Cryptocurrencies started gaining traction after 2008 with the advent of Bitcoin. However, cryptocurrencies had existed for decades prior to the debut of Bitcoin. The term cryptocurrency originally appeared in 1989, when David Chaum invented digital money. It used cryptography to safeguard and validate transactions.
It was not until the early 1990s that cryptographic methods and software were successfully developed. This would allow for the emergence of a completely decentralized electronic currency. In 1998, Wei Dai, a computer scientist, published a paper in which he proposed "B-money." He presented the concept of a digital currency that might be transmitted using a network of untraceable digital pseudonyms. That same year, blockchain pioneer Nick Szabo developed another initiative called Bit Gold. His concept was inspired by inefficiencies in the old banking system and the need to lower the level of trust required to complete transactions.
While neither was ever made official, they served as inspiration for the modern cryptocurrencies we see today.
Bitcoin was the only popular cryptocurrency on the market in early 2010. It was developed by an anonymized programmer under the moniker Satoshi Nakamoto, with the intent to provide a decentralised alternative to the traditional financial system that had caused the Global Financial Crisis.
While its success in achieving its intended goal is questionable, Bitcoin’s popularity as an investment and tradable instrument has opened up the possibility for thousands of other crypto assets to exist and flourish.
Since Bitcoin’s inception, new digital currencies have entered and existed the market, some of them replicate Bitcoin’s mission, while others offer a different use case altogether. For one, Ethereum, the second largest crypto asset by market capitalisation, was launched in 2015, with a use-case centered on providing an ecosystem for decentralised applications (dapps) and smart contracts.
As the market has grown, and matured over the past decade, it has experienced numerous cycles of boom and bust. Because the asset is so young, and because there is no definite way to measure its inherent value, investor sentiment toward the asset tends to oscillate. As such, cryptocurrency has gained a reputation as an incredibly volatile asset.