Cryptocurrencies have been an intriguing addition to the financial landscape, even though they have yet to gain mainstream adoption. The idea behind this digital form of money and its long-term purpose remains solid, as there is a global need for sound and hard money.
Cryptocurrencies Aren't Going Away
When Satoshi Nakamoto first introduced the idea of Bitcoin over 13 years ago, few people paid attention to it. However, there was a group of core supporters from day one who helped pioneer the concept of modern cryptocurrencies. Without their support, there would be no peers in this peer-to-peer network to keep things trucking along. Much has changed in those thirteen years and counting, and the future will undoubtedly hold even more changes and improvements.
How It All Began
The Digicash project required specific software to withdraw notes from a bank and signature encrypted keys before sending the money to the receiver. Opting for this method introduced a layer of privacy and anonymity to the banknotes and prevented the issuing bank and government from tracking the currency.
The idea by David Chaum gave way to ventures like B-money, created by Wei Dai in 1998, and bit gold, established by Nick Szabo. B-Money was an anonymous and distributed electronic cash system, whereas bit gold requires users to perform proof-of-work through cryptographic solutions.
All of these concepts culminated in the creation of Bitcoin in 2009 by Satoshi Nakamoto. The SHA-256 cryptographic algorithm is responsible for the proof-of-work aspect. Moreover, the Bitcoin network enables distributed electronic cash payments in a peer-to-peer manner. Although Bitcoin is not anonymous or untraceable, it offers privacy through pseudonymity.
The Development Of Crypto
Even though Bitcoin is the first of the "modern" cryptocurrencies, other developers tried different approaches to harnessing cryptography and peer-to-peer technology. Notable examples include Namecoin - an attempt to create a decentralized DNS and end online censorship - and Litecoin - a clone of bitcoin with a different hash function. There was also Peercoin, which pioneered a hybrid approach of proof-of-work and proof-of-stake.
Currencies like Namecoin, Litecoin, and Peercoin have been classified as "altcoins", or alternative cryptocurrencies. Altcoins traditionally use faster block times and lower transaction costs than Bitcoin or introduce smart contract functionality (like Ethereum) to help builders develop decentralized applications on the blockchain.
Bitcoin Pizza Day
One of the crucial events celebrated by bitcoin enthusiasts worldwide is Bitcoin Pizza Day. May 22nd of every year is a day to remember the first-ever transaction that has Bitcoin commercial value. Laszlo Hanyecz wanted to order pizzas with bitcoin in 2010, although no shops were accepting cryptocurrency payments at the time. To solve this issue, he took to the Bitcointalk forums and offered 10,000 BTC in exchange for two large pizzas.
Although it took a while to get a response, another Bitcointalk user eventually agreed to have two Papa John's pizzas delivered to Hanyecz in exchange for 10,000 BTC. Today, that transaction would be worth over $300 million, making it two of the world's most expensive pizzas.
Boost Of Crypto
Momentum started to build when the first bitcoin trading platform came to life in early 2010. Users could exchange bitcoin for dollars and speculate on the value of BTC. More exchanges started popping up over time, including the now-defunct Mt. Gox, Cryptsy, MCXNow, Bittrex, Mintpal, etc. Most of those platforms no longer exist today, but they were instrumental in bringing more attention to Bitcoin and altcoins.
Another crucial factor to the boost of crypto is Silk Road, the infamous illegal black market. Founded by Ross Ulbricht, the marketplace was one of the first major darknet marketplaces for criminals and drug dealers. It, too, worked with Bitcoin as a payment method to provide users with pseudonymity, Silk Road was shut down in 2013, but it helped pave the foundation for using Bitcoin as an online payment method.
There are over 7,000 cryptocurrencies, tokens, and assets nowadays. More importantly, cryptocurrency is not just about sending and receiving money, it also includes exciting industry verticals such as:
- Blockchain gaming
- Decentralized finance
- Metaverse & Web3
- Colored coins
- Decentralized trading
Despite there are being many more cryptocurrencies on the market, Bitcoin has never lost its top spot. It is still the biggest cryptocurrency by market cap and continues to receive plenty of support from enthusiasts and developers. Ethereum remains the second-biggest crypto by market capitalization, although the other rungs on the ladder are a free-for-all.
One thing that has not changed in cryptocurrency is the market volatility. The value of Bitcoin and other cryptocurrencies can easily go up or down by several percent in a day. Everyone is welcome with open arms in this industry, assuming they can stomach the market volatility.