History and Evolution of Cryptocurrency

History and evolution of cryptocurrency

When it comes to cryptocurrencies, many of you would immediately think of Bitcoin. This is reasonable considering the rapid growth of Bitcoin in 2021. It was recorded that in April 2021 that Bitcoin hit the peak of its price, at 953 million rupiah per coin. This is one of the reasons why there is an increasing number of people who are interested in investing in cryptocurrency. What is the history of cryptocurrencies and how did it become such a valuable asset today?

Cryptocurrency History

Cryptocurrency is a digital currency that is the result of cryptographic technology and blockchain systems. Bitcoin is a transaction tool used by many and it certainly has experienced many ups and downs. Before Bitcoin was created, a cryptography expert in the United States in 1983 named David Chaum created an electronic money technology which at that time was called e-cash. He invented an algorithm which is still used as the basis for website encryption and digital transaction systems to this day.

In 1995, Chaum made a new breakthrough by implementing e-cash into Digicash which was an early form of electronic payment system based on cryptographic technology. For this, Chaum managed to create a transaction system using software that can pull notes from banks and creates a series of encryption codes before sending funds. This system enables a digital currency that cannot be traced by parties such as banks and governments. Unfortunately, this Digicash technology failed to develop. However, the basis of the technology is still used for today’s cryptocurrency technology.

In 1998, a distributed electronic cash system was created by Wei Dai which was followed by the Bit Gold innovation created by Nick Szabo. Bit Gold is a digital currency system created using a cryptographic technology that requires users to complete proof of work functions and then integrates them into a system. However, like Digicash, both innovations failed to thrive.

In 2009, an anonymous person under the guise of Satoshi Nakamoto created Bitcoin as the first cryptocurrency to use a blockchain system. Unlike the previous cryptocurrency system, Bitcoin was created as a peer-to-peer network that allows decentralised transactions that do not require the intervention of third parties such as banks or governments. Along with its development, Bitcoin has now been used as a payment instrument that is in great demand and also has a very high value. Till today, Bitcoin is still ranked first in the cryptocurrency market and is touted as digital gold because of its appreciating value.

In 2013, Ethereum was successfully created by Vitalik Buterin, a programmer who is also the founder of a Bitcoin magazine. As a decentralized system that allows users to build applications on it, Ethereum has its own currency called ETH. Its success in being ranked number two after Bitcoin in the market is now paving the way for other cryptocurrency innovations to thrive.

Cryptocurrency as an Investment

Currently, cryptocurrencies are in strong demand and are one of the most popular investment assets. Previously, cryptocurrencies were created as a payment tool for online transactions. However, a small and increasing number of enthusiasts has raised the value of the cryptocurrencies, making it suitable as an investment. Cryptocurrency is now classified as a type of investment asset that has high returns but in turn, there is also high risk. This means that even though its value is volatile, this asset has the potential to generate huge profits if you can make the right investment decisions.Ā 

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