ventures.

 

In 1983, an American cryptographer named David Chaum wrote a paper for a meeting about an early form of anonymous cryptographic electronic money. 

 

This was the first time the idea of Cryptocurrency came up. The idea was for a currency that could be sent without being tracked and without needing centralized bodies (like banks) to handle it. 

 

In 1995, Chaum took his early ideas and turned them into Digicash, the prototype of a cryptocurrency. 

 

The user had to run a piece of software to get money out of a bank, and the money couldn’t be sent to someone else without a unique set of encrypted keys.

 

Although eCash attracted the attention of companies such as Microsoft, DigiCash ran out of funds by 1998. 

 

Nonetheless, the eCash experiment would spur further development in the blockchain space. 

 

Many programmers followed Chaum’s lead and attempted to design a digital token with the same value stability as gold. 

 

In the late 1990s, for instance, digital tokens such as EGold and Bit Gold first appeared. 

 

Despite their failure, these tokens inspired Bitcoin creator Satoshi Nakamoto to model the currency after gold’s desirable characteristics (particularly its scarcity). 

 

The Launch of Bitcoin

Bitcoin is a widely known cryptocurrency and global payment system that was established by Satoshi Nakamoto in 2009, the same year it was released as open-source software. 

 

Bitcoin has grown in popularity among people who need to transmit money across borders without being bothered by banks or governments. 

 

Nonetheless, the quick surge in value has made it difficult for some people to decide what to do with their Bitcoins.

 

On January 12, 2009, Nakamoto and Hal Finney conducted the first Bitcoin transaction. 

 

The potential of this new technology wasn’t fully appreciated until February of the following year when someone paid 10,000 Bitcoins for two pizzas delivered by Papa John’s. 

 

The value of that deal, compared to BTC’s worth, has increased by the millions.

 

The initial block, which led to the creation of 50 bitcoins, is now often known as the Genesis Block. 

 

At this period, and for the first several months after its creation, Bitcoin had almost little value. 

 

Regardless, it was the first digital currency that was completely decentralized. 

 

In April 2010, six months after its introduction to the trading market, one bitcoin was worth slightly more than 14 cents. 

 

A decline to nearly 29 cents followed a “surge” to 36 cents by early November.

 

The Market Formation of Bitcoin

In discussing the rise of Crypto, the market formation of Bitcoin was a step in the right direction.

Bitcoin, despite having a low value at the time, was proving its worth in the real world. The price hit a high of $1.06 in February 2011 before dropping to around 87 cents. 

 

A Forbes article about the new “crypto currency” helped drive up its value in the spring. Bitcoin’s value increased from 86 cents at the beginning of April to $8.89 by the end of May.

 

After Gawker (an American blog) wrote a story about the currency’s popularity among people who sell drugs online on June 1, the price went up by more than three times in a week to about $27. 

 

The worth of all bitcoins on the market was close to $130 million. But by September 2011, the price dropped to about $4.77.

 

In October of that same year, Litecoin came out. It is one of many “forks” of Bitcoin, which means it is an updated form. 

 

Soon, Litecoin was the second-biggest Cryptocurrency by market cap, with PPCoin, Namecoin, and ten others far behind. 

 

The oldest archive of CoinMarketCap is from May 2013, showing PPCoin, Namecoin, and ten others far behind. 

 

Altcoins quickly became the name for these digital currencies, some of which were built on Bitcoin’s code and others on new code. They were also called digital money or virtual money.

 

Around this time, crypto exchanges opened their (virtual) doors to the public. 

There must be an exchange to connect the digital currency market to the fiat money system. It’s a market for buying, selling, and trading digital currency.

 

The price of Bitcoin increased consistently throughout 2012, prompting the formation of the Bitcoin Foundation in September of that year. 

 

Ripple, which had previously been known as OpenCoin, was also introduced that year, with the project receiving venture money the following year.

 

In 2013, the price of Bitcoin kept going up and down because of problems at the government, criminal, regulatory, and software levels. 

 

On November 19, its price went as high as $755, but by the next day, it fell to $378. By November 30, it had gone back up all the way to $1,163. 

 

This, however, was the start of another long-term crash, and by January 2015, Bitcoin was back down to $152.

 

The Period of Crypto Scams

Although not intended, the decentralized digital currency’s anonymity and lack of centralized management make it alluring to criminals. 

 

Mt.Gox, the largest bitcoin exchange at the time, went insolvent and collapsed in January 2014 after losing 850,000 bitcoins. 

 

It’s unclear what happened; however, it’s possible that the stolen BTC were sold on other exchanges for cash (including Mt.Gox) for several years until Mt.Gox discovered their wallets were empty. 

 

This presumably began in 2011. The whereabouts of the stolen BTC are unknown after CEO Mark Karpeles was accused of theft in 2017 but later acquitted in 2019. 

Even though the hack wasn’t a one-time thing, it has taught people a lesson, and platform security is now much better. 

 

Even though hackers still break into smaller exchanges today, bigger platforms now have more protections for their reserves in case of hacks. 

 

This includes things like the Secure Asset Fund for Users on Binance, an insurance fund for crypto investors in case of a disaster.

 

Crypto traders are advised to store their Bitcoin in a hardware or software wallet rather than on an exchange. 

 

Wallets like these were not as commonly accessible during the early days of cryptocurrencies.

 

The Rise of Cryptocurrency 

When speaking of the rise of Crypto, Bitcoin is one concept that was a major player.

Bitcoin prices went from $434 in January 2016 to $998 in January 2017, a steady climb. In July 2017, a new version of Bitcoin’s software was approved. 

 

The goal was to help the development of the Lightning Network, a layer-two scaling solution, and make Bitcoin safer.

 

In August, a week after the update was turned on, Bitcoin was worth about $2,700. By December 17, 2017, Bitcoin had hit its all-time high of just under $20,000, a huge amount.

 

At the same time, a new blockchain project called Ethereum was making a lot of noise in the cryptocurrency space. 

 

Since its launch in July 2015, Ethereum has quickly become the number two cryptocurrency by market cap. 

 

It added smart contracts to Cryptocurrency, which opened up a wide range of possible uses and led to the creation of more than 200,000 projects (and growing). 

 

Unlike the Bitcoin system, Ethereum lets other platforms start up and run on its chain. Each forum can have its own cryptocurrency and use cases. 

 

Ethereum was a model that many new digital currencies, like Cardano, Tezos, and Neo, which came out around the same time followed.

 

The prices of Cryptocurrencies kept fluctuating from this period depending on the market trend. 

 

While digital assets’ volatility may be both appealing and disastrous, the blockchain technology that underpins them all has the potential to revolutionize many aspects of our civilization. 

 

Blockchain technology has the potential to be applied in virtually every sector of the economy, from facilitating accessible and low-cost financial exchange alternatives to protecting individual financial assets from all but the owner.

 

It’s easy to get excited about the cryptocurrency market and what it could mean for business and technology as the market becomes more stable and new sectors like stablecoins and decentralized finance (DeFi) come along. 

 

It doesn’t matter if it’s Bitcoin or some other blockchain initiative that piques your curiosity. 

 

Whatever it is that you do, make sure to do thorough research before investing in Crypto to ensure returns. 

 

Conclusions

The saying “Never despise the days of little beginnings” is one that truly portrays the story of Cryptocurrency.

 

Cryptocurrency started with little or no value, but today, its market is on an all-time rise. Still, having doubts about Crypto? Researching about the whole concept will help you find your foothold in the crypto space.