How Were Cryptocurrencies Born? A Short Guide to the History of Crypto

Within just a decade of Satoshi Nakamoto first investing Bitcoin, cryptocurrencies’ global adoption has reached record levels. Crypto-skepticism is decreasing across multiple regions: inhabitants of developing countries use cryptocurrencies to preserve their savings, while enormous institutions from the world’s richest countries invest in cryptocurrencies to maximize their profits. So, how did cryptocurrencies go from an alternative payment solution to a worldwide phenomenon in just a few years?

Disclaimer: This article is created for educational purposes only.

Within just a single decade, cryptocurrencies have become a viable way to pay for - and invest in - products and services across the world. Whilst firstly approached with caution and a degree of distrust, they have now made their way into investors’ portfolios all around the world. Big financial players such as Visa & Mastercard slowly introduce cryptocurrencies to their offers, and countries such as Switzerland begin to allow citizens to pay their taxes in digital currencies. The era of cryptocurrencies has just begun, and proof of this can be found in many places. To understand the undeniable popularity of cryptocurrencies, let us take a look at their history until the present day.

In this article, you will learn about…

  • Bitcoin’s early beginnings

Amidst the great financial crisis of 2009, Satoshi Nakamoto — whose identity remains a secret — published the first white paper about Bitcoin, a peer-to-peer electronic cash system which eliminates the need for an intermediary. Decentralized and transparent, Bitcoin became an alternative to the traditional financial system that failed in 2008, leaving their savings drained and hopes shattered with rising inflation and unemployment.

For the first year, the value of bitcoins was at zero as nobody traded them, but in 2010, the first trader sold all 10,000 of his bitcoins for two pizzas. Looking at current bitcoin prices, these would today be the world’s most expensive pizzas: with one bitcoin worth just under $50,000. This event is, somewhat ironically, marked by International Bitcoin Day amongst Bitcoin enthusiasts. Had the person kept these bitcoins, they would have a whopping fortune of $470,000,000.

With the first sale, Bitcoin’s journey started. In 2013, Bitcoin hit a major milestone, reaching $1,000 per coin. Shortly after, the price began to drastically drop until it reached 300 dollars. Investors were left skeptical, but the industry showed no signs of slowing down as rival cryptocurrencies emerged, and interest in alternative financial systems was rapidly growing.

(Photo credits: Coin Gate Blog)

In 2016, the world’s second-biggest cryptocurrency, Ether (ETH), came into the picture as Ethereum’s token. Ethereum is a platform that supports blockchain-based smart contracts and apps, which revolutionized the financial world. Self-executing, smart contracts make trading simpler than ever: publicly available and transparent, they are automatically executed once all requirements in the contract are met.

Ethereum’s enormous popularity can be also attributed to the use of non-fungible tokens (NFTs), which allow for the tokenizing of different assets — from art and collectibles to real estate. Why is this so important? NFTs make it easy to trace ownership and eliminate the need for an intermediary. For example, musicians can claim their royalties directly from their listeners instead of relying on music streaming services to receive any profits from their musical activity.

Although Bitcoin and Ethereum remain the unquestionable market leaders by both market cap and trading volume, there are more than 7,000 cryptocurrencies in the world right now. Some of the rising stars of the crypto scene include Solana, Cardano, XRP, and Polkadot.

Cryptocurrencies are gaining such worldwide popularity that at this point, even cities have their own coins. We can use DubaiCoin to pay for goods and services in Dubai, while new city coins emerge in Miami and New York to allow people to execute crypto-based, and yet locally-focused transactions. Even memes are being turned into coins, which is a sign of new, digital times, where virtual and non-virtual realities merge together. (DOGE) and Shiba Inu (SHIB) both took the world of crypto by storm, quickly climbing up the lists of most popular cryptocurrencies in the world.

Now, let us paint a picture of the current crypto climate with statistics: Worldwide crypto adoption has risen by 880% since 2020. Countries, which embraced cryptocurrencies with the greatest enthusiasm include:

  1. Vietnam

Moreover, in the second quarter of 2021, for the first time ever large institutional transactions made over 40% of all cryptocurrency transactions, clearly demonstrating that governments and institutions began to put more faith in cryptocurrencies than ever before.

With users and governments alike jumping aboard the crypto vessel, it comes as no surprise that the total number of monthly visits to DeFi platforms has been steadily growing over the past year. The rising inflation and the global crisis accelerated the pace of blockchain adoption, as the total number of blockchain wallet users exceeded 78 million users worldwide in November 2021. Their number is only projected to grow in the future with the emergence of new cryptocurrencies: the era of cryptocurrencies has just started.

In summary

  • The world’s first and most popular (so far!) cryptocurrency, Bitcoin, was created in 2009 amidst the global financial crisis

Sources:

The 2021 Geography of Cryptocurrency Report by Chainalysis.

Number of Blockchain wallet users worldwide from November 2011 to November 4, 2021. Statista.

https://finance.yahoo.com/news/bitcoin-pizza-day-sees-first-112000121.html

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