Even though we usually assume that crypto has started with Bitcoin, there were other predecessors that helped BTC to appear. The history of cryptocurrency says that the first attempts to create crypto were made 20 years before Bitcoin, let’s find it out!
Gas stations in the Netherlands
The first alternative means of payment appeared as an attempt to solve the problem of nighttime thefts on gas stations in the Netherlands. Developers offered to avoid paying with cash by linking money to smartcards that were created especially for these stations and their customers. Drivers could use cards instead of cash, and thus the amount of cash was significantly decreased.
Another attempt was made by David Chaum, a cryptographer and computer scientist. He believed that in order to develop commerce electronic imitation of regular money was needed. David Chaum developed a way to encrypt information to pass it securely between individuals. It was called “blinded cash”. His invention was in fact an extension of the RSA cryptographic algorithm. David Chaum offered a concept of adding a signature of authenticity. Several years later he founded DigiCash and put his ideas to practice. Even though DigiCash was not very successful, some of these ideas were used in modern technologies.
In the 1990s a number of startups appeared. They were trying to achieve goals that were set up by DigiCash. One of the greatest examples is PayPal. It signified a revolution in peer-to-peer payments. It was the first service that provided money transfers without the third party interference, it went straight from one person to another.
Flooz.com was a project in the late 90-s that tried to create an electronic currency that could be used uniquely for online trade. Users were supposed to accumulate flooz credits by purchasing something at Flooz.com, and then they could be exchanged for goods. The most interesting feature of this project was that customers could spend flooz not only on flooz.com, but also on a number of other partner platforms.
Another project on the timeline of the history of cryptocurrency is B-money that was proposed in 1998 by Wei Dai. It was designed as an “anonymous, distributed electronic cash system”. The idea was to use two synchronous protocols. It also used pseudonyms to make money transfers within a decentralized network. Unfortunately, the innovation was unable to attract enough attention to launch.
Bit Gold was a project of the late 90-s, proposed by Nick Szabo. It had its own Proof-of-Work system. A part of it was later used in Bitcoin mining technology. Just as well as in a modern blockchain system solutions were encrypted and then published. Bit Gold was the first strong attempt to avoid centralization. In the end, the project turned out to be not very successful. However, it gave life to some new ideas that were developed later.
Probably, the most lucrative project of the pre-Bitcoin times was Hashcash. There were a number of ideas behind this project, including the prevention of email spamming and DDoS attacks. Hashcash faced a lot of problems, such as the constant need in increasing the processing power. Even though this project was not able to survive through these things, it brought a lot of innovations that were used in Bitcoin as well.
It is impossible to imagine the creation of modern cryptocurrencies without a long period of different attempts. After looking back briefly at the history of crypto, we notice that the pre-Bitcoin time made a huge impact on the technologies that developed into today’s cryptocurrencies.