The emergence of Bitcoin has taken the world by storm, epitomized by its drastic rise and fall, Bitcoin’s story is one that continues to defy traditional economics leaving many in awe of its disruptive nature. The early beginnings were covered in skepticism with established economists and powerful financial institutions expressing doubt over its potential yet many technologists and programmers had been convinced of the new technology’s capabilities and were deeply getting involved in it by the day. The attention given to Bitcoin would get one thinking that the technology behind it and other cryptocurrencies is a recent invention but that may be misleading since the underlying technology, Blockchain which neatly combines elements of cryptography and decentralized systems took painstaking years of study and research to make ready for use. Here, I will roll back the carpet and walk you through the build up to Cryptocurrency, Bitcoin in this case.
Cryptography, a major feature in the design of cryptocurrencies was mainly a reserve for the military and intelligence agencies with tight regulations surrounding its use until the late 70’s when the US Government eased down on its control attracting many developers and enthusiasts to participate in its development. One such developer was David Chaum a computer scientist and cryptographer known for research in anonymous systems whose work fuelled rapid progress in cryptography. He developed ecash an anonymous electronic cash application, the blind signature, an untraceable payment system that separated a person’s identity from the transaction in 1983 and many other cryptographic protocols which became a reference for anonymous communications research and an inspiration for the Cypherpunks cryptographic developments.
In the late 1980’s the Cyperpunks, a movement that advocated for social and political change through the use of strong cryptography for privacy and security based much of their work on David Chaum’s earlier research made advances in crypto currency with the proof of work systems. This group’s mailing list which started in 1992 later grew to about 700 people by 1995 with some of the members making breakthroughs in the field of cryptography and decentralized systems.
Adam Back a British cryptographer invented Hashcash, a proof of work algorithm very similar to the one currently being used by Bitcoin in 1997. In the same year Wei Dai, a Microsoft researcher and a member of cypherpunks introduced B-Money merging concepts of decentralization and digital contracts sparking interest in cryptocurrencies. Both Adam Back and WeI Dai were contacted by Satoshi Nakamoto before Bitcoin’s launch. A year later Nick Szabo designed Bit gold, a mechanism for a decentralized digital currency. Although it was never implemented it is widely considered a direct precursor to Bitcoin.
In 2004 Hal Finney a cryptography activist and a member of the cypherpunks made a major breakthrough in cryptocurrency and decentralized systems when he developed the first successful reusable proof of work protocol (RPOW) based on Adam Back’s algorithm and later became the very first recipient of Bitcoin. Until his death in 2014, inspite of his terminal illness, he had been contributing to the development of Bitcoin.
Satoshi Nakamoto the pseudonymous creator of Bitcoin is believed to have started coding the Bitcoin protocol in late 2007 through 2008 until its launch in January 2009 and was active in its development until 2010 when he handed over to Gavin Andresen who became the lead developer and later founder of the Bitcoin Foundation, a nonprofit organization that standardizes, protects and promotes the use of Bitcoin worldwide.
It is from here that other cryptocurrencies most of which basing their design on the Bitcoin protocol picked up leading to a flurry in the cryptocurrency space especially in the Initial Coin Offerings (ICOs) through which they raised funds to build projects a technique very similar to the Initial Public Offering (IPO) in traditional businesses.
