Before Bitcoin There were Cryptocurrency: A quick guide

By | July 11, 2021

Bitcoin has driven the cryptocurrency market for years. Was it, however, the first digital currency? Cryptocurrencies, blockchain apps, and similar initiatives and projects have flooded the investment and technological sectors in recent years. Yet, despite the tidal rush of new digital currencies that have changed the industry, there has persisted a single digital currency that has captured the world’s attention more than anyone else: bitcoin. Bitcoin may be regarded as the father of cryptocurrencies and the beginning point for all that followed in its wake; however, digital money and electronic payment systems are not as novel as many assume and were not invented by the enigmatic Satoshi Nakamoto. Here is a summary of digital currencies that existed before bitcoin.

bitcoin

1. Virtual money at a gas station

Many nations do not recognize virtual money as a legitimate form of payment. Any national government does not support it. Instead, virtual currency producers are platform developers. There are several ways to create new virtual money available today. Before the advent of cryptocurrencies, digital assets were seen as perks. These early virtual currencies had one thing in common: they were all extremely vulnerable to hacker and scammer assaults.

In the late 1980s, the Netherlands undertook one of the earliest attempts to develop digital money. Gas station managers were fed up with being looted regularly. Because the situation was so bad, someone reasoned that it would be safer to store the cash on smart cards. Owners of transport businesses may load money into these cards and distribute them to their drivers. These cards would also be used to pay for fuel by drivers.

2. Digicash

Based on his technology, an American cryptographer called David Chaum built the working digital currency DigiCash in 1989. It was a breakthrough technique that introduced the notion of “blind signatures” to the world. Blind signatures hide the message’s information and utilize a combination of internal and external credentials to validate a transaction. In the form of public keys, this idea is currently employed in well-known cryptocurrencies. Even though DigiCash went bankrupt in 1998, the principles it advanced, as well as some of its formulae and encryption tools, played an essential part in the creation of subsequent digital currencies.

3. B-Money

Ten years after the launch of DigiCash, a developer called Wei Dai caused a stir in the crypto world with his paper “B-money: anonymous distributed electronic payment system.” This virtual currency was built on the usage of a decentralized network, in which members would perform specific tasks and agreements would be autonomously executed. Even though this virtual currency was technically superior to blockchain technology and the project was never deployed, it significantly affected the future cryptocurrency industry.

4. Bit Gold

Bit Gold was an electronic currency that existed at the same time as B-money. Bit Gold, proposed by Nick Szabo, originated with its concrete evidence mechanism, similar to today’s bitcoin mining process in certain respects.

Nick Sabo, a long-time cryptologist, created the Proof-of-Work protocol for his Bit Gold idea, which is currently utilized by several cryptocurrencies, including Bitcoin. Bit Gold aided in creating an image of a decentralized system devoid of a third party in charge of transaction confirmation.

5. HashCash

HashCash, according to many crypto enthusiasts, is bitcoin’s immediate forefather. Adam Beck, a cryptographer, proposed the HashCash idea in 1997. Hashcash was designed for a variety of reasons, including reducing email spam and mitigating DDoS assaults. HashCash, on the other hand, failed owing to scalability difficulties induced by network congestion.

Conclusion

Bitcoin is the product of history; when decisions were taken, they reverberated across time and into the design. As a result, Bitcoin now retains the dominating position in the cryptocurrency industry.

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