What Was the First Cryptocurrency?

Cryptocurrencies existed before Bitcoin, but they didn't reach public attention until a few years after it was introduced in 2009. The first cryptocurrency was eCash, developed by the company DigiCash in 1990. The concept and company were created by cryptographer David Chaum, who in 1983 published a paper titled "Blind Signatures for Untraceable Payments."

Several other attempts ultimately led up to Bitcoin's creation, but it took more than 20 years to evolve into the popular cryptocurrency it is today.

eCash—The First Cryptocurrency

In 1983, American cryptographer David Chaum proposed a form of electronic cash. He conceptualized a token currency that could be transferred between individuals safely and privately; the similarities to modern-day cryptocurrencies are striking.

Chaum developed a so-called "blinding formula" to be used to encrypt information passed between individuals. "Blinded Cash" could thus be safely transferred between individuals, bearing a signature of authenticity and the ability to be modified without traceability.

Chaum founded DigiCash to put his concept into practice several years later by creating the first cryptographic electronic money called eCash. Although DigiCash went bankrupt in 1998, the ideas the company put forward and some of its formulas and encryption tools played an important role in developing later digital currencies.

Other Early Cryptocurrencies

E-Gold

In 1996, Dr. Douglas Jackson and Barry Downey created electronic money that was tied to the possession of gold. This digital currency allowed users to transfer ownership of gold between users of a website, which quickly—albeit unintentionally—became a tool for money launderers and others seeking anonymity in their illegal activities.

Bit Gold

Nick Szabo, one of the early cryptocurrency pioneers, is credited with creating the concepts that eventually led to the creation of Bitcoin. This concept was called Bit Gold and used many of the same blockchain techniques, such as a peer-to-peer network, mining, a ledger or registry, and cryptography.

Perhaps the most revolutionary aspect of the Bit Gold concept had to do with its movement away from centralized status. Bit Gold aimed to avoid reliance on centralized currency distributors and authorities. Szabo's aim was for Bit Gold to reflect the properties of real gold, thereby enabling users to eliminate the middleman. Bit Gold, like other attempts, was ultimately unsuccessful. However, it too inspired digital currencies that would enter the market a decade or more after its introduction.

B-Money

In 1998, developer Wei Dai proposed an "anonymous, distributed electronic cash system" called B-money. Dai suggested two different protocols, including one which required a broadcast channel that was both synchronous and unjammable. Ultimately, B-money was never successful; indeed, it differed from Bitcoin in many ways. Nonetheless, it was also an attempt at an anonymous, private, and secure electronic cash system.

In the B-money system, digital pseudonyms would be used to transfer currency through a decentralized network. The system even included a means for contract enforcement in-network without using a third party. Although Wei Dai proposed a whitepaper for B-money, it was ultimately unable to garner enough attention for a successful launch.

Hashcash

Developed in the mid-1990s, Hashcash was one of the most successful pre-bitcoin digital currencies. Hashcash was designed for various purposes, including minimizing email spam and preventing DDoS attacks.

Hashcash opened up a wide array of possibilities that would only be realized nearly two decades later. Hashcash used a proof-of-work algorithm to aid the generation and distribution of new coins, much like many contemporary cryptocurrencies. Indeed, Hashcash also ran into many of the same problems as today's cryptocurrencies; in 1997, facing an increased processing power need, Hashcash eventually became less and less effective.

Even though it eventually fizzled out, Hashcash saw a significant degree of interest in its heyday. As a result, many of the elements of the Hashcash system worked their way into Bitcoin's development.

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