Cryptocurrency is the latest attempt to reinvent the way of exchanging money because, throughout history, humans have relied on multiple payment systems to purchase goods and services.
1. The first payment system that humans know is the barter system, namely the system of exchanging goods and services needed. However, this system proved difficult to implement because it did not determine the exchange rate of two goods without an equal measure of value.
2. Then, the payment system changed to gold, unfortunately, this precious metal is limited because it is difficult to produce and difficult to carry in making large transactions.
3. Finally, gold and silver were replaced with Fiat Money, which is a legal means of payment distributed by the government in the form of paper money, such as rupiah and dollars. However, due to the ease of making lots of paper money, Fiat faced various problems such as inflation.
Based on the evolution of these various payment methods, it can be concluded that humans prefer convenient and easy payments. Bitcoin started the cryptocurrency revolution when it was launched in 2008. But there were several predecessors and developments before Bitcoin.
The origin of cryptocurrency which is a digital currency is certainly related to the beginning of the Internet, which revolutionized the world like never before, if there is no global system of interconnected computer networks, cryptocurrency will not function.
David Chaum and DigiCash
As a pioneer in the cryptocurrency world, David Chaum in 1989, developed the world’s first cryptocurrency called DigiCash, using cryptography to make economic transactions confidential. He is thinking of breaking away from the financial trail of a bank or government and keeping his transactions private. Chaum managed to find the digital currency with a complex algorithm that ensures transactions are immutable and uncontrolled, thus enabling peer-to-peer transactions.
But unfortunately, this system failed because even though DigiCash managed to implement the basics of cryptography in its currency, the system is still centralized in one company (which means it is not decentralized). Besides, the internet in the 1990s hasn’t really become a necessity. DigiCash also had time to look for banks as partners and it was difficult for banks to accept financial activities with this system. And in 1998, DigiCash was declared bankrupt.
Wei Dai and B-money
However, the idea or term “cryptocurrency” itself was first coined in 1998. That year, Wei Dai, who is a computer engineer, began to think about developing a new payment method that uses a cryptographic system and has the main characteristic of decentralization. Later, he published a white paper on b-money. B-money is a virtual currency that includes the basic components of modern cryptocurrencies. However, from the time it was created until the end of the project, b-money was never launched.
Satoshi Nakamoto and Bitcoin
Until 2008, the world was hit by a global economic crisis that started in America and spread to various countries around the world. The financial crisis was described by economists as the biggest crisis in 80 years and was dubbed the ‘Mother of All Crisis’.
In the midst of the financial condition of the United States financial world, a chain email was sent. The recipient is a mailing list in the digital cryptography lover community. The email was sent by an unknown person who identified himself as Satoshi Nakamoto.
Most mailing list users do not respond. Until finally one of them, Hal Finney answered Nakamoto’s email. In his email, Nakamoto said that he was working on a project in the form of a new electronic money system with a decentralized “peer-to-peer” concept. Finney in the midst of his doubts asked Nakamoto to send him an early example of the system he mentioned in the email.
No need to wait long, on August 18, 2018, Nakamoto bought the bitcoin.org site. He sent the link to the site with supporting software and the first 10 coins to Finney for testing. Finney, who is interested in the project, decides to cooperate. Finney identifies bugs in the system and then guides Nakamoto to fix and improve them.
On October 31, 2008, Nakamoto uploaded a white paper entitled “Bitcoin: A Peer-to-Peer Electronic Cash System”. The white paper contains the idea, vision, and mission of a blockchain network called Bitcoin. Nakamoto wrote that it was time for a payment system based on cryptographic evidence instead of trust. Bitcoin is an electronic currency based on a blockchain network that provides space for digital payments that are free of additional fees. This network will allow two parties to conduct transactions directly without a third party.
Finney and Nakamoto work together to realize the idea. Until January 3, 2009, the first block was mined. The network, known as Block 0, earned 50 Bitcoins. Nakamoto named it the Genesis Block.
Just a few days later, the Bitcoin software was released on the cryptographic mailing list. At that time, the Bitcoin 0.1 software could only be used by Windows. After the software launches, mining in Block 1 begins. Then over time, Nakamoto launched Bitcoin 0.2 software in December 2009 which can be used for Linux devices.
The presence of this software coincided with the availability of multi-core processors for mining on the market. Since then, the mining and blockchain community has started to grow and multiply.
Then in 2010, Bitcoin was first traded at a price of $0.0008 to $0.08 for one Bitcoin. The first real-world transaction using Bitcoin occurred in 2010 when a bitcoin miner bought two pizzas from Papa John’s in Florida for 10,000 bitcoins.
In April 2011, after visibly satisfied with the successful Bitcoin project, Nakamoto sent a final email to the cryptography list, stating “I have moved on to other things. This (referring to the Bitcoin project) is in good hands with Gavin (Gavin). Andresen) and everyone else.” Satoshi then handed him the source code or a collection of writings about how Bitcoin works and he disappeared forever.
It was Gavin Andresen who later became the Lead Developer of the Bitcoin Foundation.
Later the use and investment in cryptocurrencies are increasing. Granted, many people didn’t really trust this new form of payment at first, but over time the concept has changed. Many companies are already using it, they allow payment for their products and services with this digital currency and they even create their own.
Well, that’s roughly how the idea of cryptocurrency appeared until its current development.
Source : f.a.s