What is the history leading up to the creation of Cryptocurrency?
To truly understand cryptocurrency, we need to go back in time to actually discover how it originated in the first place. Although there have been many people who have conceptually thought about the idea of cryptocurrency, and the idea of digital money before it was invented, we will be taking a look at the actual tangible discoveries that led to cryptocurrency actually being created. In 1976, Whitfield Diffie and Martin Hellman introduced the public idea of public-key cryptography. This involved a public key, a key where others can know, and a private key, which is a key that only you control. This significant discovery is crucial for crypto since a private key lets you spend coins and your public key/address lets others verify ownership. In 1978 RSA public-key cryptograph is published, which expands and turns the idea of encrypting messages and creating digital signatures into an actual concrete usable method. In 1979, Ralph Merkle develops Merkle trees, which basically lets you summarize a large amount of data with one short cryptographic hash. This is connected to Bitcoin since it used hashes, which are fixed-length digital fingerprint of data. It is basically a digital fingerprint of a message. For example, if you put a sentence or information into a hash function, it will give you a short code, which leaves the fingerprint of the original message. If people try to change or alter the fingerprint, the hash will be completely different, which protects the system. A merkle tree is a way to combine many transaction hashes into one final hash. In 1982, David Chaum presents blind signatures, which made it possible for a bank to issue digital money without being able to trace exactly where each payment went. This allows people to spend money, but it is difficult for the bank to know which person actually spent the money. In 1985, Chaum published a paper talking about how digital money could be created using cryptography so that payments could be private, like cash. A bank could verify digital money without being able to track exactly who spent each coin. In 1989, DigiCash is founded by Chaum. DigiCash was one of the first companies trying to commercialize cryptographic digital cash. This however was different from Bitcoin since there was a central company that was running DigiCash.
In 1988, Timothy C. May described a political and technoloigical vision: that strong cryptography could let people communicate, trade, and store money privately, outside the control of government, banks, and corporations. In 1993, Eric Hughes talks about how privacy will not be protected by governments or corporations automatically. People must build tools that protect privacy. In 1990, Haber and Stornetta present digital timestamping work, in which they were trying to solve the problem of how you can prove that a digital file existed at a certain time and has not been secretly changed later? A digital timestamp is proof that a piece of digital data existed at a certain time. This relates to hashes since digital timestamp proves that “this exact digital file existed at this time”, and the has proves “this exact file has not changed.” Hashes detect tampering by if someone changes the digital fingerprint by the hash the hash change so the timestamp no longer matches. That means the fake version cannot use the old timestamp. In 1991, Haber and Stornetta published a paper describing linking records together using cryptographic hashes. In 1992-1993, Merkle trees are added to timestamping systems, which made it easier to bundle many records together efficiently. In 1992, Dwork and Naor present proof-of-work-like idea and in 1993, their paper is published. This idea revolves around the fact that in order to send an email or something to someone else, you would have to do a certain amount of work in order to perform this task. This prevented people from sending out a ton of emails.The idea revolved around the later idea about how Bitcoin makes participants spend real computational effort before they can add new blocks. In 1994, DigiCash launched its eCash digital cash system. DigiCash’s eCash was one of the earliest serious attempts to create private digital money for the internet.In 1996, E-gold was launched, which was an internet-based money system backed by physical gold. In 1997, Hashcash was created by Adam Back, which is a system where a computer had to solve a small mathematical puzzle before sending something, such as ane email. This also goes back to the proof-of-work idea where you had to do work in order to send something to prevent people from sending to many things. In 1998, Wei Dai proposed b-money on the cypherpunk mailing list, which was a proprosal for a decentralized digital currency meaning the bank would not be involved in transactions. In 1998, Nick Szabo develops the bit Gold concept, which described a system where scarce digital objects could be created through proof-of-work and linked together cryptographically. In 1999, Napster launched as a peer-to-peer file-sharing service, which let people share music files directly from one person’s computer to another person’s computer. Before Napster, people usually downloaded files from a website or company server. In 2001, Bit Torrent is released, which expanded on the peer-to-peer system but on a larger scale.