A brief history about the existence of cryptocurrency before Bitcoin.

cryptocurrency before bitcoin

Did Cryptocurrency exist before Bitcoin or was there any technology developed for the digital currency before Bitcoin?

The answer is YES.

All the cryptocurrencies and blockchain is taking the internet by storm these days. After all, cryptocurrency, blockchain apps, and other related ventures and projects are paving their way to disrupt the future technology.

Founded in 2009, Satoshi Nakamoto outlined Bitcoin using the concept of Blockchain technology. Many people believe Bitcoin to be the original cryptocurrency. Although it started the cryptocurrency era, crypto existed long way back before bitcoin.

This article features the history before bitcoin and will clear all your doubts.

Early Attempts in the Netherlands

In the late 1980s, the petrol stations in Netherland suffered from the nighttime thefts as all gas stations were operated overnight to refuel the trucks. In an attempt to increase the safety of the post guards and minimize the risk, a group of developers attempted to link money to smart cards that were being tested. The truck drivers used to carry those cards instead of cash and the fiat money. This was 25 years ago before the existence of Bitcoin.

During the same period, Albert Heijin, a dominant retailer of that time pushed banks to invent a way so that the shoppers could pay directly from their bank accounts which eventually developed to be called as POS or Point-Of-Sale. This happens to be the earliest example of electronic cash that links to the digital currency as we know today.

Blinded Cash/ DigiCash

Even before the Netherlands attempted to create digital money (cryptocurrency), David Chaum, an American cryptographer had been investigating for the creation of the digital Cash.

In 1983, he published a scientific paper that described anonymous digital money and in 1989, he created DigiCash where he implemented his concept into practice. This system was based on the Blind Signature Technology which ensured both the safety and privacy of transactions between the individuals as similar to the concept of cryptocurrency. The issued payments were untraceable for both banks and the governments.

DigiCash was launched before e-commerce wave took over the internet and ultimately filed for bankruptcy in 1998 as customers preferred credit cards over the anonymity for online purchases. However, some of its concepts, formulas and encryption tools played an important role in the development of later currencies.

Web-based money:

In the 1990s, there were numerous startup making efforts on creating their space on digital money. And in the mid-1990s, the attention switched to Europe where the Netscape IPO released a huge VC interest and respectively to Europe where it brought its first regulatory clampdown on digital cash.

After DigiCash, Paypal was able to make a long-lasting impact on the financial world. Paypal allowed person-to-person payments and even allowed the individuals to transfer the money via web browsers quickly and securely. It connected to the eBay community through which Paypal was able to secure a dedicated user base that allowed their growth. PayPal is still one of the recognized methods of payments.

Paypal inspired a lot of crypto-communities and several imitators started chasing the Paypal’s web hybrid. Among which, e-gold was a huge success which offered online credit in exchange for the physical gold or junk silver and any other precious metal. As the issuer of e-gold was offshore which did not require US onshore approval, its popularity soared and the independent market exploded till 2000. However, the company ran into various scams and was eventually shut down by the federal government in 2005.

B-money:

Wei Dai, a developer proposed an anonymous, distributed electronic cash system” called B-money in 1998.

B-money was quite similar from Bitcoin yet was never successful. Nonetheless, it was among the earliest attempt for the creation of anonymous, private, and secure electronic cash system. Digital pseudonyms were used for transfer currency through a decentralized network. Wei-Dai even proposed a whitepaper for the B-money but was never launched officially.  Nevertheless, some of the elements of B-money could have inspired Satoshi Nakamoto to create a Bitcoin whitepaper a decade later.

BitGold:

BitGold is another electronic currency system that existed in the same period as B-money. BitGold was designed by Nick Szabo, a computer scientist, and cryptographer in 1998, who is also suspected to be Satoshi Nakamoto.

The structure of BitGold required a dedicated computer power to solve cryptographic puzzles. The network solved the puzzles that were sent to the Byzantine fault-tolerant public registry whereby the public key was assigned to the solver. Each of the solutions was a part of the next challenge that created a growing chain of the new property.

BitGold also aimed to avoid reliance on the centralized currency distributors and authorities. This was the revolutionary concept that in some way resembles how the modern blockchain functions. The concept of BitGold was never implemented but the concept came with its proof-of-work system that is still used in today’s bitcoin mining process.

Although Szabo has repeatedly denied, a lot of people have speculated that he is the mysterious Satoshi Nakamoto. Though Bit Gold was ultimately unsuccessful, it provided inspiration for a large group to enter into the market a decade or after its introduction.

Hash cash:

According to the Merkle, Hash cash was one of the most successful pre-bitcoin digital currency. It was designed for minimizing email spam and preventing DDoS attacks. Hash cash used the proof-of-work algorithm that aided the generation and distribution of new coins, this technique is still used in many cryptocurrencies. The possibility created by Hash cash was realized nearly about two decades later.

Hash cash faced processing power need and eventually became less and less effective and was closed down just like other platform existing those days.

Flooz:

Flooz, a currency established by Flooz.com in 1999 operated with the similar principle as the various loyalty programs such as a frequent flyer or customer bonus card. The users could accumulate flooz credit in two ways, one as a promotional bonus by some internet business and secondly by direct purchase from flooz.com. The company raised as much as $35million in venture capital as it was on demand among the merchants for its new and exciting payment mechanisms. In spite of its popularity, it was closed down because of all the criminal activities taking place on the platform.

Finally, Satoshi Nakamoto introduced  Blockchain technology, a new technology and solved all the issues for the creation of decentralized cryptocurrency; Bitcoin. Bitcoin was developed in 2009 and it officially started the cryptocurrency era. It has created a revolutionary impact on the cryptocurrency space and still has been able to maintain its number one rank in the digital currency in the world.

  • TAGS
  • cryptocurrency
  • blockchain
  • bitcoin

BROWSE DICTIONARY

ABCDEFGHIJKLMNOPQRSTUVWXYZ#