Cryptocurrency has come a long way since its humble beginnings. As you start to invest in the lucrative opportunities associated with crypto, it helps to understand the history of cryptocurrency and how it reached its popularity today.
In this article, our experts at Vauld explore the ideas behind decentralized finance and the blockchain, the first cryptocurrency, and the unprecedented rise that crypto is now experiencing.
The History Of Cryptocurrency: Before Its Origins
Long before cryptocurrency existed, the ideas behind a decentralized currency — and even the blockchain — were already conceptualized. During the late 20th century, several cryptographers helped pave the way for the future of crypto.
1980s: Crypto Concepts
A few decades before the first pizza was purchased using bitcoins, cryptographer David Chaum wrote a 1982 dissertation titled Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups.
In his writing, Chaum detailed concepts that would later be implemented in the blockchain. He is also credited with creating the first use of digital cash and worked to integrate an anonymity feature, a core concept of crypto.
1990s: Blockchain Proposal
Chaum’s paper was not the only writing to inspire the eventual Bitcoin whitepaper. First published in 1990, How to Timestamp a Digital Document by Stuart Haber and W. Scott Stornetta explained how a system reliant on timestamp verification would operate.
Haber and Stornetta wanted to ensure their timestamps could not be changed or tampered with. Through their work, they acted as a foundational part of cryptocurrency’s eventual creation.
2008: Satoshi Nakamoto’s Whitepaper
Although the concepts behind decentralized currency and the blockchain had already existed for some time, there were still critical elements missing.
In 2008, an unidentified individual (or possible group) known by the pseudonym Satoshi Nakamoto published the whitepaper summarizing Bitcoin.
This peer-to-peer digital cash with non-reversible transactions relied on cryptographic proof, and the paper outlined how these transactions could exist without centralized banks and intermediaries.
The whitepaper further detailed some of the crucial features of cryptocurrency as we know it today, such as a mining network, proof of work, and the use of timestamps to prevent fraud or instances of double-spending.
The History Of Cryptocurrency: Bitcoin
Shortly after the release of Nakamoto’s whitepaper, the concept of Bitcoin was put into action, giving rise to a new market.
2009: The Bitcoin Protocol
Once the first block (called the genesis block) was mined, this provided validity to the blockchain and allowed for the very first Bitcoin test transaction to occur.
2010: A New Market
A little more than a year after the first successful mine, the first economic transaction of Bitcoin happened in exchange for two Papa John’s pizzas. The 10,000-bitcoin total paid for the pizzas would have an estimated value of around $400 million.
The History Of Cryptocurrency: Altcoins
Once the popularity of Bitcoin began its slow but steady growth, newer coins entered the market aiming to improve on Bitcoin by offering greater speed, anonymity, or other advantages.
2011: The Appeal Of Altcoins
One of the very first cryptocurrencies to release after Bitcoin was Litecoin. Litecoin is an altcoin founded by Charlie Lee, a former Google engineer. It was initially known for its faster block generation rate and faster transaction time.
These new altcoins led to the growth of many crypto exchanges. The platforms could now help crypto owners buy, trade, and sell their assets as newer coins emerged with varying levels of value and risk.
The now-defunct bitcoinmarket.com was the very first platform dedicated to these types of services, but modern exchanges like Vauld have allowed for new opportunities in crypto, from earning competitive interest rates on assets to Automatic Investment Plans.
2012: Staking Tokens
While Bitcoin’s mining verification relied on its proof-of-work structure, it wasn’t long until a new idea was implemented. In 2012, Peercoin introduced the proof-of-stake (PoS) concept and offered a new way to verify blocks.
A goal of this PoS concept was to reduce the energy consumption that Bitcoin mining infamously relied on. This approach is considered better for the environment and has most recently seen the likes of Ethereum switch over to PoS.
This new PoS blockchain invited validators to stake their own crypto assets in exchange for the chance to validate transactions, maintain the blockchain, and earn crypto in return. This also gave rise to new crypto investment opportunities.
2013: Bitcoin’s Volatility
As Bitcoin grew in popularity, its value progressively rose with it. But it wasn’t until five years after its inception that it took an extremely volatile turn.
The trading value began at $13.28 in 2013, but soon into the year, it spiked to $230. After this unprecedented increase, the value dropped to $68.50, then rose to $1,237.55. A few days later, it dropped back below $1,000.
2014: Crypto Scams
In 2014, an awareness of crypto security grew as scams were becoming more common, robbing companies of thousands of dollars worth of crypto.
One of the earliest and most detrimental scams to hit the crypto market was when Canadian-based Flexcoin was scammed out of $650,000 in bitcoins. A crypto exchange known as Poloniex also experienced a loss of $50,000 in bitcoins during the same year.
Knowing this history, the security of your crypto assets is also one of our top priorities at Vauld. We keep your assets safe by moving funds from your wallet to a centralized lending pool that’s insured for $100 million in BitGo, a leading digital asset trust and security company.
2015: Ethereum And Smart Contracts
The year 2015 saw the rise of today’s second-highest valued crypto. With the creation of Ethereum came a new and more efficient way to facilitate and enforce contracts within the blockchain network.
The introduction of smart contracts aimed to expand on Bitcoin’s goal of decentralization by allowing automated agreements to be made between parties without sacrificing transparency or immutability.
The Rise Of Cryptocurrency
Up until this point, mainstream media and the majority of news outlets did not consider cryptocurrency a serious means of transaction due to its limitations and lack of regulation.
2017: Bitcoin Prices Skyrocket
In 2017, the views that many shared surrounding crypto changed drastically once the value of one bitcoin increased from just over $1,000 to $20,000. This led to a heightened awareness of cryptocurrency in the general public.
2020: Crypto Lending
As the economy reached an unexpected halt in 2020, the decentralized finance market developed a way for crypto owners to take out a loan in fiat currency without having to sell their assets.
Flexible repayment plans, low interest rates, smart contracts, and the omission of credit scores helped crypto loans emerge as another innovative way to take advantage of the growing crypto market.
2021: Market Cap Surpasses $2 Trillion
If there was any lingering speculation around the validity of decentralized finance, it was cleared when the value of the crypto market exceeded $2 trillion in 2021.
By this time, the term “cryptocurrency” was well-known throughout households. One survey estimated that one in 10 American adults owned some amount of crypto. Others estimate this number to be higher.
2022: Calls For Regulation
The rise of cryptocurrency has brought new calls for regulation. In fact, Brazilian lawmakers are set to vote on a bill later this year that will aim to regulate the crypto market.
On March 9, the United States also took an important step toward regulation through an executive order that directs the federal government to devise a plan on crypto regulation. This action will further define the risks and opportunities that the crypto market presents.
Invest In Your Future With Vauld
The history of cryptocurrency shows the many obstacles and achievements that the industry has faced up until today. As the world of DeFi continues to expand, new opportunities will become available to a wide range of investors.
It’s impossible to say what the future of cryptocurrency will look like, but current trends suggest that it will lead to more regulation, innovative investment opportunities, and an increase in crypto accessibility.
Whether you’re interested in simply owning crypto and earning interest on your assets or want to lend, trade, borrow, and spend, you can find everything you need to improve your wealth-building journey at Vauld.
As a Vauld customer, you’ll enjoy:
- Our customer-first attitude
- Extremely competitive rates
- Seamless product experience
- Transparent business practices
- Continuous upgrades
- Adaptability to customer needs
The future of finance is here. Visit Vauld.com to learn more and see how you can earn interest on crypto from the very first deposit.
