In the later part of the 1980s, Chaum relocated to the Netherlands, and, with the help of a few fellow enthusiasts, laid the foundation of DigiCash, a for-profit cryptocurrency network based on his “blinded money” algorithm. Unlike newer cryptocurrencies, DigiCash exercised full monopoly over its supply, a far cry from being a decentralized mode of transaction such as Bitcoin. While DigiCash was founded with the idea of trading directly with individuals, the Netherlands government imposed severe restrictions on the company, forcing it to sell only to licensed banks. This seriously curtailed the company’s profits, and after a decade of struggling and being partnered with by Microsoft, the company finally closed doors in the 1990s. Chaum did go on to try his luck on a few similar cryptocurrency startups at the time, though none of them were really successful to begin with.
Fast forward to 2008, when a whitepaper was released under the pseudonym of Satoshi Nakamoto, detailing what would be widely regarded as the first modern cryptocurrency initiative. The idea combined concepts such as decentralization, perfect anonymity, finite supply and blockchain technology to pave the way for what we know as Bitcoin. Nakamoto, a pseudonymous individual or individuals operating under a fake name, released Bitcoin to the public in 2009. This idea was soon taken up by a gazillion different startups such as Litecoin. In 2010, Bitcoin received recognition as a proper currency after merchants such as WordPress, Expedia and Microsoft began accepting it as a mode of payment.
Speaking for 2017, we’re still far from Bitcoin, or any other cryptocurrency initiative, being officially recognized by a state government as a preferred mode of currency. Mere months ago, Bitcoin saw a 35% fluctuation in price range after a proposed exchange-trade fund by the Winklevoss Bitcoin Trust was denied by the U.S. Securities and Exchange Commission due to concerns that the currency could be used for illegal purposes such as black market trading. However, hope is anything but out, and 2017 will be a year to watch out for as far as alternative currencies are concerned.
While Bitcoin experienced a drop in its prices, a cheaper cryptocurrency by the name of Ether reached its all-time highs at $40 a unit. While Ether’s current setup prevents it from being used as a direct method of payment, the cryptocurrency still seems to have a bright future ahead thanks to the concept of smart contracts. In the meantime, more privacy-concerned cryptocurrency alternatives are starting to gain prominence in favor of institutions such as Bitcoin, which despite their vigilant security measures, continue to have loopholes that could be exploited for access to personal data.
Another interesting turn of events is the acceptance of Bitcoin in the educational industry, what with the University of Ohio hosting classes about Bitcoin and other cryptocurrencies as a part of its MFE curriculum. Several colleges have even begun to accept Bitcoin as a means of payment, a move which will clearly help bring this alternative currency to the mainstream. The acceptance of Bitcoin, in general, has already led to a few companies considering genuine investment opportunities in the currency, further fueling its journey to mainstream.
Will cryptocurrencies be the new norm after 2017? Perhaps it is too soon to tell. But if there is one thing we know for sure, it is that the currency seems to have a wide appeal with a particular section of technologically-savvy individuals, a point that is sure to soon work in its favor.