A Brief History of Cryptocurrency

It's hard to imagine anyone these days who’s never heard the word ‘cryptocurrency.’ Following the collapse of the FTX, one of the largest centralized exchanges, digital assets have long become a hot topic across the Internet, TV, and major media outlets. By 2025, crypto has become fully intertwined with the ‘real world’ — just look at Bitcoin fluctuations on the day of US President Donald Trump’s inauguration. If you're intrigued by the crypto world, we invite you to dive into the history of the very first cryptocurrency and explore the coins that followed in its footsteps.

What Makes the Year of Cryptocurrency Creation Noteworthy?

The history of cryptocurrencies truly took off with the Bitcoin launch in 2008. However, digital assets existed for decades before the BTC debut. The term ‘cryptocurrency’ traces back to 1989, when American computer scientist David Lee Chaum came up with the groundbreaking idea of developing digital money. He was the first to propose using cryptography to secure and verify transactions, laying the foundation for what we now know as cryptocurrency.

It wasn’t until the early 1990s that cryptographic methods and software development began to take off, marking a key turning point in the decentralization rise. In 1998, computer engineer Wei Dai introduced the ‘b-money’ concept in a groundbreaking paper. He outlined the anonymous workings of a distributed system for electronic money.

Many still believe the world’s first cryptocurrency was called Bit Gold. While it did exist and emerged around the same time as ‘b-money,’ it wasn’t the first. Created by blockchain pioneer Nick Szabo, Bit Gold was inspired by the traditional banking system’s inefficiencies and aimed to reduce the trust level required for transactions. Though it never fully launched, Bit Gold laid the groundwork for Bitcoin and other cryptocurrencies that followed.

Neither of these cryptocurrencies ever became official. However, their significance lies in the fact that they became a crucial part of digital history, inspiring the modern coins’ creation that are now available on the market. Today, these cryptocurrencies can be mined using personal computers and more powerful devices, marking their lasting influence on the crypto landscape.

Which Crypto Was the First?

The history of cryptocurrency begins with Bitcoin. It was created by an anonymous programmer, or a crypto enthusiast group, under the Satoshi Nakamoto nickname. To this day, the person’s true identity behind the first digital currency remains unknown. These mysterious developers aimed to create a decentralized alternative to the traditional financial system, which many saw as a significant problem and a key contributor to the 2008 global economic crisis.

Satoshi Nakamoto's success in fully achieving the original goal may still be up for debate, but Bitcoin’s popularity as an investment and trading tool is skyrocketing in many countries. Its emergence paved the way for the existence and growth of thousands of new crypto assets. The digital coin number continues to soar, now exceeding 20 000, and there are no slowing down signs.

Since the BTC creation, countless new digital coins have entered the market. Some follow Bitcoin’s mission, while others offer entirely different use cases. For example, Ethereum, the second-largest crypto asset by market capitalization, was launched in 2015 with a distinct goal: to create an ecosystem for decentralized applications (dApps) and smart contracts.

As the market has evolved over the past decade, Bitcoin's rate has experienced numerous booms and bust cycles. Given this asset's relatively young age, investor sentiment remains volatile, and cryptocurrency is still considered a highly unpredictable and volatile asset.

What Made Cryptocurrencies so Popular?

The digital assets primary goal is to decentralize finance. Let's dive into the exciting world of cryptocurrencies and explore their pros and cons!

Digital coins advantages:

• Enthusiasts see cryptocurrencies like Bitcoin as the money of the future and are eager to buy them before their value skyrockets, and they become a universal payment method for everyday purchases.
• Cryptocurrency is a powerful player in the financial asset world and one of the central banks' fiercest competitors. The traditional financial institutions’ downside is that, over time, they are forced to devalue fiat currencies through inflation.
• Certain community members see crypto as a promising launchpad for building the future financial system. According to 2021 data from Pew Research Center, Asians, Americans, and Latinos are ‘more likely than Europeans to invest in, trade, or use cryptocurrency.’
• Other users are drawn to blockchain technology since it offers a decentralized system for processing and recording data. This may provide a more secure platform than traditional payment systems like credit cards.
• Some cryptocurrencies offer their holders the opportunity to generate passive income through staking.

Digital coins disadvantages:

• Many crypto projects remain untested, and blockchain technology isn’t yet widespread. If the core idea behind digital assets fails to reach its full potential, long-term investors may never see the returns they hoped for and could eventually stop investing in digital coins altogether.
• There are also additional risks for short-term crypto investors. Cryptocurrency prices fluctuate rapidly. This means that within a single day, users could either make quick profits by buying at the right moment or suffer significant losses by investing just before a market crash.
• Bitcoin and other projects using the Proof-of-Work (PoW) algorithm have a significant environmental impact. For instance, a Cambridge University study revealed that BTC mining consumes twice as much electricity as all residential lighting in the U.S. However, some coins employ an energy-efficient technology called Proof-of-Stake (PoS).
• Governments around the world have yet to fully determine their stance on cryptocurrencies, which led to hesitancy in enacting laws that impose restrictions on their use. However, changes in the regulatory landscape could impact the market in unpredictable ways.

The first 10 Cryptocurrencies That Emerged After Bitcoin

Cryptocurrencies that emerged after Bitcoin are called altcoins. Most of them aimed to fix Bitcoin's shortcomings and introduce competitive advantages in their newer versions.

The term ‘altcoin’ comes from the combination of two words: ‘alt’, meaning ‘alternative’, and ‘coin’, meaning ‘cryptocurrency.’ Together, they represent a cryptocurrency category that serves as an alternative to BTC. After Bitcoin's success, many other peer-to-peer digital currencies emerged, aiming to replicate BTC’s story.

Many altcoins are built on Bitcoin’s foundational structure. As a result, most of these assets are peer-to-peer and use the Proof-of-Work (PoW) algorithm. However, despite sharing many similar features, altcoins can vary greatly from one another.

Let’s have a brief look at the 10 oldest cryptocurrencies launched after Bitcoin.

• Litecoin (LTC). Created by former Google employee Charlie Lee in October 2011, this coin was designed to reduce transaction times from 10 minutes to just 2.5. Litecoin uses the Scrypt hashing algorithm instead of Bitcoin's SHA-256. It’s one of the very first cryptocurrencies to emerge after Bitcoin.
• Namecoin. Inspired by Bitcointalk discussions about the BitDNS system, Namecoin was introduced by Vincent Durham in April 2011. It’s a Bitcoin fork. This altcoin was launched to function as a decentralized name registration service, similar to the Ethereum Name Service (ENS) for domain names.
• SwiftCoin. Developed by Daniel Bruno’s team in 2011, SwiftCoin uses the Proof-of-Work (PoW) algorithm and incorporates blockchain technology. This altcoin is designed for dynamic circulation, helping to keep volatility in check. Its blockchain isn’t public, setting it apart from many other cryptocurrencies.
• Bytecoin. Designed to provide anonymous transactions and ensure privacy, this altcoin uses the Cryptonote algorithm. It enables instant crypto exchanges worldwide, and it takes about two minutes on average to verify a client's transactions.
• Peercoin. The first cryptocurrency to combine both Proof-of-Work (PoW) and Proof-of-Stake (PoS) algorithms, it has no capped market supply but maintains a steady 1% annual inflation rate. As one of the first ten coins launched after Bitcoin, its whitepaper was released in August 2012 by Scott Nadal and Sunny King. Inspired by Bitcoin’s concept, Peercoin has a unique feature where transaction fees are automatically destroyed by the system, helping to self-regulate transaction volumes.
• Dogecoin. Launched in December 2013, DOGE was initially based on a popular internet meme featuring a Shiba Inu dog. Surprisingly, it gained widespread popularity and, by January 2016, reached a market capitalization of $16 million. Initially, it had a cap of 100 billion coins, but founder Jackson Palmer later embraced the unlimited market supply idea. As of fall 2024, Dogecoin ranks 8th in the global cryptocurrency rankings, according to CoinMarketCap.
• Feathercoin. Peter Bushnell's first blog post about the Feathercoin launch on Bitcointalk dates back to April 16, 2013. As one of the oldest altcoins, Feathercoin has stood the test of time and continues to be actively developed by its founder and a small but dedicated community. This crypto is an improved and customized BTC version, offering users access to two wallets — FeathercoinCore and Electrum — that function similarly to Bitcoin but with faster block processing times. In addition to these wallets, Feathercoin is supported by various mobile wallets and blockchains.
• Gridcoin. This crypto uses blockchain technology to crowdsource computational resources for scientific projects. The Gridcoin protocol was published on October 16, 2013, and employs a Proof-of-Stake mechanism for its issuance. A Gridcoin’s key feature is that its issuance is tied to participation in scientific distributed computing, meaning users are rewarded for their ‘computational contributions’ to science. Gridcoin aims to differentiate itself from BTC by adopting ‘eco-friendly’ methods for minting new coins and securing the network. It implements a novel Proof-of-Research (PoR) scheme that rewards Gridcoin users for performing valuable scientific computations through BOINC (Berkeley Open Infrastructure for Network Computing).
• Primecoin. This blockchain-based crypto employs Proof-of-Work technology to generate new blocks and manage transactions. What sets Primecoin apart is its unique approach of using the undiscovered prime numbers computation as the complex mathematical problem required for block creation. This means that the computing power and energy consumed by the cryptocurrency serve a beneficial scientific purpose, contributing to mathematical research while securing the network.
• Ripple. Launched in 2013, Ripple is a payment protocol that facilitates real-time gross settlement systems efficiently used by some of the largest centralized financial companies worldwide. The XRP token is among the leading coins introduced after Bitcoin. The protocol is designed to address scalability issues and is capable of confirming 1 500 transactions per second and reaching up to 50 000 operations per second. Additionally, XRP ranks seventh among digital coins.

Cryptocurrencies are high-risk assets, so it's essential to approach such investments wisely. Before investing in a project, you should thoroughly research what it entails rather than choosing it solely based on fascinating ads. Many investors prioritize the crypto asset age when conducting their research. It’s generally believed that the more market cycles an asset has survived, the more reliable it is.

F.A.Q.

How is crypto created?

Digital coins are generated through mining. Users harness their devices’ computing power to solve cryptographic puzzles, and the cryptocurrency creation is this effort’s result.

What is crypto’s market capitalization?

As of September 2024, the global crypto market capitalization exceeds $2.1 trillion.

What’s the prospect for crypto?

Cryptocurrency is the key to decentralizing the economy, reducing reliance on traditional payment systems, and ensuring widespread financial accessibility. Digital assets are expected to gain even greater traction and acceptance in the future.

What makes cryptocurrency different from fiat money?

The main difference between digital currencies and fiat money is decentralization. Any financial institution doesn’t govern cryptocurrencies; instead, the rules are established by the participants of the crypto community themselves.