Cryptocurrency is often linked to Bitcoin’s release in 2008, but its roots stretch back much further. Long before blockchain technology, researchers were already exploring digital money systems designed to operate independently of banks, laying the groundwork for decentralised finance.
Cryptocurrency began as an attempt to create digital money that could operate without banks or central authorities. Long before Bitcoin existed, cryptographers were already experimenting with electronic cash systems that relied on mathematics and peer-to-peer networks rather than trusted intermediaries. Those early ideas eventually led to Bitcoin, blockchain technology, and the wider crypto ecosystem that exists today.
The history of cryptocurrency can be broken down into five key stages:
In most accounts, 2008 is usually mentioned as the year when cryptocurrency started. But really, efforts to start digital currencies started decades earlier, when cryptographers were exploring how to start electronic cash systems to decentralize cash control, long before Satoshi Nakamoto came to the picture.
American cryptographer David Chaum introduced in 1983 the concept of eCash, and in 1990, he founded DigiCash to put his vision of secure, anonymous transactions into motion. While ultimately falling short in disrupting the established financial sector, his attempts laid the foundation for the revolution that decentralized digital currencies will bring to the global economy.
With DigiCash ultimately unsuccessful, the torch was passed to the cypherpunks, a group of geeks and activists in the 90s aiming to fight back against centralized control. Projects and ideas that emerged from this movement will later build the groundwork for Bitcoin.
In 1998, B-money was proposed by Wei Dai, a computer engineer, being one of the first to bring forward the idea of an anonymous, distributed electronic cash system. B-money came with the early concept of crypto mining, where participants could make digital money after successfully solving computing puzzles.
A legal scholar and computer scientist, Nick Szabo, conceptualized a system called Bit Gold around the same time as Dai. Szabo’s system introduced the concept of “proof of work,” close to what the cryptocurrency ecosystem uses now.
However, both of these projects hit a wall, as neither Bit Gold nor B-Money was able to overcome the long-standing double-spend problem, as these projects still needed a trusted third party to verify transactions and maintain the credibility of the system.
| Project | Creator | Key Idea Introduced | Limitation |
|---|---|---|---|
| B-Money | Wei Dai | Distributed money, early mining concept | Required trusted third party |
| Bit Gold | Nick Szabo | Proof of work, scarcity | No decentralised transaction validation |
This technical problem kept these projects as theoretical ideas, but they laid the groundwork, especially in cryptographic proof, distributed ledger technology, and the decentralized digital currency ideas that Satoshi Nakamoto would later build on.
In 2008, the traditional financial system collapsed during the subprime mortgage crisis in the United States, setting in motion a series of events that would see household names fall. These events made the ideas and work of Szabo and Dai in decentralized financial control relevant, making more people interested in the project, and jump-starting the pivot towards digital currencies.
The global financial collapse triggered a massive loss of trust in the traditional banking system, where the Federal Reserve and other central bank institutions freely printed trillions of new money into the system to try to save the very companies that caused the global crisis. The seemingly careless handling by the Federal Reserve made people realize that the value of their money is at the mercy of the central authority, eroding trust that the central bank can maintain the integrity of the financial system.
People began to question if there is an alternative to the centralized banking system that they just saw fail. And with the growing realization that the money in bank accounts is not really theirs, the anger and instability that brewed finally led to a push for a breakthrough for digital currencies. Seeking independence from the constraints of the traditional financial system, the transition to a strictly objective, unbiased cryptocurrency system began to emerge.
A key event in the history of cryptocurrency happened in October 2008, when a whitepaper promising decentralized finance was released. The proposed electronic cash system will kick-start the crypto movement, making trust in financial institutions unnecessary.
Barely a month following the collapse of Lehman Brothers, a white paper was quietly posted, titled Bitcoin: A Peer-to-Peer Electronic Cash System, authored by a mysterious Satoshi Nakamoto. This introduces the push towards blockchain technology, a concept that will soon revolutionize the financial system.
Satoshi finally figured out how to combine cryptography, computing power, and even game theory into one cohesive and unified system, solving the “double spend” problem that Bit Gold and B-money got stuck at.
This is a groundbreaking technology in which all connected peers act as the “share truth” machine, which is the complete opposite of centralized banking systems, where only one entity holds the ledger of who owns what. Bitcoin introduced the distributed ledger system, which records transactions across the entire network, with all connected systems holding a copy of the ledger.
The peer distribution approach is the elusive solution to the “double-spend” roadblock that has thwarted cryptographers for many years. Bitcoin’s network polices itself, where the decentralized network will reject system nodes that try to cheat and spend virtual currency twice, since the transaction will not sync with the ledger every node in the system holds.
A few months after the publication of Satoshi’s whitepaper, the very first cryptocurrency block of the Bitcoin blockchain was mined on January 3, 2009, which will be known in the history of cryptocurrency as the Genesis Block, marking the official launch of the cryptocurrency industry.
Embedded in the first ever bitcoin block is a direct reference to a British newspaper headline: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”. This served a dual purpose, acting as a timestamp officially recording the first-ever crypto asset, and more importantly, a defiant message against the traditional financial system, positioning digital assets as the answer to the failing banking systems, as bailouts remained rampant in the global economy at the time.
In the early days of digital currencies, proving that the blockchain technology works was more important than market speculation or actually getting rich. Back then, bitcoin had no price, just a computer program being tested by geeks and enthusiasts.
On January 12, 2009, the first crypto transaction occurred when Hal Finney received 10 bitcoins from Satoshi. This proved that financial transactions can be successfully made peer-to-peer globally, transferring value without asking a financial institution for permission.
With earlier attempts at digital currencies all failing, Satoshi understood that in order for Bitcoin to succeed, the cryptocurrency ecosystem needed to incentivize honesty. And for decentralized digital currencies to survive, participants in the peer-to-peer networks need motivation to play within the rules, which led to the concept of mining being introduced.
This mechanism required transactions to be verified by peer-connected miners before the actual transaction could be added to the shared and irrevocable ledger, which is the blockchain, effectively solving the double-spend problem.
While at first not requiring significant processing power and electricity, computers ranging from home devices to specialized ones competed with each other, with the first device to solve a particular computing puzzle getting the right to the next block of transactions to the blockchain, earning them a whole piece of bitcoin, a process now popularly called crypto mining.
This mining mechanism has effectively replaced the role of the traditional financial system, where financial transactions will require a bank manager or a credit card server to verify transactions. Now, verification of digital money transactions is done by many miners connected to the network.
With mining now costing significant amounts of electricity, and not to mention costly hardware setups, this effectively secured the network, as no single entity can control more than 50% of the network’s processing power to manipulate the cryptocurrency ecosystem, a feat that is practically impossible due to how expensive it will be. Thus, network peers have more incentive to protect the network than to attack it.
A frantic dash among developers to tweak, develop, or improve on Bitcoin began when they realized that a distributed ledger system could actually work. They didn’t know it then, but this experimental digital asset would lead to a massive crypto industry that would change the traditional financial system.
The growth was not just simple, but explosive. Starting as defiant resistance from the failing financial system, it has evolved into a global race to develop the best blockchain technology and the next digital cash. Soon, a surge of new projects claiming to be more secure, faster, and more flexible than Bitcoin paved the way for the rise of the cryptocurrency market.
An escalating arms race among developers to build the next Bitcoin soon emerged, giving birth to the altcoin industry. Just two years after Bitcoin’s white paper was released, the first notable digital currency that appeared was Litecoin, even though Namecoin was actually the first one that came after Bitcoin.
| Category | Example Assets | Purpose |
|---|---|---|
| Payments | Litecoin, Bitcoin Cash | Faster or cheaper transfers |
| Smart contracts | Ethereum | Programmable applications |
| Meme tokens | Dogecoin | Speculative or community-driven |
Litecoin was derived from a tweaked code to achieve faster digital transactions, while utilizing a different mining algorithm. Developed by a former Google engineer, Charlie Lee, Litecoin was touted as the silver to Bitcoin’s gold, showing that crypto assets are not a winner-take-all race, but as an alternative investment vessel that can serve different specific needs.
What started as a trickle has turned into a tsunami of new digital currencies, as developers rush in to capitalize on the crypto hype. According to the UK’s Financial Conduct Authority, there are over 20,000 crypto assets, in varying levels of utility, from high-concept blockchain technology ideas to meme projects with little to no utility, such as Dogecoin.
While many of the early projects started just for the heck of it, this period is a key part in the history of cryptocurrency, as it demonstrated that crypto is not just a digital currency, but an entirely new asset class.
With Bitcoin acting as the main knife, doing the digital money thing exceptionally well, Ethereum came to the picture, trying to be the Swiss Army knife. Introduced by Viterek Buterin, a teen Canadian programming prodigy, Ethereum was imagined to be a blockchain that can be programmed, not just as a digital currency. This was groundbreaking technology that introduced the concept of decentralized applications.
Self-executing contracts were already included in the crypto code, with smart contracts pioneered by Ethereum. This meant that other developers can build entire applications and other digital assets on top of the Ethereum system, without the need to create their own blockchain from scratch. In a universe of decentralized applications (dApps), Ethereum can serve as the universal payment system.
The traditional financial system was instantly revolutionized, with services like lending, borrowing, and trading now being done inside the cryptocurrency ecosystem. Participants no longer need a traditional banking system for loan approval and asset management, since smart contracts can now be done inside the Ethereum.
The idea of secure financial transactions happening inside code, without the prying eyes of central banks, led to the exponential rise of decentralized finance, DeFi.
The evolution of digital assets from digital gold to programmable money can be argued as the most important step, as cryptocurrency now has actual utility, and further positions Ethereum for continued growth. And in September 2022, Ethereum shifted from proof-of-work to proof-of-stake to once again revolutionize the financial sector, and shed the notion that cryptocurrency is merely a form of digital money.
Also called “The Merge, this showcased that blockchain technology has the capacity for evolution happening in real-time, and also proved the viability of a decentralized financial sector.
The success of Ethereum inspired developers to make new tokens, with the cryptocurrency market exploding in 2017 with a deluge of Initial Coin Offering (ICOs) sprouting left and right. This is the crypto market’s version of the IPOs, or Initial Public Offering in traditional financial markets, but with a minimal to zero regulatory framework, allowing for turbo-charged introduction of digital assets.
Ambitious startups realized that they simply have to write a whitepaper, demo their digital asset on a website, and launch their crypto product. Accepting bitcoin or Ethereum, these startups can bypass the tedious regulatory approaches without the need for investment funds. The ICO boom in 2017 alone was huge, with some estimates placing the amount raised by ICOs at around $5 billion. As examples, the EOS and Filecoin projects were able to raise millions of dollars via ICOs even without having a finished product.
Of course, the ease of launching new cryptos and other assets with minimal to zero regulatory framework also attracted bad players, scammers, and hustlers. For each legitimate digital asset introduced, there were also a bunch of scams, vaporware, and low utility token projects that came with it, rugpulling unsuspecting investors from their money.
The ICO boom and the scams that came with it attracted the attention of central banks and government bodies, demanding a regulatory framework to keep the potential benefits of the cryptocurrency system. Regulatory bodies around the world started clamping down on the spread and use of digital currencies, showing the industry that while decentralized, the regulatory landscape still needs to be addressed.
In the early days of Bitcoin, Wall Street didn’t take it seriously, laughing it off as just a playground for computer geeks and hobbyists. One can only find discussions about digital currencies on Reddit forums or some obscure tech blogs. Fast forward to more than a decade, and the narrative has flipped, where you’ll be hard-pressed now to go to the Wall Street Journal and not see something about bitcoin, or some news about the cryptocurrency industry.
The momentum gained even more traction for digital currencies around 2021, when the financial industry started to recover from the COVID crash, where bitcoin and other cryptos began being hyped and bought by major listed companies like Tesla and MicroStrategy. This was only the beginning, as the big push for these digital currencies was fueled by the arrival of the big investment funds.
In 2024, the financial system delivered a major milestone with the approval of Spot Bitcoin Exchange Traded Funds by the US SEC. This basically legitimizes digital currencies with real value and allows institutional and retail investors alike exposure to exchange-traded products without the hassle and worry of managing private keys and other nuances in owning digital assets.
October 2025 saw the total crypto market cap go as high as more than $4 trillion, showing heavy record transactions, and the global acceptance and financial stability being enjoyed by the cryptocurrency ecosystem. Icing the global adoption of digital money is when El Salvador, a sovereign nation, adopted Bitcoin in 2021 as a legal tender, together with the US dollar.
Digital currencies led by bitcoin at this point became too big for central banks to ignore, moving past the unregulated “Wild West” era. As stewards of monetary stability, central banks have to balance and manage the risks and opportunities presented by these new digital assets and the financial transactions that have been ballooning. And since they can’t simply ban digital assets now, governments have instead imposed a fluid regulatory landscape and focused more on financial stability.
In the early days, one of the potential benefits of Bitcoin was bypassing the privacy concerns that come with a centralized banking system. However, with the explosive growth of decentralized digital currencies came the side effect of bad actors using these alternative cryptocurrencies to launder money and commit other illegal activities. The Financial Action Task Force (FATF) was among the agencies to introduce the “Travel Rule,” which requires exchanges to share user information just like old-school banks do. Cryptocurrency firms were forced to comply with strict regulatory requirements, such as the now-standard Know Your Customer (KYC) guidelines.
Still, countries globally had wildly varying regulatory approaches, like the strict one employed by China, which banned all cryptocurrency transactions in 2021 to maintain government control. On the positive side of the regulatory spectrum, the European Union rolled out in 2024 the Markets in Crypto-Assets (MiCA), seen as a pioneering rulebook for cryptocurrencies, finally providing clarity for issuers and protection for consumers. The legal status of bitcoin and other cryptocurrencies varies by country, with some more lenient than others and some banning or restricting use.
While financial regulators busied themselves with how to regulate the growing decentralized digital finance industry, central banks around the world are thinking about the potential benefits of blockchain technology, especially with its transparency, programmability, and instant settlement. This realization has led some of them to develop their own Central Bank Digital Currencies (CBDCs).
One of the key traits of cryptos like Bitcoin and Ethereum is that these are decentralized digital currencies, with no central authority controlling them. CBDCs are the polar opposite of these virtual currencies, where a CBDC is basically a digital version of a country’s official legal tender currency, like a digital dollar or digital euro, issued and under the jurisdiction of the home central bank.
To put it simply, one can think of this official digital cash as a legal tender of the state. CBDCs offer central banks compelling benefits, where they can also set up “programmable money,” such as writing stimulus checks that will expire after a period of non-use. Central banks like the Federal Reserve can also streamline payments while lowering transaction costs.
However, a CBDC can raise privacy concerns, since theoretically, the issuing central bank can track every transaction made with the digital currency, which goes against one of the main philosophies of why bitcoin and cryptocurrency were developed in the first place.
Cryptocurrency systems have come a long way from the Wild West days, where cryptocurrency trading was barely a concept, mostly done through peer-to-peer transfers organized inside niche tech forums.
One legendary bitcoin transfer was made in May 2010, where Laszlo Hanyecz paid 10,000 BTC to Jeremy Sturdivant for two pizzas, bought for $41 at Papa John’s. It may have been a transaction made for fun back then, but looking back, those two pizzas would have been worth around a billion dollars now.
That crypto transaction marked the start of people realizing that digital assets can have real-world value. However, that realization also revealed a problem. Finding someone to actually deal with was a hassle, as it took Laszlo five days for someone to accept his offer to pay 10,000 bitcoin for two pizzas.
Fast forward a decade, crypto markets have now evolved from manual person-to-person barter trading, into a complex electronic cash system that includes massive spot markets, derivative crypto products offered by regulated brokers, and the organic expansion into cryptocurrency-funded trader programs offered by prop firms.
Early adopters likely never imagined that Bitcoin would be embraced now as it is by the financial industry. But now, whether you want to speculate on future price action without actually owning one, trade cryptos using someone else’s money, or just own any cryptocurrency, there is an available product for everyone.
The early answer to the difficulty in finding a counterparty to someone’s crypto holdings was a centralized exchange. A system to automatically match buyers and sellers was developed in the early 2010s, with Mt Gox as one of the early leading exchanges. To trade Bitcoin, one must buy Bitcoin first using real or fiat money, transfer it into a digital wallet, and start trading within an exchange.
This period also showed the dangers of centralized exchanges and the importance of private keys. And when Mt. Gox collapsed in 2014, this event lost traders worth hundreds of millions of dollars, emphasizing the risks of leaving crypto assets on exchanges. The cryptocurrency market has since matured, with modern exchanges now having vastly improved security protocols, offering an equilibrium of convenience and safety for those wanting to trade digital assets.
Now, retail traders can participate in:
If your investing objective is to own the underlying crypto asset, spot exchanges remain the most ideal one for you. These firms allow you to dive into the ecosystem, vote on proposals, or even stake or invest your assets for yields usually better than what is offered by the traditional banking system.
For a detailed look at some of the best crypto exchanges that have led in this era, check out our shortlist of the best crypto trading platforms.
Gaining traction beyond the early bitcoin traders and enthusiasts, a type of trader from traditional financial systems began to take notice. Moving beyond the hardcore crypto “hodlers”, crypto has got the full attention of speculators wanting to take advantage of the volatility that comes with crypto trading. These types of traders do not care about setting up safe hardware wallets and maintaining seed phrases, they simply want the thrill of trading.
The newfound demand for crypto has hastened the integration into traditional financial instruments like CFDs, or Contracts for Difference. This was a game-changer for traders, as it allowed them to buy and sell bitcoin and other crypto assets with leverage, even without actually owning the underlying cryptocurrency.
CFD integration of crypto removed one of the primary barriers for trading digital currencies. Traders no longer need to worry about the wide variability of transaction fees, blockchain congestion, among other things. All you need is to find a legitimate and regulated broker. For pure traders, going the CFD route makes the most sense.
For more info, read our shortlist of the best crypto CFD brokers.
As we enter into the latest era of the cryptocurrency system, one key problem for many skilled traders has been solved. Talented traders, but lacking a significant trading fund, will have little option to really grow their wealth, unless they manage to find a cryptocurrency that shot to the moon, or bet their entire life savings for a chance to win big.
While retail proprietary trading firms started to become popular almost at the same time as bitcoin, modern prop firms patterned their systems after the traditional Wall Street model. With a small “audition fee,” a trader will try to prove that they can consistently turn a profit trading cryptos while maintaining disciplined risk management. And if the trader is successful, a cryptocurrency firm will give the trader a funded account that can reach up to $100,000, or even more, with the prop trader keeping a big split of the profits, and usually in the range of 70% to 90%.
Trading the firm’s capital, the prop firm assumes all the risks, while the trader risks only the evaluation fee paid for the trading challenge. The rise of crypto prop trading firms highlights the maturation of the industry, firmly shedding the old criticism of digital currencies only as “magic internet money,” opening up a new career opportunity, and potentially earning way more than a traditional office job.
Bitcoin is considered the first cryptocurrency in history. While earlier digital cash concepts like eCash, Bit Gold, and B-Money introduced important ideas, they never operated as fully decentralised systems. Bitcoin, launched in 2009 by Satoshi Nakamoto, was the first to successfully solve the double-spend problem without relying on a trusted intermediary, making it the first functional and decentralised cryptocurrency
Cryptocurrency was started by Satoshi Nakamoto. In 2008, Nakamoto published the Bitcoin whitepaper outlining a peer-to-peer electronic cash system, and launched the Bitcoin network in 2009. While earlier researchers like David Chaum, Wei Dai, and Nick Szabo contributed key ideas, Satoshi was the first to combine them into a working, decentralised cryptocurrency market.
In 2009, Bitcoin did not have a formal market price. For most of that year, Bitcoin was exchanged informally between early users, mainly for testing purposes. The first commonly cited price appeared in late 2009, when an early exchange valued 1 Bitcoin at less than one cent, based loosely on the cost of electricity required to mine it.
