The Origins of Cryptocurrency...
The history of cryptocurrencies have a long and storied origin, much of which is relatively unknown to the public. In this article, we discuss the history of cryptocurrencies, a few recognizable coins and the bright future for cryptocurrency.
The year is 1983, the TV show ‘Wheel of Fortune’ begins its syndication. Pioneer 10 passed the orbit of Neptune as the first man-made object to leave the vicinity of the major planets, and American cryptographer David Chaum conceived an anonymous cryptographic electronic money called eCash. With eCash, the user could spend the digital money at any shop accepting eCash, without having to open an account with the vendor first, or transmitting credit card numbers. Security was ensured by public key digital signature schemes. This allowed the new digital currency to be untraceable by banks, the government or any third party. A currency without limitations was conceived. Cryptocurrency was introduced to the world.
In 1996, the National Security Agency went on to publish a paper entitled How to Make a Mint: the Cryptography of Anonymous Electronic Cash. It went on to describe an early blueprint of a Cryptocurrency system, which was first published within an MIT mailing list. Humble beginnings for what we know of cryptocurrency today. Fast-forward to 1998, Wei Dai, a computer engineer from the University of Washington, published a description of “b-money”, an anonymous, distributed electronic cash system. Soon thereafter, Nick Szabo described it as “bit gold”. Much like Bitcoin and many cryptocurrencies following after, bit gold was described as a type of electronic currency that required users to complete a proof-of-work function.
Now going forward to 2009, the very first decentralized cryptocurrency, Bitcoin, was created by developer Satoshi Nakamoto. Along with its inception, it used SHA-256, a cryptographic hash function within a proof-of-work scheme. What followed was an influx of coins that helped shape what we know of now with cryptocurrency. Namecoin was created as an attempt at forming a decentralized DNS, which inevitably would make internet censorship much more difficult. Soon after that, in 2011, Litecoin was released, which used a hash function outside SHA-256. Then Peercoin was created which used a proof-of-work/proof-of-stake hybrid. These coins helped shape and mold much of which we know about cryptocurrency today.
With an influx of new cryptocurrency coming in almost daily, is the dilution of cryptocurrency too much? With Bitcoin being the ultimate trendsetter, the brand-new wave of cryptocurrencies built ondecentralized networks has not only garnered a legion of new followers but a chasm of new money. Since Bitcoin’s rise, the next great digital cryptocurrency may pop up as early as tomorrow. It is such a new market that many of the newer cryptocurrencies are popularized by word of mouth, or a simple tweet if you are Elon Musk. Even for the casual observer, it is more than just about coins. Other virtual cryptocurrencies such as Ethereum are being used to create entire decentralized financial systems to help ease those who don’t have access to traditional financial products. Some cryptocurrency coins boasts the ability to handle more transactions, others use algorithms like proof-of-stake, and some other cryptocurrencies simply have been hyped beyond comprehension, it can be hard to keep up with the ever-growing market.
In the bridging of the gap from there being only virtual cryptocurrency coins to the physical world with credit cards associated with them, it is important to note that a vast majority of cryptocurrency remain largely intangible. The freedom from government manipulation is partly what makes cryptocurrency so appealing but just how long will that be a reality many wonder with the groundwork foundational aspect of the industry coming under fire as of late. As recent as May 2021, the U.S. Treasury Department has made calls for much stricter cryptocurrency compliance when it comes to reporting to the IRS. In some cases we are talking about hundreds of millions of dollars, with some chief concerns being facilitating illegal activity broadly including tax evasion. According to the Treasury department's estimates, the difference between cryptocurrency taxes owed to the U.S. government and those actually paid totaled nearly $600 billion in 2019 alone. With figures that astronomical, it was only a matter of time for cryptocurrency, right?
With longtime cryptocurrency expert Gary Gensler at the head of the Securities and Exchanges Commission, or SEC, financial advice firm Raymond James expects it is only a matter of time until Congress steps in and grants the regulator broader jurisdiction.
“Chairman Gensler is viewed as a potential ally for cryptocurrencies as a former professor on the topic; however, these statements are likely to revisit debates regarding the regulatory risk to cryptocurrencies and exchanges”
Cryptocurrencies aren’t going anywhere anytime soon. Long before it was popular, Bitcoin made investors realize there was a reality such as the one we enjoy today. The deepening divide between government regulation and the desire to leave cryptocurrency untouched will only grow deeper. Highly respected cryptocurrency such as Bitcoin are only growing in popularity, the end is nowhere in sight. And with smaller cryptocurrency coins such as Dogecoin driving new investors into its camp daily, fists full of new money for the coin, seasoned investors often wonder when the rocket of popularity will land and what the ramifications may be. The history of cryptocurrency is set in stone but the future may not be, or at least what we know of it. Cryptocurrency is ever-evolving, and if you blink, it may pass you by.