Sunday, November 27, 2022

Was Bitcoin the first cryptocurrency?

Many think that Bitcoin is the first digital currency to have been developed and created. However, not many know that there are “fossil” digital currencies that existed before Bitcoin. In this article, you will learn more about Bitcoin’s predecessors.

Was Bitcoin the first cryptocurrency to exist?

Bitcoin is the immediate answer someone will give when asked what cryptocoins they know. It is the first established cryptocurrency that first made it to market and succeeded at a large scale. Still, Bitcoin was not the first attempt at a decentralized digital currency (cryptocurrency).

Below, the process to where we are today is explained.

The Timeline Of Digital Currency / Cryptocurrency

From Blind Signature to Bitcoin, read more about the ‘evolution’ of digital currency / cryptocurrency below.

Bitcoin’s Ancestor: Blind Signature

The “blind spot” technique of the present web encryption architecture was developed by an American cryptologist named David Chaum in 1980. This algorithm enables parties to share unchangeable information. Future electronic payment technology will be built on this foundation. At the time, it was called “Blind Signature.”

The Next Generation Of Blind Signature: DigiCash

Chaum collected cryptocurrency enthusiasts in the late 1980s to develop “Blind Signature.” He founded DigiCash, a cash creation company based on the “blind spot” algorithm, after landing in the Netherlands. DigiCash, on the other hand, is not decentralized like Bitcoin; it has a monopoly on supply control, much like a typical Central Bank.

Soon after DigiCash contacted them, the Dutch Central Bank dismissed the concept as ridiculous. Microsoft, on the other hand, sees the potential of DigiCash, which is allowing Microsoft users to use DigiCash when making purchases. Unfortunately, the two companies were unable to reach an agreement on terms. In 1990, DigiCash became extinct.

Despite its extinction, DigiCash’s ideal is a model for other digital currencies, from its formulas to encryption tools. DigiCash is the very first textbook for later cryptocurrencies.

Anonymous, Distributed Cash System: B-money

At that time, Wei Dai, a software programmer, introduced B-money on a whitepaper, the complex and decentralized virtual currency concept we know today. Creating an electronic cash system that was anonymous, private, and safe is always a topnotch target. Digital pseudonyms used the B-money system to transfer currency across a decentralized network. The system even includes a way to enforce contracts in-network, without the need for a third party. In the end, B-money was never employed as a medium of exchange.

However, B-money was the muse for Satoshi, father of Bitcoin, when he invented Bitcoin. We can see some of B-money traits in Bitcoin nowadays.

Bitcoin’s Sibling: Bit Gold

One of Chaum’s business colleagues, Nick Szabo, came up with Bit Gold. Bit Gold had its own proof-of-work method, which is similar to the Bitcoin mining process today in several aspects.
Because it leverages the Blockchain platform in modern times, this is a great invention. More importantly, Bit Gold allowed buyers to bypass the intermediaries.

Bit Gold, just like B-money, failed to capture the interest of the general public, but it took the attention of other digital currencies.

The Former Star: Hashcash

First introduced in the mid 1990s, Hashcash was the top cryptocurrency before Bitcoin. Hashcash was created for a variety of reasons, and opened up a world of possibilities that would take nearly two decades to solve. Hashcash relied on a proof-of-work algorithm to facilitate the creation and distribution of new coins.

The Perfect Version: Bitcoin

When it came to the crowd in 2009, Bitcoin has learned and taken in all the failures from the predecessors, which make it the first ever succeeded and currently still biggest cryptocurrency ever. At first, people were still not acquainted with the concept of digital money, since you earn it but cannot touch it. Many expected that Bitcoin, much like other digital money, would be buried under the ground. But with the unique decentralized system and blockchain technology, Bitcoin gradually emerged, and slowly became what it is today.

Bottom Line

We have come through all the growing phases of cryptocurrency. In order to have Bitcoin, or other digital currencies, many haven’t succeeded, but they became lessons for the future. They are the unsung heroes, and the pioneers of the crypto world. We all should say thank you to: Blind Signature, DigiCash, B-money, Bit Gold and Hashcash.

Norah is a big fan of the concept of a cashless economy. She is addicted to discovering and learning about new ideas that can bring convenience to society, both now and in the future. She believes that the crypto and blockchain world is not just a new trend to expertise, but a whole new era to learn and get used to. “Never stop learning, because life never stops teaching.” - Kirill Korshikov.

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