The true origin of cryptocurrencies

Cryptocurrencies are digital currencies, also known as digital financial assets or crypto-assets. But how are cryptocurrencies created and what is their origin? This type of alternative currency, created as a medium of exchange in which the holders of the currency create the value itself, has technological features based on the use of cryptography. This is the use of various techniques to encrypt or encode information so that it is unintelligible to unauthorized recipients.

Bitcoin (BTC) can be considered the origin and major representative of cryptocurrencies, with an open source protocol and peer-to-peer network. It originated from Satoshi Nakamoto's (heretofore unknown) paper published in 2008. At the beginning of its development, only a few technophiles knew about it and it was considered almost useless and worthless. Its value, however, has risen to levels not previously thought possible for this type of asset. This is the basis for understanding the emergence of cryptocurrencies.

Although the history of crypto-currencies began in 2008, the first bitcoin (we explain what it is and how to properly invest it) or the first crypto-currency was issued on January 3, 2009 at 6:15 pm as part of a 50 BTC block called Genesis. However, its roots go back much further. To know the true history of crypto-currencies and understand how they came to be, we must first go back a few years to the first idea of digital assets and their creators.

The origin of crypto-currencies, the real story

The development of crypto-currencies has traveled a longer path than many people realice. Scientists, mathematicians and people with a great vision for the future have made great contributions that have played a decisive role in making these new crypto-assets or digital currencies what they are today. In addition to Satoshi Nakamoto, the creator of bitcoin, other names such as David Chaum and Wei Dai can be considered precursors of crypto-currencies.

David Chaum

As mentioned earlier, the history of crypto-currencies as we know them dates back to 2008. Their true roots, however, go back to the 1980s. Specifically in 1983, when American cryptographer David Chaum developed the first cryptographic system called eCash.  It was designed as a kind of anonymous cryptographic electronic money or eCash system. From 1995 to 1998, it was used in an American bank as a micropayment system.

This software is responsible for storing the money in a digital format cryptographically signed by the bank. The user can spend this digital currency at any merchant that accepts eCash without having to open an account with the provider or transmit credit card numbers. The security of this system is based on public key digital signatures. In 1995 he developed a new system called DigiCash, which used cryptography to keep the details of financial transactions secret. Cryptocurrencies probably originated in this way.

Wei Dai

Later, in 1998, Wei Dai, a computer engineer specializing in cryptography, published a paper introducing the concept of “b-money,” a distributed, anonymous electronic currency system. In this paper, Dai described the basic characteristics of all cryptocurrencies that currently exist. Dai defined it as “a scheme that allows a group of undetectable digital pseudonyms to pay each other with money and enforce contracts among themselves without outside help.”

In his essay on “B-currencies,” Dai identifies a number of particular and specific features that are present today as a fundamental element of cryptocurrencies currently in circulation. One of the key features was the need for collective verification, in a collective ledger, of the computational work required to create the cryptocurrency. Along with the corresponding reward for those responsible for carrying out this work.