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Digital Currencies Before Bitcoin

Suppose we are in a time machine and want to go back to an era where bitcoin has not yet been created, but digital currency innovations are spreading around the world and researchers are embarking on the field of electronic money technology. In this article we look at projects that had a decentralized e-money dream before Bitcoin.

The emergence of trusted digital currency coincided with the advances in cryptography. There are two basic questions for anyone who wants to accept a digital currency:

  • Is this money valid and not possible to counterfeit?
  • Can anyone other than me claim the money? (Duplicate problem)

Paper money solves the problem of forgery by using sophisticated paper and printing technology. In addition, it never faces the challenge of Double spend , since a physical entity cannot be present in two places at the same time.

As you know, traditional money can also be digitally stored and transferred. To counter fraud and double spending, one (or more) centralized entity or entity, such as a bank or private company, monitors and controls all electronic transactions.

In digital money, which lacks the essence of confidential printing or security holograms, cryptography is used to trust and substantiate a person’s claim of money. Digital signature in cryptography allows a person to sign a digital asset or a transaction and thereby prove ownership. Digital signature can also be used to meet the challenge of double spending.

In the late 1980s, the use of cryptography became widespread, and efforts were made by researchers to develop digital currencies with the help of this science. Early digital currencies were often called digital currency. Their backing was a national currency or a metal bug like gold. Although acceptable, they were centralized and could easily be harmed by the government or hackers.

Early digital currencies, like the traditional banking system, used a central data warehouse to regulate transactions over time. Unfortunately, most emerging digital currencies have been attacked by governments and completely destroyed. Some of them have changed in general as well. In order to prevent the intervention of legitimate governments or criminal elements, a decentralized digital currency was needed to prevent attacks.

The first attempts began in the Netherlands

The first attempts began in the Netherlands

In the late 1980s, Dutch gas stations suffered from night thefts because they had to stay open all night to refuel trucks. In order to secure the guards, a group of developers decided to replace the smart cards that were being tested at the time. Truck drivers used these cards instead of cash. This was true about five years before the emergence of Bitcoin.

At the same time, Albert Heijin, an influential businessman of his time, offered banks to devise a way for shoppers to make payments directly through their bank accounts. This invention was developed under the name of Point of Sale. This is almost the oldest version of electronic cash available.

DJ Cache

dj cache
DJ Development Team of the Year at 2

Almost simultaneously with the Dutch efforts to make digital money, American cryptographer David Chaum was looking for a way to make electronic money. He published a scholarly paper on anonymous digital currency in year 2, and in the year 5 he developed the digital currency Digicash to apply his theory. DJs were based on Blinded Signature technology that could secure the security and privacy of transactions. Payments made with digital cash could not be tracked by banks or the government.

DJ Cash came before the e-commerce wave began on the Internet platform and eventually with the advent of Internet payment companies in the project that needed a centralized system to continue working because customers at that time preferred credit cards to anonymous online purchases. They failed, defeated in two. However, some of the concepts, formulas and tools of digital encryption have played an important role in the development of future digital currencies.

Paypal and Eagle

paypal

Many startups in the 1980s tried to gain a foothold in the field of digital money.

After DJ Cash, paypal had a lot of power for long-lasting dominance of the global economy. PayPal allows for individual payments and allows people to send money using web browsers very quickly and securely. PayPal is one of the most popular payment methods in the world today and has managed to gain a good standing for itself. Of course, PayPal initially intended to be something like bitcoin that changed with the pressure of legislation. Many startups have tried to follow the company’s path. Among them, e-gold was a very successful project.

As Eagle has worked overseas, its popularity has grown and its market has grown by 2 years. The project eventually faced numerous scams and was shut down by the US federal government in 2008.

Bmoney

bmoney

Prior to the emergence of Bitcoin, digital currency b-money was introduced by Wei Dai in year 6 as a peer-to-peer distributed electronic money system. In the secured system there was a reward for approving transactions and a fine for cheating. Network participants had to deposit some money into a specific account that would have been punishable if it had been proven wrong. It is not hard to imagine that the weakness of this solution was in encouraging complicity. How can a society without a central executive body be punished? Who will be the judge? Bitcoin’s solution was to end up only rewarding, not punishing.

Satoshi Nakamoto in Bitcoin’s Whitepaper cites this currency article. White Pepper, which he described as Dai for Reluctance, was never officially launched, but some of its elements inspired Satoshi in White Pepper Bitcoin.

Bitgold

bitgold

Nick Szabo, a few years before Bitcoin and in Year 2, was looking to build something like Bitcoin called “Bit Gold”. The Bit Gold project failed due to technical problems and was never operational but is referred to as the “founder of Bitcoin architecture”. It is interesting to note that the concept of smart contracts was first introduced by Sabo at 2.

The Bit-Gold structure was designed to require a dedicated computer to solve complex cryptographic equations. In fact, in a participant’s BitGold structure, his computer devoted itself to solving complex mathematical equations. The solved equations were sent to a public office and the public address of the solver was attached. Each solved equation was part of the next puzzle. The BitGold feature allowed the network to have a way of validating and timing the new queens as only if the majority of the members agreed on the solution.

Bit Gold came with the aim of making people out of centralized currency exporters and organizations. It was a revolutionary concept in the financial industry, similar to how China’s blockchain operates in today’s world. Although the Bit-Gold theory was never fully implemented, its proof-of-work system is used in the bitcoin extraction process today. Of course, the work-proof system used in Bitcoin is also called a hashish, previously designed by Adam Back in year 2.

Although Sabo has repeatedly stressed that he is not Satoshi Nakamoto , many still suspect that Nick Sabo may be Satoshi, the anonymous creator of Bitcoin.

FLOOZ

flooz

This digital currency was introduced in year 3 by the Flooz.com website with a similar approach to customer loyalty programs and cards. Users of this site could obtain two credentials. First, other sites could pay for their users’ activity, and second, direct purchase from the site. The company earned $ 5 million from venture capitalists through its innovative and sophisticated payment mechanisms. Despite its popularity, it eventually failed due to fraudulent activities on the platform.

Bitcoin’s Birthday

Digital Currencies Before Bitcoin

On August 7, a domain named bitcoin.org was registered. On October 5 of that year, an article titled: Bitcoin: A Peer-to-Peer Electronic Money System by author Satoshi Nakomoto was published in an online email community called the Cryptography mailing list.

This paper describes the method of using a peer-to-peer network to set up an electronic transaction system without the need for a reliable intermediary. On November 9, the Bitcoin project was registered with the SourceForge.net website open source project community. This is how Bitcoin was born.

what is your opinion? Could digital currency one day be better than bitcoin, the throne, and bitcoin to join the dead digital currency? Or will Bitcoin be immortalized?

About Sean Patterson

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