Cryptocurrencies are changing the way we think about money. They’ve continued to make headlines since the launch of Bitcoin back in 2008.
Here, we look at seven events that helped to shape the evolution of cryptocurrencies over the last decade.
THE BIRTH OF BITCOIN
Bitcoin, the world’s first cryptocurrency, was established in 2008 by an unknown founder who goes under the pseudonym ‘Satoshi Nakamoto’.
The original Bitcoin whitepaper was released by Nakamoto the following year. The paper presented the argument that the problem with current online transactions is that they rely on the security of a centralised bank. This means that transactions are inevitably prone to fraud and unnecessary transfer charges.
The whitepaper introduced Bitcoin as a form of digital currency that would remove the need for a centralised financial institution. By relying on users within its network to verify transactions through encryption, the currency could be used to make truly direct, trusted and secure payments.
This system of peer-to-peer verification laid the foundations for blockchain technology and all the modern cryptocurrencies that rely on it.
THE FIRST REAL-WORLD TRANSACTION
In early 2010, Florida-based software developer Laszlo Hanyecz made the first Bitcoin transaction when he ordered two pizzas to be delivered to his home at a cost of 10,000 BTC (worth £48 billion today).
That real-world transaction turned Bitcoin’s theory into a reality. Two months later, the value of a Bitcoin grew by 900%. Today, you can buy and sell cryptocurrency in a matter of seconds thanks to the services offered by Skrill.
BITCOIN GETS HACKED
In 2010, hackers stole more than 184 million coins. This is the only security breach ever to have been reported in the cryptocurrency’s system.
The growing popularity of Bitcoin was based on the fact that it was supposed to be more secure than centralised banks, an important feature in the years following the financial crash. The hack resulted in a short-term drop in the value of the cryptocurrency and a loss of faith in its security.
Rival cryptocurrencies used this as an opportunity to prove their superiority. Litecoin, emerging in 2011, introduced a faster transaction confirmation rate, dramatically reducing any chance of a hack.
BIG BUSINESS PUTS FAITH IN CRYPTOCURRENCIES
The anonymity afforded to users of cryptocurrencies raised doubts about its use on the dark web. Yet, by 2013, cryptocurrencies had infiltrated the mainstream. Big businesses were starting to investigate the possibilities of using cryptocurrencies internally to pay shareholders and transfer funds internationally.
Virgin Galactic was one of the first companies to embrace cryptocurrency. In 2013, it allowed users to pay for space travel with Bitcoin. This illustrated how established cryptocurrencies were becoming within the wider technology market.
Months later, Microsoft announced that it would be accepting Bitcoin as payment for the purchase of online games.
THE LAUNCH OF ETHEREUM
By 2015, cryptocurrencies were big news. In July, a new open-source blockchain computing platform was launched under the name Ethereum. Around 72 million coins were thought to have been pre-mined by the platform.
Ethereum allowed developers to build decentralised applications without the need for an advanced knowledge of coding and cryptography. This paved the way for an explosion of the number of cryptocurrencies that would become available.
NEW CRYPTOCURRENCIES FLOOD THE MARKET
By May 2017, there were more than 1000 different cryptocurrencies to choose from. The market capitalisation value of all cryptocurrencies exceeded $100 billion for the first time.
More platforms began to emerge that made buying cryptocurrency easy for everyone. Platforms like Skrill now allow people to instantly buy multiple cryptocurrencies in one place.
BANKS AND GOVERNMENTS RECOGNISE CRYPTOCURRENCY
Nearly a decade after its launch, Bitcoin began to be recognised by governments and major financial institutions. In 2017, Japan became the first country to pass a law accepting Bitcoin as a legal payment method. Norwegian banks now integrate Bitcoin accounts and accept cryptocurrency as a viable investment asset.
In 2018, cryptocurrencies have continued to gain momentum as a real investment opportunity that exists outside the confines of large tech companies. Today, over $50 billion worth of cryptocurrencies is traded every day, rivalling the 24-hour trade volume of the New York Stock Exchange.