Cryptocurrencies are digital currencies also known as digital financial assets or crypto assets. but, how are cryptocurrencies born? what is the origin? created to function as a means of exchange in which the owners of the currency themselves create its value, this type of alternative currency has technological characteristics based on the use of cryptography. this consists of the application of different techniques of encoding or scrambling information in order to make it unintelligible to unauthorized recipients.
it can be said that bitcoin (btc) is the origin and maximum representative of cryptocurrencies, with an open source protocol and red among equals. it was born as a result of satoshi nakamoto’s article (so far unknown), published in 2008. at the beginning of its development only a few tech geeks knew about it and it was considered almost useless and worthless. however, its value has reached figures never imagined for this type of asset. It is the basis for understanding how cryptocurrencies are born.
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Although the history of cryptocurrencies began in 2008, the first bitcoin (of which we explain what it is and how to invest correctly) or cryptocurrency that was published saw the light on January 3, 2009 at 6:15 p.m., as part of a 50 btc block called genesis. however, its roots lie much further back in the past. To know its real history and understand how cryptocurrencies were born, we must start by going back a few years to find the first idea of digital assets and their creators.
the origin of cryptocurrencies, the real story
Beyond what many people think, the development of cryptocurrencies has come a long way. Scientists, mathematicians and people with a great vision of the future have made great contributions that have decisively contributed to these new crypto assets or digital currencies becoming what they are today. In addition to Satoshi Nakamoto, creator of Bitcoin, we find other names such as David Chaum and Wei Dai, whom we can consider the forerunners of cryptocurrencies.
As has already been indicated, the history of cryptocurrencies as we know them dates back to 2008. However, its true roots go back years, to the 1980s. More specifically, in the year 1983 when the American cryptographer David Chaum developed a first cryptographic system called ecash. it was conceived as a kind of anonymous cryptographic electronic money or electronic cash system. and was mined as a micropayment system in a US bank from 1995 to 1998.
This software is responsible for storing amounts of money in a digital format cryptographically signed by the bank. the user can spend this digital money at any merchant that accepts ecash, without having to open an account with the provider or transmit credit card numbers. the security of this system was based on public key digital signatures. in 1995, it introduced a new system called digicash, which used cryptography to keep the data of those who carried out economic transactions confidential. In fact, it can be said that this is how cryptocurrencies were born.
later in 1998 wei dai, a computer engineer specializing in cryptography, published an essay in which he presented the concept of «b-money«, a distributed electronic cash system and anonymous. In this document, he describes the set of basic features inherent in all existing cryptocurrency systems today. dai defined it as “a scheme for a group of untraceable digital pseudonyms to pay each other with money and enforce contracts with each other without outside help”.
in his essay on «b-money» dai includes a series of particular and specific characteristics that are present today as a fundamental part of cryptocurrencies currently circulating. One of its main characteristics was the need for verification by the community in a collective accounting book of the necessary computational work and that would facilitate the generation of the cryptocurrency. in addition to the corresponding reward to those who were in charge of carrying out this work.
b-money, the initial essay
Additionally, dai specifies in his essay the necessity of maintaining collective accounting with cryptographic protocols, which would be responsible for authenticating transactions and, at the same time, would serve as guarantee that they stay organized. With this proposal dai goes ahead and takes the first steps on the path towards what we know today as the blockchain technology. it also suggests the implementation of the use of public keys or digital signatures for the execution of contracts and authentication of transactions.
in addition to all of the above, dai’s essay of «b-money», raised two proposals. the first contemplated a pow proof-of-work function to generate the “b-money”, considered very impractical. and the second something more similar to the block structure that we currently know. Although “b-money” never became official, Dai’s work has been widely recognized. to the point that the smallest unit of ethereum is called “wei” in honor of it.
satoshi nakamoto and bitcoin
10 years later, in 2008, during the great global financial crisis, a person or a group of people whose true identity is still unknown presented themselves under the pseudonym satoshi nakamoto. Nakamoto, on November 1, posted a whitepaper of what he called bitcoin on the p2p (peer to peer) foundation website. in ‘bitcoin: a peer-to-peer electronic cash system’ he revealed his new vision of electronic money.
In this way, the concept of bitcoin is presented to the world for the first time and this is how cryptocurrencies are born. later, on January 3, 2009 its official birth occurs when the first bitcoin comes to light as part of the first 50 btc block called “genesis“. According to the ideas of Satoshi Nakamoto, open source software was designed and released and the P2P network was built on top of it. which makes bitcoin a digital currency encrypted in the p2p format.
bitcoin, the first famous crypto
This point-to-point transmission format indicates that it is a decentralized payment system. which means that, unlike the other traditional currencies of legal circulation called fiduciary money, bitcoin does not have a centralized issuer, but is generated by calculations based on specific algorithms the nodes of the network. In this way, it can circulate around the world, be in any connected computer and anyone can participate in its manufacture or «mining«.
no matter where you are, anyone can mine, buy, sell or receive bitcoins. using a distributed database made up of nodes throughout the p2p network. In this way, it allows registering and confirming all transactions using the cryptographic design in order to guarantee security in all aspects of the operation. Bitcoin is a digital currency that is made up of a series of complex codes generated by a computer.
the offer grows
After the launch of bitcoin, whose initial objective was to become a digital currency with which you could make purchases online, the market for crypto assets or digital currencies began to grow very quickly. this market gave rise to many other cryptocurrencies, although not all of them have been successful. some of them are:
- 2011: litecoin (ltc) and namecoin (nmc).
- 2012: ripple (xrp) and peercoin (ppc).
- 2013: dogecoin (doge) .
- 2014: maidsafecoin (maid), dash (dash), monero (xmr), bitshares (bts), solarcoin (slr).
- 2015: ether (eth).