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Crypto in plain English

One minute per topic – easy to understand and perfect for beginners.

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April 25, 2022

A brief history of cryptocurrencies

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today, let’s take a brief look at the history of crypto, why it was invented, and how it evolved.

It all started in 1983, when a researcher called David Chaum imagined digital money, and his idea slowly started to resonate with the cypherpunks movement. This group was interested in ways to preserve anonymity through cryptography in the early days of the internet, and an anonymous digital payments system was eventually outlined by one member, Wei Dai, in 1998.

But the internet was young, and that idea remained dormant until 2009, when an anonymous programmer under the pseudonym of Satoshi Nakamoto launched Bitcoin.

In the first transaction ever, Satoshi referenced an article about a bank being bailed out by the British government after the 2008 financial crisis, leading people to believe that Bitcoin was a protest against government controlled financial systems.

Bitcoin became popular quickly and in May 2010 someone made the first real world transaction – he paid another person 10,000 Bitcoins in exchange for two pizzas. It may sound silly in retrospect, but this was significant: Bitcoin suddenly had a value.

The year after, the first major alternative blockchain was launched: Litecoin was a Bitcoin clone, aimed at improving upon it. Many more so-called altcoins followed it.

At this point, crypto was only used to store value or send money around. But a young computer programmer called Vitalik Buterin wanted to replace the entire financial system: Smart contracts would turn crypto into programmable money with infinite potential.

His vision was called Ethereum and caught the attention of Peter Thiel, the PayPal co-founder, who gave him $100,000 dollars to drop out of college and pursue the idea. Ethereum was launched in 2015 and took the world by storm. By mid 2017 it already overtook Bitcoin in transactions per day. 

Later that year, Bitcoin itself touched $20000 - making that original pizza purchase worth $200 million dollars.

The markets pulled back, and Bitcoin dropped to around $4000 before starting a meteoric rise again in 2020. Today, there are almost 10000 traded tokens, and Bitcoin is still the largest cryptocurrency.

We hope you liked this brief trip down memory lane. And next time we discuss the claim that crypto is really just a ponzi scheme.

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