Bitcoin reigns over the cryptocurrency space. However, contrary to what many would believe, electronic payments and digital money aren’t totally new ideas only introduced by Satoshi Nakamoto.
Bitcoin might be regarded as the starting point for everything that followed in its wake because other previous attempts aren’t so talked about since they haven’t succeeded in turning into viable, accepted, and used cryptocurrencies. A fundamentally new financial system is a concept that other developers have tried to embody in Bit Gold, B-money, eCash, and other pioneering developments. They aspired to enable individuals to check their cryptocurrencies’ prices just like you check the Bitcoin price today.
Those with fantastic financial thinking prepared the world for the digital economy and formed a new market so that you can today use Bitcoin (BTC) and other cryptocurrencies easily. And how easily! When you want to invest in Bitcoin, you simply register on a popular crypto platform and determine an amount you’re comfortable losing. There are several ways to pay for it and many applications, like storing it long-term, using it to pay for your vacation or flight tickets, donating it, and so on.
Several attempts led to BTC’s creation, but it took over 20 years for it to become the cryptocurrency it is today. Let’s see what revolutionary and mind-blowing projects gave wings to the digital economy and currency of the digital era.
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eCash
In 1983, American cryptographer David Chaum originated the idea of a form of electronic cash. He proposed using cryptography to create digital signatures, and in the 1990s, he suggested electronic payment platforms.
In the hopes that the money spent on digital platforms could be sent anonymously and secured from being counterfeited by any third party, he developed the so-called “blinding formula.” It was meant to be used to encrypt information passed between users and to hide the identity of the person signing forever. As a result, no one could tell how much money someone held or who had signed a particular transaction.
Chaum’s system worked by using private and public keys, an idea that describes the crypto space and blockchain, and is now widely used in e-commerce, too – if you’ve ever used credit cards for shopping online, you likely used a blind signature.
Several years after creating the concept, Chaum founded DigiCash and developed the first cryptographic electronic money – eCash. DigiCash went bankrupt in 1998, but the company’s idea, formulas, and encryption tools played a crucial part in creating later virtual coins.
E-Gold
In 1996, oncologist Douglas Jackson and attorney Barry Downey gave life to another concept: electronic money tied to the possession of gold. E-Gold was a virtual gold currency operated by G&SR that permitted users to open an account denominated in grams of gold or other precious metals, allowing them to transfer ownership of gold.
E-Gold quickly became a tool for money laundering or other illegal activities that implicated anonymity, although unintentionally. At its peak in 2006, it processed more than $2 billion in transactions every year.
Bit Gold
Blockchain pioneer Nick Szabo tried to create a decentralised virtual currency in 1998. His project was never implemented; however, it’s seen as the precursor to Satoshi Nakamoto’s Bitcoin protocol. Bit gold accomplishes decentralisation by combining features of cryptography and mining, like time-stamped blocks that are recorded in a title registry and created using proof-of-work (PoW) strings.
The shift away from centralised status was probably the most ground-breaking aspect of the Bit Gold concept. It aimed to eliminate reliance on centralised currency distributors and authorities while reflecting the properties of real gold, therefore eliminating any intermediary.
Bit Gold, like other attempts, failed, but it inspired the digital currencies that are now in use.
B-Money
In 1998, developer Wei Dai attempted to create an anonymous, secure, distributed, and private electronic cash system through B-Money. He proposed two different protocols, one of which required an unjammable and synchronous broadcast channel.
B-money was never successful, and it varied from Bitcoin in numerous respects. Nonetheless, it was an attempt to create an electronic currency system that was secure, private, and anonymous. In this system, users would use digital pseudonyms to transfer currency through a decentralised network. It also included a method for in-network contract enforcement without implicating a third party.
Despite Wei Dai’s presentation of a whitepaper for B-money, the project needed more attention to be successfully launched. However, its impact on the cryptocurrency frenzy is unquestionable, as there are elements of B-money referenced in Nakamoto’s Bitcoin whitepaper.
Flooz
The Flooz e-currency is an example of using virtual money before cryptocurrencies’ emergence and was released in 1998 by Flooz.com as part of its marketing campaign. Users received Flooz for purchases made on the company’s website and could use it to purchase other products or use it as bonus points in several other participating online stores. The cost of a Flooz was $1.
Despite the multimillion-dollar advertising campaign, the e-currency didn’t garner the popularity needed to keep the project afloat. Additionally, the website suffered huge losses after a group of Philippine and Russian hackers bought from this platform with stolen credit cards.
This company no longer exists, but the concepts that inspired the creators of Flooz have been implemented in modern cryptocurrencies.
Hashcash
Hashcash was developed in the mid-1990s and was among the most successful pre-Bitcoin e-currencies. It was created for many purposes, like preventing distributed denial-of-service (DDoS) attacks and minimising email spam.
Hashcash opened up many possibilities that were released almost twenty years later. To aid in the creation and distribution of new coins, the system used a proof-of-work algorithm, much like many current cryptocurrencies. And just like today’s digital currencies, the system wasn’t spared similar problems. In 1997, the system became increasingly less effective as it faced an increased need for processing power.
Even though Bitcoin’s not the first cryptocurrency, it is the oldest surviving one, having been introduced in 2008 via a whitepaper. In 2010, the first cryptocurrency purchase occurred – two pizzas for 10,000 BTC, or about $173 million at the moment of writing.
