What Was Before Bitcoin?

We found out 3 digital currencies, which began the history of cryptocurrencies.

Dec 25, 2017

At the end of the 20th century, there was an increasing need in the world for an alternative digital currency, which would be independent of banks and state authorities, but at the same time would be reliable and fast.

DigiCash was a form of early electronic payment created by David Chaum in 1990. This system was based on a revolutionary concept of Blind Signature Technology that ensured the complete privacy of users who conduct online transactions. By using public and private key cryptography, it allowed anyone to become his or her own bank and control their funds without third-party oversight. Issued payments were untraceable for banks and governments. DigiCash was unable to grow the company successfully through the expansion of its user base, because it entered the market before e-commerce was fully integrated within the Internet. The company behind DigiCash ended up in bankruptcy in 1998.

Bit Gold was one of the first decentralized cryptocurrencies concepts. It was designed in 1998 by Nick Szabo - a computer scientist and cryptographer from the USA. Bit Gold was never implemented, but has been called "a direct precursor to the Bitcoin architecture”. In Szabo’s Bit Gold structure, a participant would dedicate computer power to solving cryptographic puzzles. In a Bit Gold network, solved puzzles would be sent to the Byzantine fault-tolerant public registry and assigned to the public key of the solver. Each solution would become part of the next challenge, creating a growing chain of new property. It’s interesting that although Szabo has repeatedly denied it, people have speculated that he is Satoshi Nakamoto (the creator of Bitcoin), whose identity is still wrapped in obscurity.

Flooz was a kind of currency established in 1999 by Flooz.com. The principle of operation was similar to the various loyalty programs, such as frequent flyer or customer bonus cards. Users accumulated flooz credits either as a promotional bonus given away by some internet businesses or purchased directly from flooz.com which then could be redeemed for merchandise at a variety of participating online stores. During the three years Flooz was in business, the company raised as much as $35m in venture capital, betting on demand among merchants for new and exciting payment mechanisms, but was closed down due to criminal activities taking place on its platform.

 


Sources:
https://www.coindesk.com/3-pre-bitcoin-virtual-currencies-bit-dust/

https://en.m.wikipedia.org/wiki/Cryptocurrency/

https://themerkle.com/top-4-cryptocurrency-projects-created-ahead-of-bitcoin/

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