A Brief History of Crypto Currency

•1980's, Dr David Chaum wrote numerous papers on subjects including; “Security without Identification: Transaction Systems to Make Big Brother Obsolete” and “Numbers Can Be a Better Form of Cash than Paper”. Chaum basically predicted the anonymous use of electronic money as opposed to paper money, which we all now know, as Crypto-Currencies.

•1992, Eric Hughes, drafts the Cypherpunks Manifesto in which he states 'privacy in an open society requires anonymous transaction systems. Until now, cash has been the primary such system. An anonymous transaction system is not a secret transaction system. An anonymous system empowers individuals to reveal their identity when desired and only when desired; this is the essence of privacy.'

•1997, Adam Back creates Hashcash an anti-spam mechanism which adds a time and computational power cost to sending email, making the sending of spam uneconomical. The sender would have to prove that they had expended computational power to create a stamp in the header of an email (similar to the proof of work (POW) use in Bitcoin) before they can send it.

•1998, Wei Dai, publishes a proposal for B-Money. This included two methods of maintaining transaction data; a) every participant to the network would maintain a separate database of how much money belongs to users and, b) all records are kept by a specific group of users. Within the second option the group of users who have custody over the records are incentivised to be honest because they have deposited their own money into a special account and stand to lose it if they are not. This method is known as “proof of stake” (POS) and the specific groups of users (or master nodes) will lose all the funds they have staked if they attempt to process any fraudulent transaction.

•2004, Hal Finney, created Reusable Proofs of Work which borrowed from the principles of Backs’ Hashcash.

•2005, Nick Szabo publishes his proposal for Bitgold, built on previous ideas developed by Hal Finney and others.

•2008, Satoshi Nakamoto, an anonymous individual or group of individuals, sends a paper to the cypherpunk mailing titled, “Bitcoin: A Peer-to-Peer Electronic Cash System”. This paper makes direct references to b-money and hashcash and addresses many of the issues that previous developers had such as, double spending (the risk that a single token is used multiple times to purchase goods). Even though the papergarnered a lot of criticism from sceptics, Nakamoto continued on and mined the genesis block of Bitcoin on 3 January 2009.