Ask CryptoVantage: Did Cryptocurrency Exist Before Bitcoin?

The First Attempts at Cryptocurrencies

The idea for cryptocurrency first began in the 1990s, the idea for a currency which could be sent untraceable and in a trustless manner, a decentralized digital currency. In 1995, American cryptographer David Chaum implemented an anonymous cryptographic electronic money called Digicash. It was an early form of cryptographic electronic payments which required user software to withdraw from a bank and required specific encrypted keys before it could be sent to a recipient. This advancement of public and private key cryptography allowed electronic payments to become untraceable by the issuing bank, the government, or a third party.

Bit Gold, often called a direct precursor to Bitcoin, was designed in 1998 by Nick Szabo. It required a participant to dedicate computer power to solving cryptographic. A user had to solve a cryptographic puzzle using computing power. All solved puzzles were sent through a Byzantine Fault Tolerant (BFT) peer-to-peer network and then assigned to the public key of the puzzle solver. Details relating to the transaction are stored in a title registry, much like with a blockchain’s consensus system because it offers an immutable record of and order for transactions that have taken place. If you put Chaum and Szabo’s concepts together and you have something that resembles Bitcoin.

Bit Gold was never actually launched though because Szabo could not solve the puzzle of the double-spending problem (digital data can be copied and pasted) without the use of a central authority, and so it was not until a decade later when a mysterious person or persons, using the pseudonym Satoshi Nakamoto, published a white paper called Bitcoin – A Peer to Peer Electronic Cash System, that the history of Bitcoin, and subsequent cryptocurrencies, began.

Bitcoin Arrives

The similarities between Bit Gold and Bitcoin led a lot of people to believe that Szabo was the man behind the pseudonym, but he has denied this claim time and time again. However, it seems clear that the Digicash and Bit Gold concepts helped to create the first successful form of cryptocurrency which we all know and love as Bitcoin.

On October 31, 2008, Satoshi Nakamoto published the white paper called Bitcoin – A Peer to Peer Electronic Cash System, describing the functionality of the Bitcoin blockchain network. Blockchain technology is the basis for all subsequent cryptocurrencies, and is the reason that Bitcoin was able to become a successful crypto.

So, while cryptocurrency, or at least the concept of it, did exist before Bitcoin, it was not until Bitcoin entered the scene that cryptocurrency became legitimized. As a result of Bitcoin, all other digital currencies that have developed, including national digital dollars like that they are now using in China, have become intriguing technological developments, and it will be interesting just how mainstream crypto becomes.