14 Jun 2021 9:56 AM +00:00

What Was The First Cryptocurrency Created Before Bitcoin?

Contrary to popular belief, bitcoin was not the first cryptocurrency created, with other - albeit less successful - currencies coming over a decade before bitcoin first burst onto the scene in 2008.

While these digital currencies were outperformed by bitcoin's success (it currently sits at a price of over $39,000), they did pave the way for Satoshi Nakamoto's creation.

So, here's all you need to know about the origins of cryptocurrency.

What was the first cryptocurrency before bitcoin?

When looking at the inspiration for bitcoin, two names are mentioned: DigiCash and HashCash.

DigiCash - first created by David Chaum in 1989 following a paper he published in 1983 - was set to be the first digital, anonymous currency. DigiCash's focus on privacy garnered Chaum a lot of attention from investors and companies. Various banks expressed their interest, and Microsoft even wanted to integrate DigiCash into Windows 95.

Ultimately, the various DigiCash deals all fell through and, as DigiCash was a private digital currency - as opposed to the open-source cryptocurrencies that exist today, meant it was unable to expand in a pre-Internet era. The company filed for bankruptcy in 1998.

Aside from DigiCash, Hashcash is deemed as an important influence for bitcoin. Created by Adam Back in 1997, Hashcash used Proof-Of-Work algorithms, also used in bitcoin for transactions. Hashcash's main use in its early years came in filtering email spam and preventing DoS attacks. Hashcash had such an impact on bitcoin that it was even cited by Satoshi Nakamoto in the bitcoin white paper.

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What is the oldest cryptocurrency exchange?

When bitcoin first launched, trades did not occur on a cryptocurrency exchange, but via bitcoin-focused forums, including Bitcointalk - which was created by Satoshi Nakamoto.

In terms of the first bitcoin exchange, bitcoinmarket.com became the most popular method for trading outside of forums. The website went live in March 2010 after being proposed by 'dwdollar' on Bitcointalk in January 2010. The user stated:

Hi everyone. I'm in the process of building an exchange. I have big plans for it, but I still have a lot of work to do. It will be a real market where people will be able to buy and sell Bitcoins with each other. In the coming weeks I should have a website with a basic framework set up. Please bear with me.

Previous exchanges did exist before Bitcoin Market, although they did not focus on cryptocurrency transactions until after bitcoin gained popularity. The now infamous Mt.Gox - or Magic the Gathering Online Exchange - was first established in 2007 as an exchange for the trading card game, before switching to bitcoin in 2010.

Mt.Gox and Bitcoin Market both no longer trade, with Mt.Gox filing for bankruptcy in 2014 following a string of well-publicised breaches that resulted in over $450 million bitcoin being stolen or lost.

Of the existing and active exchanges, Kraken and Bitstamp are the oldest cryptocurrency exchanges. Kraken was founded on 28 July 2011, with Bitstamp forming one month later. These both formed as alternatives to Mt.Gox, which had suffered its breach just a month earlier.

READ MORE: How do whales affect cryptocurrency?

[Featured Photo by Executium on Unsplash]