Early Cryptocurrencies: What Were They?
Regardless of your position in the world of finance, these days you're probably one of those who have heard of cryptocurrencies more than once. But what was the very first cryptocurrency and what came after it? That's what we're going to find out today.
When Did Crypto First Appear?
Perhaps we should start from the very beginning. The idea of creating something like the first cryptocurrency in the world originally emerged in 1983 at one of the conferences. At the event, American cryptographer David Chaum published a paper in which he described an early form of anonymous cryptographic virtual money. His theory suggested that it was possible to create an electronic currency that could be sent without trace and without the involvement of centralized organizations. And his theory paid off a dozen years later. Chaum managed to develop a system of cryptographic protocols called Digicash, which involved user software "withdrawing" electronic "banknotes" from a bank account and transmitting them to other users using blind signature or private key encryption.
While the innovative discovery amazed many at the time and allowed Chaum to start a company to realize the project, unfortunately it failed miserably back then. David, in an interview in 1999, attributed this to the fact that the DigiCash project and its technological system entered the market too early, before e-commerce was fully integrated into the Internet.
But the history of cryptocurrencies only began its active development after that. Other cryptographers and developers made many discoveries in the following years, which together literally gave birth to the 1st cryptocurrency in 2009.
What Was the First Cryptocurrency?
As we mentioned earlier, the world first cryptocurrency appeared in 2009. And its name is Bitcoin. The history of the oldest crypto began on October 31, 2008, when the White Paper (official document) was published. It was describing the functionality of the Bitcoin blockchain network. And only a few months later, the cryptocurrency was officially released and became available to everyone. But who created the first coin? Let's find out further on!
Who Created the First Cryptocurrency?
Bitcoin was first launched by a computer programmer or group of developers under the pseudonym Satoshi Nakamoto, whose real identity has not been confirmed even to this day. In January 2009, Satoshi mined the first block of the Bitcoin network, which further mined 50 Bitcoins. At that time, the oldest token had no worth: the value of the first crypto coin in the beginning of sale was just under 14 cents.
What are the Functions of the First Cryptocurrency?
Like the DigiCash, the first crypto project aimed to solve problems with the centralization of traditional systems. And as we know it succeeded. Today, Bitcoin has revealed to us:
Decentralization: With the emergence of the very first cryptocurrency, people have experienced the lack of control by the government or a financial institution. This provides more privacy and also the ability to transact without intermediaries.
Security: Bitcoin owners use public and private keys to access their wallets. These and the blockchain network's methods of protecting information through the use of coded algorithms, hashes and signatures help to encrypt wallet data and keep funds secure.
Globalization: The first cryptocurrency in the world has no physical medium and exists in the virtual world. This means that it can be transacted from anywhere in the world and Bitcoin is now literally acting as a global currency.
What Other Cryptocurrencies Have Emerged Since Bitcoin?
Of course, by causing a stir among people, Bitcoin has spurred many programmers to create other oldest cryptos. The earliest cryptocurrencies and cryptocurrencies launched after Bitcoin are now called "altcoins". There are a few of them:
Litecoin: This is a decentralized P2P payment network with the currency of the same name, which was founded by former Google developer Charlie Lee in October 2011. The goal of the Litecoin project was initially to develop a cryptocurrency using a different mining algorithm. For this purpose, a Scrypt hashing algorithm was used, rather than SHA-256, as in the first ever cryptocurrency. This reduced the time to confirm transactions and improved the Bitcoin system.
Ripple: In 2013, the Ripple payment protocol was introduced. Its real-time gross settlement system is effectively used by some of the most prominent centralized financial institutions around the world. In addition, while Bitcoin is capable of processing 7 transactions per second, the Ripple platform has a capacity of 1,500 transactions per second. Therefore, the XRP token is one of the leading tokens launched after the first coin crypto.
Ethereum: Ether is now the second most capitalized token after 1st crypto Bitcoin and was created on the Ethereum blockchain. The first block was received in 2015. At that time, Ethereum became known to many as a platform for creating smart contracts. And this led to the reason that today the most ICOs are held on this platform.
These are just a small part of the cryptocurrencies that have emerged since the rst crypto was created. Below we will tell you more about them and understand why they appeared and what role they play in the world of cryptocurrencies.
Why Did Cryptocurrencies Other Than Bitcoin Emerge?
As history shows, the first active trading of Bitcoins began on the oldest crypto exchange bitcoinmarket.com, which does not exist now. But a year later, many people discovered Bitcoin's shortcomings and problems. To solve them, altcoins or so-called "alternative coins" were created. Let's consider what disadvantages of Bitcoin were to be solved by altcoins:
Transaction Duration: The proof-of-work algorithm and the actively growing number of blocks slowed down the transaction processing in Bitcoins. Therefore, to speed up transaction times, new types of cryptocurrencies were created that began using other algorithms and had smaller block volumes.
Disadvantages of Mining: As interest in early crypto Bitcoin grew, so did the complexity and cost of mining it. Altcoins have offered alternative mining protocols to make it more accessible and without the need for large electrical and complex technological resources. Now, consensus protocols such as proof-of-stake or proof-of-history do not require the resources that mining still does.
Lack of Functionality: Initially, the main task of the cryptocurrency first coin was to be a tool for settlement transactions. Altcoins also fulfill this task, but they add extra functionality, such as the creation of smart contracts or the ability for staking.
Of course, these are not all the problems that altcoins are trying to combat. The list of solutions they offer us is very extensive. That's why they are extremely popular in the world and highly valued. Just think of Ethereum, which today ranks second in market capitalization and remains one of the most favorite cryptocurrencies to buy and sell on the Cryptomus P2P exchange. You can always learn how to buy Ethereum and other altcoins in our blog articles or on the P2P trading platform itself. Check it out soon!