WHAT PREFACED CRYPTOCURRENCY AND THE APPLICATION OF BLOCKCHAIN TECHNOLOGY
Before 1977, computers were nearly off-limits to all except companies or those with wealth. Then, a great innovation happened and the first personal computer came along. By the mid-1980s, the world entered the computer age where computers became mainstream. A certain momentum rose within the computer programming space. Groups had the goal to make anonymous transactions a possibility without being tracked by government entities. The core idea of this movement was to use computers to facilitate these transactions.
Attempts of Digital Currency Adoption
In 1983, an American cryptographer, David Chaum, published a scientific paper titled “Blind Signatures for Untraceable Payments,” outlining the topic of using anonymous digital money. In 1989, he created DigiCash, which applied concepts from his paper to be used as a global digital currency. After many unsuccessful attempts to have banks adopt the technology, the company went bankrupt in 1998.
Another early concept of digital currency originates with the advent of “E-gold,” created in 1996 by an oncologist named Douglas Jackson. Its goal was to mimic and simulate the value that intrinsic gold carries with it but in a digital format. It was backed by gold and showed promising potential for the time. However, unlawful activity and weak security inevitably led to the shutdown of E-gold.
In 1998, a blockchain pioneer named Nick Szabo, created a project by the name of “Bit Gold,” aiming to address many of the inefficiencies that existed in the traditional finance system at the time. Bit Gold is considered to be one of the most impactful digital currency projects of the pre-2000s era. Many of its core and foundational concepts were used in the creation of Bitcoin just ten years later. It was never implemented as its functionality ultimately left users and financial institutions vulnerable in many ways, including fraudulent activity and theft.
Digital currencies exposed many nuances in the field of finance. Finally, with the introduction of the first blockchain-based digital currency, Bitcoin, digital currency really caught on. In January of 2009, the first ever Bitcoin block was mined by Satoshi Nakamoto, which lead to Bitcoin’s first transaction on January 12, 2009.