Cryptocurrency: An Overview of How Digital Money Came Into Being

“Crypto,” “blockchain,” and “token” have become major buzzwords over a very short order of time, and all of them related to the idea of a cryptocurrency. That said, the notion of a cryptographic form of non-physical currency goes as far back as the 1980s. Provided below is an overview of how cryptocurrency came to be, its state during the “crypto bubble,” and what remains of it now.


Two major names are connected to cryptocurrency’s origins.

  1. David Lee Chaum is a Jewish American cryptographer who first came up with the idea of a cryptocurrency in the early 1980s.
  2. Satoshi Nakamoto is the pseudonym of one or more individuals who developed Bitcoin in the ’00s. This name is so influential to the concept of 21st Century cryptocurrency that a “satoshi,” or “sat,” is a shorthand term for the smallest unit of bitcoin; 1 Bitcoin is equivalent to 100 million sat.

While the earliest concepts of Chaum’s cryptocurrency can be traced back to 1983, which he coined as “ecash,” it would not be until the ’90s that it would become a reality. Now being marketed as “Digicash,” this form of payment required specialized software that would withdraw banknotes and use special encryption before sending them off, with no means of being traced, to another party.

One year after Chaum’s Digicash was put into practice, the National Security Agency published a paper discussing how a cryptocurrency ecosystem works. Said paper was initially published in a mailing list of the Massachusetts Institute of Technology but was later published in the 1997 edition of “The American Law Review.” In 1998, Wei Dai, a Chinese computer engineer came up with the term “b-money” as a form of anonymous electronic cash, followed shortly thereafter by Nick Szabo, an American legal scholar and crypto-enthusiast, who came up with a similar idea but called “bit gold” (no relation to “BitGold” which had its value tied to a gold standard). Much like the various cryptocurrencies that would arrive in the 21st Century, bit gold was regarded as an e-commerce system where users had to complete proof of work using cryptographic solving and publication. Additionally, some have suspected that Szabo may be Nakamoto, but he has repeatedly denied this.

The Dawning of the 21st Century and the Crypto Bubble

January 2009 marked the introduction of Satoshi Nakamoto’s Bitcoin and its use of SHA-256 for crypto-hashing. “Namecoin” entered the market in April of 2011, introduced with a decentralized DNS. Later that year, in October, “Litecoin” came out, using “scrypt” for a hash function instead of SHA-256. “Peercoin” would debut nearly a year later in August of 2012, using a blend of proof-of-work and proof-of-stake to earn. This introduction of several new cryptocurrencies over such a short period marked the first of several short-lived crypto bubbles and crashes. The next few surges occurred between the years 2013 through 2015 (Bitcoin went from $1,127.45 to $172.15), 2017 through 2018 (Bitcoin peaked at $19,783.06 only to plummet to $5,500), and 2021 up to 2023 (Bitcoin began at a value of $47,686.81.

Government Concerns and Industry Panic

  • August 6th, 2014. Rising interest in cryptocurrency encourages the UK to commission a study. This study, conducted by the UK Treasury, assessed the nature and viability of cryptocurrency within the framework of the nation’s economy and also assessed how greatly cryptocurrencies might require regulation. The final results of this study were published four years later and declared that both cryptoassets and stablecoins (cryptocurrencies with their value tethered to a reference point, such as fiat money, commodities, or a sibling cryptocurrency) required further consultation at the start of 2021.
  • June 2021. After a vote of 62-22, the nation of El Salvador becomes the first country to accept Bitcoin as legal tender. The relevant bill was submitted by President Nayib Bukele.
  • August 2021. Cuba abides by its Resolution 215, joining El Salvador as a Latin nation that recognizes and regulates cryptocurrencies.
  • September 24, 2021. The People’s Republic of China invalidates all cryptocurrency transactions despite its status as the largest crypto market on the globe. An immediate crackdown began on all Chinese intermediaries and miners.
  • April 2022. The U.S. Securities and Exchange Commission announces regulations for cryptocurrencies.
  • April 4, 2022. “Bitmex” is the first agency to lay off one-quarter of its staff.
  • June 12, 2022. The “Celsius Network” exchange ends withdrawals and transfers and several other crypto agencies announce layoffs.
  • June 17, 2022. Hong-Kong-based crypto leader “Babel Finance” freezes withdrawals.
  • June 23, 2022. “CoinFlex” freezes withdrawals and fails to repay a $47 million margin call.
  • June 27, 2022. “Three Arrows Capital,” a crypto hedge fund, defaults on a $670 million loan from crypto broker “Voyager Digital.”
  • September 15, 2022. Ethereum, the planet’s then-second-largest cryptocurrency, transitioned to a proof-of-stake consensus mechanism, known as “the Merge.” According to Ethereum’s co-founder Vitalik Buterin, the measure was intended to reduce the energy consumption and emission generation of mining Ethereum to a mere 0.1%.
  • November 11, 2022. The crypto exchange and hedge fund known as “FTX Trading Ltd.,” evaluated at $18 billion, files for bankruptcy.
  • November 2, 2023. Sam Bankman-Fried, founder of FTX Trading Ltd. is convicted on seven counts of fraud and conspiracy.
  • March 11, 2024. Sam Bankman-Fried will undergo a second trial covering five charges, including bank fraud and bribery.
  • March 28, 2024. Sam Bankman-Fried is sentenced for his fraud and conspiracy and is expected to serve several decades of imprisonment.

In Conclusion

Cryptocurrency is a novel, alternative form of payment that has adapted to the notion of a cash-free society but it also seems to have attracted many speculators and grifters. After several booms and busts, the cryptocurrency industry of 2024 and beyond will likely only involve a few tokens like Bitcoin and Ethereum. Even so, it remains unclear how much longer these forms of payment will linger when willing outlets and vendors continually dry up.