The History of Cryptocurrency

The History of Cryptocurrency

By McAlex7 | justsomenews | 29 Apr 2020


We are living in a world governed and structured by any form of money, this world is evolving and changing faster than we think, in terms of technology, science and economy. From this evolution, one idea emerged quite recently : cryptocurrency, basically to oppose to centralized currencies and Central Banks.

This new digital asset is design to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. In a way a cryptocurrency is decentralized unlike our current currencies, so with cryptocurrencies the control is exercised by the entire system and not only by a small minority. 

Cryptocurrency is a solution to avoid the control of corporate boards and governments on the supply and demand of our current currencies. Let me drive you through this recent and ambitious idea that is cryptocurrency which appears nowadays to be a solution for our future economic systems.

1. How this all story started ?

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Let's get back in the past, more precisely in 1984, during this year an American cryptographer named David Chaum had the idea of an "electronic money"  untraceable by governments, banks or anyone else, that he called "ecash", the first idea of a cryptocurrency was born. In addition to this electronic money, David started to design and develop a platform for electronic payments and withdrawing this electronic currency to a bank account, it called it "Digicash".

Few years later the National Security Agency (NSA) became aware of this electronic money and has written a report on it using for the first time the word "cryptocurrency" to refer to this new asset. Some visionaries started to imagine how cryptocurrencies could be structured in the future, especially by a computer scientist named Nick Szabo. Indeed he started to describe what he called Bit gold in late 1990's, which appears to be very close of the description of the current Bitcoin.

Then 10 years later, in 2009, Bitcoin was created. We assume today the creator of Bitcoin is Satoshi Nakamoto, it is complicated to be sure because of Satoshi's anonymous. Basically Satoshi decided to use a proof of work scheme to build up his project, and once all the development was finished he wrote the white book of Bitcoin to explain it. In the footsteps of Bitcoin some cryptocurrencies started to emerge, Namecoin in April 2011 and then Litecoin in October 2011 (one of major cryptocurrency today). Nowadays there are over 3.000 different cryptocurrencies in circulation and new cryptocurrencies frequently appearing.

2. Let's talk about the structure and architecture of a cryptocurrency 

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A cryptocurrency are supposed to be decentralized like I said earlier, the idea emerged in opposition to our centralized economic systems. When we speak about decentralization, it means no governments or companies can't produce them, can't control the supply and demand, in a way no one has a major control on this cryptocurrency, it is the whole as collectivity who "owns" this control.

One of cryptocurrency's specificity is the blockchain, so what is it, and how it works. Basically it is used to check the validity of a cryptocurrency's coin, a blockchain is constituted by "blocks" linked together and secured by using cryptology (it means each block has a hash pointer, a complex math algorithm, to be linked to the previous block). A blockchain is using what we call the "peer to peer" network, each computer of the network is structured with the other peers and receive tasks to perform, the all system create " a security circle" and avoid any possible alteration of the network.

Then comes the mining part, in cryptocurrency miners don't really "mine" they validate multiple transactions, and because they are using a lot of power (mainly electricity) they are getting rewarded in cryptocurrency. To execute those transaction, the miners need to "crack" the algorithm of the block like I mentioned earlier, it requires strong machines (not a basic computer) with a good water cooling (because of the heat generated) and a lot of power (electricity). If we take the example of Bitcoin, mining always require a lot of power however back in 2010 there wasn't a lot of miners so in a day a miner could get around 50 BTC in reward (so around $387.000 today), but the number of miners increased and it became way harder to get this kind of reward. 

As a result the "mining pools" were created, a group of miners gather their individual efforts into one and increase their chance to be rewarded. But with time it doesn't last, indeed there is the halving to create a rarity for the cryptocurrency. An halving divide by 2 the actual reward for a miner to mine 1 block, it is then more and more difficult to get a reward when you mine. There is an halving every 210.000 blocks, the next one should be on May 12, it will become 6.25 BTC per block and no longer 12.5 BTC per block. 

3. Let's see now how cryptocurrencies evolved since their creation

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In 2013, the price of Bitcoin crashes, after a peak of $1.000 it dropped to around $300 and it will take 2 years to climb back that mountain and reach $1.000 again. In 2014, cryptocurrencies because of the anonymity they provide started to be used for illegal purposes, for scams, on the Dark Net and a lot of thefts were committed, we're talking around $4.4 billion stolen. In 2016 a cryptocurrency created a huge enthusiasm : Ethereum, it allowed investors to trade and exchange cryptocurrency and gave a new purpose to cryptocurrencies. 

Since then, new people joined the cryptocurrency world, anyone with a bit of money could invest and trade, as a result on December 2017 Bitcoin reached a value of $20.000 and managed to keep a value around $10.000 during half of 2019. It dropped recently due to COVID-19 but it immediately started to climb up (around $7.900 as I'm writting this) and could reach huge heights after the halving. 

Bitcoin has been the leading light for all cryptocurrencies and inspired a lot of other project, like Ethereum who were the first to use a different protocol rather than weighing down Bitcoin and became one the biggest cryptocurrency today, or like the BAT that you can earn by browsing with Brave, or like the Pi Project that I've presented to you in a previous article which use a different protocol in order to mine on your phone without using your battery. 

4. Talking of history, let's finish by imagine what could be the future of the cryptocurrency

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We are many to be pretty enthusiastic about the cryptocurrency's future, mainly because of the different aspects and benefits provided by those, in terms of decentralization and potential. More and more countries started to be interested in cryptocurrencies, China for example who is seeking for a solution in terms of economy to deal with the current crisis and they have stated that cryptocurrency appears to be the ideal solution to the problem. They recently announced a numerical Yuan that will be tested in some neighborhoods in big China cities and see how in the future they will implement a cryptocurrency as their official currency.

The USA are also very seduced by cryptocurrencies, a project directed by GreenWinter Research aim to use an Application linked to a blockchain for the next US Elections, many States have already gave their agreement. A lot of huge US enterprises are also about to try to implement cryptocurrency into their payment systems, McDonalds, Starbucks and Subway. Many nations are also planning to develop a cryptocurrency for the economic stakes of their country, Denmark, Venezuela and more think cryptocurrencies have advantages in terms of stability, security and volume. 

Our current currencies are getting old, they promote their centralization within governments and don't assure long term stability especially in times of crisis (like today). Even if cryptocurrency is a quite recent thing, it might already be a solution to our current economic issues, the past has taught us what problems we are going to face in the future it is now up to us to avoid them.

As a conclusion, cryptocurrency's future might be brighter than we think. 

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McAlex7
McAlex7

i'm alex and i'm here to bring you news, informations and some of my knowledge about the cryptocurrency world !


justsomenews
justsomenews

Just bringing few information, knowledge and news around the crypto world

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