The rise of digital currency
The cryptocurrency craze seems to have come out of nowhere. But there’s no escaping the incredible growth of the industry – in August 2021, the total market value of cryptocurrencies exceeded $2 trillion.
But how did we get to this point, where crypto has gone from digital novelty to trillion-dollar technology in the space of a few short years? And what’s next for Bitcoin, Ethereum and Dogecoin – will these become the main forms of currency in a completely cashless society?
It’s time for a quick history lesson, to get to grips with the meteoric rise of digital currency.
It all started with Bitcoin
In 2008, a paper called ‘Bitcoin – A Peer to Peer Electronic Cash System’ was posted to a mailing list, as part of a discussion on cryptography. It was authored by Satoshi Nakamoto, a mysterious figure whose real identity is still unknown.
As little as a year later, the first Bitcoin software was launched. Mining – where new Bitcoins are created, logged and verified on the blockchain – also started in 2009.
In 2010, Bitcoin was valued for the first time. Up to this point, Bitcoins had only ever been mined. No one had yet considered trading them, but this happened for the first time when a Bitcoin enthusiast ‘sold’ 10,000 units for the princely price of two pizzas. Little did they know that if they had kept those units, they would be worth over $100 million today.
Rival cryptocurrencies emerge
With Bitcoin becoming more popular, the idea of encrypted digital currencies starts to catch on. This led to the launch of other cryptocurrencies from 2011 onwards, including Litecoin and Namecoin. At the time, no one imagined that there would be upwards of 1,000 different cryptocurrencies in circulation just a decade later.
A difficult period
The following few years of Bitcoins history were a little more turbulent. There was a major price crash in 2013, where the per-unit price dropped from $1,000 to just $300. This led to heavy investor losses, and prices took a couple of years to recover.
What happened next was somewhat predictable, especially for a brand new technology – and for a currency designed with anonymity in mind.
In early 2014, the world’s largest Bitcoin exchange Mt.Gox went offline, and approximately 850,000 Bitcoins worth $450 million completely disappeared. The exact circumstances are still unknown, but it’s suspected that the emerging and highly lucrative cryptocurrency was targeted by criminals.
If the same thing happened today, the thieves would have made off with a whopping $4.4 billion in Bitcoins.
Blockchain kickstarts revolution in fintech
As Bitcoin reaches a value of $10,000 and the market cap on cryptocurrency jumps from $11 billion to £300 billion, a whole new industry was born. From 2017, blockchain technology found many more applications, and many new adopters jumped onboard. Major banks such as Deutsche Bank, Barclays and BNP Paribas all start looking into ways to work with Bitcoin, sparking a revolution in the fintech industry.
2021 and beyond
The last couple of years have seen many new major players embrace cryptocurrency, finally bringing it into the mainstream. These included car manufacturer Tesla, which bought $1.5 billion in Bitcoin in early 2021, and huge financial institutions such as Goldman Sachs introducing new cryptocurrency services. The US crypto exchange platform Coinbase was even listed on the Nasdaq stock market.
So, what’s next? Crypto is set to play a significant role in everything from tech and finance to social media, including Facebook’s new ‘Metaverse’ project. The sky’s the limit.
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