The history of cryptocurrency starts with the most mysterious IT character known as Satoshi Nikamoto. In 2008 he (she, or even they) posted the whitepaper called Bitcoin: A Peer to Peer Electronic Cash System, where the bitcoin protocol (BTC) was described. Satoshi named his currency a transparent version of peer-to-peer digital money. It was a blockchain technology and bitcoin debut.
In January 2009 50 first coins were generated, Satoshi Nikamoto carried out 10 first bitcoins transaction and posted the code to the open internet sources. The digital community accepted blockchain as it was a decentralized, transparent system where the data was unchangeable and unruly. In 2009 the bitcoin wasn’t demanded by the general public as now, and it was mined just by pro, especially from IT sphere. As the quantity of coins was very low it was possible to generate them using PC. When bitcoin became popular serious margin of power was needed to create new chains. Nowadays it is impossible to mine at home. The bitcoin exchange rate was appreciating and at the end of 2009 it ranged from 700 to 1600 bitcoins to the U.S. dollar. The first exchangers were established in 2010 when a ridiculous Bitcoin pizza story took place.
A programmer Laszlo Hanyecz decided to pay 10,000 bitcoins ($40 according to the exchange rate in 2010) someone who would buy him two pizzas. The volunteer was found and Laszlo made the first purchase using cryptocurrency. In 2011 the bitcoin exchange rate increased by 25 thousand times, so the American programmer purchase has gone down in history as the priciest pizza. Its price is still being recounted every year. In 2018 bitcoin is considered to be the most expensive cryptocurrency.
With the growing bitcoin popularly and dramatic increase in exchange rate some problems appeared. One of them was a scalability. The first cryptocurrency block size was just about 1 megabyte. This block size was appropriate just for several dozens of first bitcoin users, but in 2018 the amount of them exceeded 1 million of people. The quantity of transactions increased significantly provoking the queue. The users either had to wait the transaction confirmation for several days or to pay additional commission. Small sum Bitcoin payments were difficult to make, the ways of problem solutions provoked debates in society. At this time the leading developer team, headed by Amaury Séchet, carried out a hard fork which is a radical change to protocol that makes previously invalid blocks/transactions valid. The 32 Mb Bitcoin Cash (BCH) was created. All bitcoin holders automatically turned into new cryptocurrency owners permitting the transaction acceleration. The problem of delayed transaction confirmations was solved.
The scaling problem provoked other forks, such as litecoin (LTC). It was created by American programmer Charlie Lee in 2011. The litecoin transaction speed was higher than the daddy’s one, having four times increased the carrying capacity. Thanks to its convenience, high speed and affordability, litecoin soon became a very popular cryptocurrency. Moreover, it was litecoin that carried out transactions with other blockchains (Decred, Vertcoin, bitcoin) for the first time. The intermediaries’ services were no longer demanded as the cryptocurrency exchange was implemented. In addition, atomic swap technology solved the problem of lack of needed coins and forced additional conversions on the Stock exchange.
The Russian-Canadian programmer Vitalik Buterin was a member of bitcoin programmer team. He argued that bitcoin needed a scripting language for application . So, he suggested to design it, however, the bitcoin community didn’t appreciate his idea. So, Vitalik Buterin launched his own project and in 2013 he published the new platform white paper where the main aim was described . He decided to supply blockchain with programming language to use it as a tool for smart-contact creation. So, Ethereum was invented.
In contrast to bitcoin, the Ethereum can not only write such data as a cryptocurrency, but also as smart-contracts. (Contracts written in programming language and kept in a blockchain). The smart- contracts made Ethereum popular as it permitted to monitor all blockchain transactions, and since that moment they were transparent and irreversible. ETH became the project currency. It is bought by programmers in order to create blockchain based Ethereum applications. The code is available to all, so everyone can use it to design an application or cryptocurrency.
Apart from bitcoin based applications, there are other types of blockchains using their own virtual money. For instance, DASH payment system with fully anonymous transactions . In a word, anonymity problem became the reason for new cryptocurrency creation.
Evan Duffield, a developer, suggested to build anonymity in bitcoin, but the Bitcoin community didn’t take to his proposed solution . So he decided to act and created his personal algorithm called Darkcoin later renamed as Dash. Nowadays this cryptocurrency is characterized by fully anonymous transactions and high level of decentralization. The Dash mining, in contrast to many other variants, is available on PC. All network members take par in its development.
The anonymous transaction is offered not only by DASH, but also by Monero (XMR) invented by Nicolas v an Saberhagen in 2013. The coin appeared without preliminary mining as the special mining program was invented several weeks later. In contrast to bitcoin, Monero doesn’t show the recipient name, the sum of money in the wallet, transaction time and date. The anonymous usage made cryptocurrency very popular. Many other payment systems, such as ZCash (ZEC) appeared.
Cryptocurrency market isn’t stable now. The exchange rate is growing rapidly and falling rapidly because of stock-market speculation. However, digital money has turned into mainstream. According to Vitalik Buterin, soon exchange rate spikes will terminate and people concerned will work with cryptocurrency at a deeper level. The industry is making millions of dollars and Fortune 500 giants are implementing bitcoins and smart-contracts in their businesses. This technology simplifies the partnership projects, assists with avoiding third persons influence and frauds. Bitcoin is being tested by banks to issue loans, cut spends, accelerate money transfers; insurance companies and funds to write down client data; creative industries for crowdfunding and copywrite protection. In 2017 there was ICO boom and hundreds of new coins appeared. It seems that cryptocurrency history had just started.
