The 6 Cryptocurrency Trials Before Bitcoin

Bitcoin rules the cryptocurrency space. However, contrary to what many would believe, electronic payments and digital money are not completely new ideas only introduced by Satoshi Nakamoto.

Bitcoin can be considered the starting point for everything that followed in its wake because other previous attempts are not as publicized since they have not succeeded in becoming viable, accepted and used cryptocurrencies. A fundamentally new financial system is a concept that other developers have tried to incorporate into Bit Gold, B-money, eCash and other cutting-edge developments. They wanted to enable individuals to check the prices of their cryptocurrencies, just like you check the Bitcoin price today.

Those with fantastic financial thinking prepared the world for the digital economy and formed a new market so that today you can easily use Bitcoin (BTC) and other cryptocurrencies. And how simple! When you want to invest in Bitcoin, you simply sign up on a popular crypto platform and decide on an amount you are comfortable losing. There are several ways to pay for it and many applications, such as storing it long-term, using it to pay for your vacation or plane tickets, donating it, and so on.

Several attempts led to BTC’s creation, but it took over 20 years for it to become the cryptocurrency it is today. Let’s see which revolutionary and sensational projects gave wings to the digital economy and currency of the digital era.

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eCash

In 1983, the American cryptographer David Chaum started the idea of ​​a form of electronic cash. He proposed using cryptography to create digital signatures, and in the 1990s he proposed electronic payment platforms.

In the hope that the money spent on digital platforms could be sent anonymously and secured against being counterfeited by a third party, he developed the so-called “blinding formula”. It was intended to be used to encrypt information sent between users and to hide the identity of the person signing forever. As a result, no one could tell how much money someone had or who had signed a particular transaction.

Chaum’s system worked using private and public keys, an idea that describes the crypto space and the blockchain, and is now widely used in e-commerce as well – if you’ve ever used a credit card to shop online, you’ve probably used a blind signature.

Several years after creating the concept, Chaum founded DigiCash and developed the first cryptographic electronic money – eCash. DigiCash went bankrupt in 1998, but the company’s idea, formulas and encryption tools played a crucial role in creating later virtual coins.

E-gold

In 1996, oncologist Douglas Jackson and lawyer Barry Downey gave life to another concept: electronic money linked to the possession of gold. E-Gold was a virtual gold currency powered by G&SR that allowed users to open an account denominated in grams of gold or other precious metals, allowing them to transfer ownership of gold.

E-Gold quickly became a tool for money laundering or other illegal activities that implied anonymity, even if it was unintentional. At its peak in 2006, it processed more than $2 billion in transactions each year.

A little gold

Blockchain pioneer Nick Szabo tried to create a decentralized virtual currency in 1998. His project was never implemented; However, it is seen as the precursor to Satoshi Nakamoto’s Bitcoin protocol. Bit gold achieves decentralization by combining features from cryptography and mining, such as time-stamped blocks recorded in a title registry and created using proof-of-work (PoW) strings.

The shift away from centralized status was probably the most ground-breaking aspect of the Bit Gold concept. It aimed to eliminate reliance on centralized currency distributors and governments while reflecting the characteristics of real gold, therefore eliminating any middleman.

Bit Gold, like other attempts, failed, but it inspired the digital currencies now in use.

B money

In 1998, developer Wei Dai attempted to create an anonymous, secure, distributed and private electronic cash system through B-Money. He proposed two different protocols, one of which required an unjammable and synchronous broadcast channel.

B-money was never successful and it differed from Bitcoin in many ways. Nevertheless, it was an attempt to create an electronic currency system that was secure, private and anonymous. In this system, users will use digital pseudonyms to transfer currency through a decentralized network. It also included a method of enforcing contracts in the network without implicating a third party.

Despite Wei Dai’s presentation of a whitepaper for B money, the project needed more attention to be successfully launched. However, its impact on the cryptocurrency frenzy is unquestionable, as there are elements of B-money referenced in Nakamoto’s Bitcoin Whitepaper.

Flooz

Flooz e-currency is an example of the use of virtual money before the rise of cryptocurrencies and was released in 1998 by Flooz.com as part of its marketing campaign. Users received Flooz for purchases made on the company’s website and could use it to buy other products or use it as bonus points in several other participating online stores. The cost of a Flooz was $1.

Despite the multimillion-dollar advertising campaign, the e-currency did not gain the popularity needed to keep the project afloat. In addition, the site suffered heavy losses after a group of Filipino and Russian hackers purchased from this platform with stolen credit cards.

This company no longer exists, but the concepts that inspired the creators of Flooz have been implemented in modern cryptocurrencies.

Hashcash

Hashcash was developed in the mid-1990s and was among the most successful pre-Bitcoin e-currencies. It was created for many purposes, such as preventing distributed denial-of-service (DDoS) attacks and minimizing spam.

Hashcash opened up many possibilities that were released almost twenty years later. To help create and distribute new coins, the system used a proof-of-work algorithm, much like many current cryptocurrencies. And just like today’s digital currencies, the system was not spared similar problems. In 1997, the system became increasingly less efficient as it faced an increased need for processing power.

Although Bitcoin is not the first cryptocurrency, it is the oldest survivor, having been introduced in 2008 via a whitepaper. In 2010, the first cryptocurrency purchase took place – two pizzas for 10,000 BTC, or around $173 million at the time of writing.