Cryptocurrency has reached a certain height of popularity that there won’t be many humans who are unaware of it. Although crypto is more or like a rollercoaster that whimsically goes up and down, the popularity it gained back in the year 2017 is still intact, more or less. There are predictions and assumptions that crypto is the future and that the potential that crypto holds is unprecedented. This explains the surprising number of people who join the crypto bandwagon despite the many disadvantages that often shadow the advantages. The future of crypto might still be a hazy maze that would need some prudent navigation. However, we do have at hand a past that not many people are aware of. Where did it all start, and more importantly why did it all start? Read along to know more about the beginnings of cryptocurrency.
We live in a society that is in constant flux. As the good old quote goes, “Change is the only constant.” Tracing back history, in order for societies to sustain in harmony, a system of exchange was necessary. What began as a barter system traversed many roads and we have reached a point where digital cash can be used for transactions.
Given the current popularity and trend, crypto might seem like a very recent phenomenon. That is far from true. The idea of cryptocurrency dated back to the 1980s when they were called cyber currencies. However, these coins touched the line of popularity with the one and only Bitcoin which was launched in the year 2008. The identity of the Bitcoin creator or creators is still a mystery. All we have is a pseudonym “Satoshi Nakamoto” and several theories about it.
From the year 2009, with the launch of Bitcoin, cryptocurrency has been part of the mainstream society albeit with a little lesser spotlight than it has in the present. However the question is what was the reason behind the creation of cryptocurrency. Although cliche, the quote, “everything happens for a reason” has some degree of veracity and the same hold true for cryptocurrency as well.
The Why And How
What makes Bitcoin or any other cryptocurrency different other forms of exchange is that it is decentralized. In other words, intermediaries like banks or governments have no role to play in the exchange and people can send money directly to one another. This is exactly the reason why Bitcoin was created in the first place. In order to facilitate the creation of an exchange free of the governmental or any other institutional constraints giving people a certain degree of autonomy. Thanks to the blockchain technology and its reliance on the proof-of-work method, financial transactions can be made without any interference from a third-party. Whether this is a boon or bane is another question altogether.
Tracing back history, Bitcoin, the very first cryptocurrency was basically an answer to a grievance. The hardships caused by the Great recession in the year 2008 shook the general public’s trust in banks. People began to question their role in the financial system. This was when Satoshi Nakamoto, an anonymous individual or group of people, addressed the centralized control of money by issuing a white paper. In the midst of the ensuing turmoil, Bitcoin came and took the battlefield like the knight in shining armor promising an integrity and trust that the financial institutions couldn’t back then.
January 3, 2009 marked the launch of the blockchain with the mining of the very first block called the genesis block. One week following the launch, a test transaction took place. Initially, its availability was restricted to just miners “validating the blockchain.” During its initial years, cryptocurrency did not have any monetary value and it was more of an experimental feat often performed for fun.
However, the potential and scope of cryptocurrency was revealed with the very first economic transaction that took place a year after the launch. A man based in Florida negotiated the delivery of two Papa John’s pizzas worth $25 for 10,000 BTC. This was on the 22nd of May 2010. According to Mark Grabowski, an associate professor at Adelphi University, “That transaction essentially established the initial real-world price or value of Bitcoin at 4 Bitcoins per penny.” And today the same Bitcoin is valued at nearly $400 million. Although it cannot be denied that the journey of cryptocurrency has been more or like a paper plane that flies high, then crashes, and flies again.
From 2011, other networks were being built by miners and coders by improving the code behind Bitcoin’s blockchain thereby opening up a plethora of opportunities all the more emphasising the scope and potential of cryptocurrency in general. This also brought in more individuals who were willing to invest in cryptocurrency, which might have contributed to an extent in increasing its perceived value. With the acceptance of Bitcoin by certain businesses for transactions, the field opened up more for crypto to play its game. And it cannot be denied that it has been playing that game rather impressively albeit with a couple of falls and faults here and there. Experts also attribute the popularity of crypto to exchanges like Coinbase which made transactions in cryptocurrency much easier and accessible to people in general.
Crypto has indeed come a long way from an idea that began its journey in the 1980s to a point where it is debated that it can even replace physical currency. However, as the saying goes, “every coin has two sides,” and it is the same for crypto. The multitude of opportunities also created a rather large space for scams and frauds which in fact is a major drawback when it comes to cryptocurrency. But that hasn’t stopped people from investing crypto nor has it stopped the popularity of crypto from skyrocketing with more and more organizations and celebrities joining the crypto bandwagon.