A Brief History of Crypto Evolution

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The emergence of crypto marked the development of a whole ecosystem of related technologies working on the basis of distributed registries and representing a large industry that is growing every year, changing the usual way of things in one area or another and contributing to radical changes in the financial system, both within a single country and in the whole world. However, how did these technologies appear, and what stages of development did they pass through during the whole history of their existence?

Key Takeaways

  1. The first cryptocurrency in the world is called Bitcoin, the first block of which was created in 2009.
  2. In response to the development of crypto technologies, digital asset applications such as NFT, Metaverse, GameFi, DeFi, Web3, etc. have emerged.
  3. Digital currency was first mentioned in the 1980s, more precisely in 1989. However, it was only in the early 1990s that cryptographic protocols, as well as software, began to be developed that would enable the creation of a truly decentralized digital currency.

The Most Significant Development Stages in the History of Crypto

Since the earliest days of crypto technology, it has experienced many different and sometimes significant changes transforming the world of traditional money into a digital space, an ecosystem of interconnected crypto trends that collectively drive communities towards progress. Digital currency has a 14-year history, mentioned back in 2009, when the first digital cryptocurrency called Bitcoin was born.

Many momentous events have occurred over the years that have directly and indirectly affected not only the transformation of the monetary, payment, and other systems, but also the world’s financial establishment as a whole. Below are the main and most important stages in the development of crypto technologies, from the emergence of the first digital currency to the present day.

1. Crypto – 2008

The digital currency was first mentioned in the 1980s, more precisely in 1989. However, it was only in the early 1990s that cryptographic protocols, as well as software, began to be developed that would enable the creation of a truly decentralized digital currency. The history of Bitcoin (the first decentralized cryptocurrency) starts with the first Bitcoin block that was created on January 3, 2009, and the first payment was made on January 12. And the open-source software was released on the 13th. This allowed anyone with the necessary technical skills to participate in the system. For a long time, the first cryptocurrency generated little interest. Then, during the first 4 months of 2012, the volume of crypto transactions grew by leaps and bounds. In early 2013, Bitcoin’s market capitalization continued the same trend. 

Today, Bitcoin has literally become mainstream in the cryptocurrency world. With a market capitalization of about $200 billion and a daily trading volume of about 320,000 transactions, it has become a significant topic of idle conversation among employees in many companies. Today, there are plenty of offers on the market, from blockchain-based payments to management solutions for identifying management information management. Even more interesting is the blockchain solution behind Bitcoin software, which experts are predicting an even brighter future. No problem cannot be solved by the clever application of blockchain technology.

2. Web3 – 2014

Web 3.0 (also known as Web3) is the next generation of Internet technology that relies heavily on machine learning, artificial intelligence, and blockchain technology. Gavin Wood, inventor of Polkadot and co-founder of Ethereum, coined the term initially. Web 3.0 will give people more control over their online data, whereas Web 2.0 (present generation of the internet) is based on user-generated content stored on centralized websites.

Web 3 aims to provide personalized and relevant information faster through artificial intelligence and advanced machine learning techniques. Smarter search engines and advances in Big Data analytics will allow robots to intuitively perceive and offer information. Web 3 will also emphasize user content ownership and support an accessible digital economy.

3. Stablecoins  – 2015

Stablecoin is a decentralized cryptocurrency backed by an underlying asset, such as any national currency, commodity, tangible asset, economic metric (consumer price index), or cryptocurrency. Tying the value of a cryptocurrency to an underlying asset minimizes the volatility of its market rate on the crypto market. The built-in price stabilization mechanism inherent in the stablecoin, which is its key difference from other online currencies, makes it economically viable to use it universally as a medium of exchange, a means of savings, and a measure of value.

4. NFT – 2016

NFT is a digital token which contains ownership information of a particular item or content: graphics, music, documents, program code, etc. Once a token (mint) is issued, it is no longer possible to change the information in it. But NFT can be transferred, like Bitcoin, from one cryptocurrency wallet to another. That is, the owner of NFT can sell or exchange it. The ownership of NFTs is stored in the blockchain network and can be confirmed at any time – the information about which wallet a particular token is in is publicly available.

Experiments with NFTs began back in 2013-2014 with several tokenization projects on the Bitcoin blockchain. But projects such as CryptoPunks and then CryptoKitties became particularly famous. The most expensive NFT token from the animation movement world, American artist M. Winkelman’s Everyday’s: The First 5000 Days, sold in 2021 for $69.3 million USD on the MakersPlace platform.

5. DAOs – 2016

After the creation of blockchain, organizations based on this technology began to appear worldwide, where decisions are made not by the board of directors but by the project’s users. These companies are called DAOs – decentralized autonomous organizations. The capitalization of all DAOs has already reached $10 billion, and the tokens of eight such projects were included in the hundred largest cryptocurrencies list. 

The most famous example of the functioning of the technology is The DAO project, launched in 2016 by the German startup Slock. It was created as a smart contract on the Ethereum blockchain, which was only a year old by then. The DAO raised more than $160 million (ETH 12.7 million) from about 20,000 people. The project’s crypto investors would collectively vote with DAO tokens (they were given in exchange for ETH) on where to spend the money. 

6. GameFi – 2017

GameFi is an amalgam of the words Game and Finance. It refers to blockchain-based games and decentralized digital currency (decentralized finance tools) in all their manifestations: farming yields, lending, and borrowing, algorithmic stablecoins, new token issuance tools, etc.

The GameFi industry offers developers opportunities to create new meta worlds and game worlds filled with creatures, events, objects, and, most importantly, their own in-game economies that attract many players. Users can earn money from in-game activities while having fun in the process. The genres of blockchain games range from action to strategy.

7. Metaverse – 2018 

The Metaverse (adigital universe) is a virtual world of the future that will exist alongside the physical world, “populated” by digital avatars of real people. So far, the existing virtual worlds are fragmented, independent and unconnected, interacting only by necessity. With the advent of the Metaverse, people’s everyday lives will flow into the virtual environment. The estimated timeframe for creating such a perfect metaverse is five years to several decades.

Metaverse should become the next generation of the global network (Web 3.0), a permanent virtual space where people can work, talk and relax. The metaverse concept is closely connected with digital technologies: virtual and augmented reality (VR/AR technologies), artificial intelligence, wireless communication, distributed registry technologies (blockchain), etc. Their development makes the creation of a “full-fledged” metaverse within the next two decades highly probable.

8. Multichain – 2022

Multichain is an open-source blockchain technology that allows applications and protocols to connect to multiple blockchains, making them compatible with data from both chains.

Multichain offers a blockchain with a small, easy-to-manage private network with developer-friendly and flexible tools. It also supports a wide range of programming languages. Network assets, known as native tokens, can be easily created and exchanged between users with these multichains.

Crypto Industry Today: Modern Ways of Transforming the Economic System

The use of cryptocurrencies and blockchain technology is very controversial but, at the same time, a popular and actively discussed trend in today’s financial world. The development of the decentralized financial system depends on how it will be carried out and how quickly it will start to be implemented. One of the most pressing issues in this area is the legislative regulation of cryptocurrencies. For government regulators in many countries, this has become one of the key issues, since crypto technology development can fundamentally change the global financial system within a short period of time. 

It should be noted that the practice of legislative regulation of cryptocurrencies is still very limited. Still, gaining an understanding of general trends in this sphere gives us a good idea of how world regulators view crypto technologies in the financial sector in general.

Blockchain technology, the basis of Bitcoin cryptocurrency, constantly finds new applications. One of the rather interesting applications of Bitcoins is making investments based on them. In this regard, many today call the initial coin offerings (ICOs), initial exchange offerings (IEOs) and initial decentralized offerings (IDOs) a new stage in the development of crowdfunding and even an alternative to the usual IPO. But it is unclear whether it can be considered a full-fledged substitute for the usual tools. ICO works on principles similar to IPO – investors, who invest funds, get a certain share in the company. 

The main difference is that in an ICO or IDO, the investor does not get the real shares; he becomes the owner of some cryptographic tokens traded on decentralized cryptocurrency exchanges for various cryptocurrencies. The bottom line is that the tokens are not tied to stocks or ownership. With all that, ICO has something in common with crowdfunding because funds are raised to realize a certain concept, i.e., when the company has no product.

Crypto technology has made it possible to use the full power of blockchain for financial transactions, transferring funds in minutes with minimal (or sometimes no) commissions to any corner of the planet. Today, numerous different digital assets in the cryptocurrency market are available to everyone, which can be used as a means of payment for goods and services.

According to many experts, the most popular blockchain technology in the future will be Metaverse.

Fast Fact

Major Prospects for Crypto Development in the Near Future

The development of the crypto industry is inevitable, and instead of it, changes associated with the introduction of this technology in various subjects of the economic system will follow.

First, it is necessary to highlight the acceleration of the dynamics of Web 3.0 development in the interests of the crypto industry in the following areas: pay for the login through your crypto wallet with the native money of the wallet without leaving the page; personal data is not disclosed in the absence of legal requirements – only the address of the wallet account and the balance of the wallet are disclosed; the user pays the service for the service, receives a share (token airdrop, token purchase) in the service for its use; service developers, early users, and token buyers on a crypto exchange can become co-owners of the service; service promotion and fundraising through ICO, airdrop, community channels (Reddit, discord, thematic forums, telegram channels); the main priority is to first focus on the needs of the Bitcoin community, and then – if there is a response – you can make a product.

Second, emphasis should be placed on the further development of DeFi technology. The main trend is new technological solutions that provide services with CFA and cryptocurrencies without centralized intermediaries, thanks to smart contracts. This technology will accelerate development if there are no political decisions to eliminate such a competitor for banks as DeFi solutions. Regarding the overall capitalization of DeFi projects, the pace will be lower than in 2021-2022 due to a significant correction in Bitcoin and a decline in overall confidence in the cryptocurrency market.

Moreover, the popularity of NFT is expected to continue. According to forecasts, the volume of NFT trading in 2023 will decrease, but the interest in non-fungible tokens, which are considered unique, will remain. The main trend in the development of this type of cryptographic tokens will be related to the expansion of transferability of rights, not only to virtual, but also to physical property. According to Finder experts, the capitalization of the NFT market will reach $146 billion in the next three years.

Taking into account the dynamics of interest increase of both professional participants and physical persons, one can state that the crypto industry has already become a real competitor to traditional banks. Therefore, in the context of the current global economic crisis, regulators are working on the formation of legal norms restricting work in the crypto industry market.

Conclusion

The birth of crypto technology gave a new perspective on the world of finance. The development of related digital technologies contributes to the development of the entire financial system, which is already undergoing serious changes in all aspects, making common things easier and more convenient. Of course, digital finance, despite its short history, occupies a special place in the financial system today, and absolutely will be an integral part of our world for many years to come, gradually digitizing every aspect of economics as well as other spheres of life.

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