History of Cryptographic

Currencies

The history of cryptographic currencies rests on two foundations. The first is the history of distributed
systems research in general, and the second is the history of electronic cash systems.

In the early days,
these two areas of research had very few connections with each other,
despite the use of cryptographic primitives. Both fields are related to research and advances in cryptography,

and particularly research in the area of electronic cash was driven by the inventions in the area of asymmetric cryptography,
e.g., blind signature schemes.

In retrospect, Bitcoin provided the missing link between those fields of research to create a decentralized cryptographic
currency.

Bitcoin cherry-picked the right pieces from each of these areas and combined them.
One byproduct of the rise of Bitcoin is an increased interest in distributed systems research as
well as in electronic payment systems and currencies.

In this chapter, we take a brief look at the history of cryptographic currencies before Bitcoin
and the beginnings of this field of research. Therefore we focus on the technical innovations
and the context of existing research at that time rather than individual persons or legal definitions.

The purpose of this chapter is to provide a basic understanding of historical events that impacted cryptocurrency research and the community around it.

Legally cryptographic currencies of all types fall under the definition of a virtual currency.
The term virtual currency was defined by the European Central Bank in 2014 as “a digital representation
of value that is neither issued by a central bank or a public authority, nor necessarily
attached to a fiat currency, but is accepted by natural or legal persons as a means of payment and
can be transferred, stored or traded electronically”.