A Brief Account of Cryptocurrencies Before the Invention of Bitcoin


Before the conception of Bitcoin (BTC), there were digital currencies. However, many people knew nothing about cryptocurrencies till the release of Satoshi’s white paper.

The Ancient Days

The first digital currency to be recorded in history was from the Netherlands in the 1980s. It was invented as a solution to the rampant overnight raids made on local petrol stations. Since the petrol stations had to operate on a 24-hour economy, someone decided to put the local currency into new-fangled smartcards and this is how digital currency was invented.

Digital Currency

David Chaum, a famous American cryptographer, had been exploring what was needed to create virtual currency. His concepts of money and privacy made him to strongly suggest that for people to carry out safe businesses, there was a need for a token currency resembling fiat currency.

In 1983, Chaum developed the blinding method- a modification of the RSA algorithm employed in crypto encryption. He started DigiCash and went further to develop its internet money innovation in the 80s.

The Second Wave

The invention of DigiCash initiated several other cryptocurrency start-ups. PayPal was launched in the mid-90s facilitating the exchange of money between people.

As PayPal progressed to become a common web protocol, Chaum’s concepts continued to be valued more in the western nations giving rise to the invention of WebMoney in Russia. Another establishment that sprouted as a PayPal web hybrid is e-gold– an American firm that had its headquarters in Nevis.

With its popularity on the rise, e-gold fully exploded into life in 2000, and its future seemed bright.

The Regulatory Menace

e-gold faced various problems with the authorities due to its libertarian way of permitting anyone to create an account. This regulatory bust was ignited by a constant series of ponzis, HYIPs, ‘games’ and other internet scams that drew the attention of the Federal Reserve System (Fed).

In 2005, the company’s Florida offices were ransacked marking the end of the e-gold currency as an efficient tour de force.

The Feds also progressed to wipe curb any digital currency platform they came across, leading to the end of the second great wave of the new currency.

Any type of digital currency was labelled as a hotbed of terrorists and drug peddlers, hence a valid target for total control.

Sequential sets of the eMoney regulations were put into place to give way to the third wave of digital currency, but being Europeans, people never comprehended what a start was, and the somewhat less-high limitations acted as stumbling blocks to the third wave of cryptocurrency.

This brings us forward to 2008, where Satoshi Nakamoto published his Bitcoin White paper.


From the above discussion, it is clear digital currencies existed before the invention of Bitcoin. Even in the Bitcoin White Paper, Satoshi admitted that there were many people involved in cryptocurrency world in the 90s. However, due to the tight regulations in the cryptocurrency space, they thought all was lost.

Bitcoin is a product of history; when policies were crafted, they rallied a longer period and into the invention. Satoshi is the mother of Bitcoin, but the cryptocurrency has many forefathers, like David Chaum.

Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.
John Makori is a cryptocurrency writer with background in IT and journalism. He has lived in different countries, and settled in Canada. He has more than 4 years of experience working as a journalist with interest in Bitcoin and Cryptocurrencies. He’s passionate about learning Blockchain technologies’ potential to reshape all aspects of our lives. He joined TheOofy as a writer.