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Welcome to the beginning of our Intro to Crypto series! This was designed for those of you that have little familiarity with crypto and Bitcoin. Our mission at Bravado Trading is to help give you the foundation you need to get started, with accurate and organized information.
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For many, the origins of cryptocurrency are shrouded in mystery. Where and how did cryptocurrency begin? Nowadays, cryptocurrency is digital cash that enables the global transfer of not only money but things like stocks, digital assets, property titles, and more.
Cryptocurrencies did not always have so many utilities, and as we take a look back at the long and winding road crypto took to get to where it is now, it will become evident that the spark for an entire financial revolution was a cryptographer's simple desire to design autonomous, unmediated money.
The analog world was one of purely physical objects. Anything that could be owned was, by necessity, tangible – there only existed what could be felt with the hand. In the 1930ʼs, renowned cryptographer Alan Turing shattered the analog paradigm with his introduction of the “Universal Computing Machine,” giving the world its first blueprint for the modern computer. From there, we seem to intuitively know what happened. Computing power increased, the technologies that amassed around computers accelerated, and the tangible world began to give way to the digital one.
Digitization is the process of converting information into a format that can be read by computers. What can this information consist of? The answer to that is – anything. Without any limits constraining the process of digitization, information of every kind has been converted and fed into computer networks that grow more sentient by the day.
By the time cryptographer David Chaum came onto the scene in 1982 with his proposal for an electronic cash system, there was already a growing cadre of cypherpunks, crypto-anarchists, and libertarian coders looking for ways to digitize the most important physical object of all – money.
By the 1980ʼs, films like Tron portrayed humans themselves being digitized, compact discs were replacing vinyl, and over 10% of Americans reported owning a home computer. In light of this, the digitization of money would have only seemed natural.
The thing was, Chaum and the aforementioned cypherpunks werenʼt looking to create just any kind of digital cash. They wanted digital money to be anonymous and transactions to be private. In their view, credit systems had advanced to the point that they had become tyrannical, pervasive systems of financial oversight that ensured the continuation of debt cycles for individuals and nations alike.
eCash, An Early Predecessor to Bitcoin
By inserting themselves into the middle of nearly all financial transactions around the world, credit and banking systems had become so dominant that world events became shaped by their fortunes, as evidenced by the S&L banking crisis of the 1980ʼs which was the worst financial debacle since the Great Depression.
Anonymous digital cash offered a way out from failing, monopolistic financial systems that did not seem to serve the interests of ordinary people but instead played into the hands of monopolistic powers. By cutting banks, credit institutions, and governments out of the way between counterparties via anonymous currency, Chaum hoped to create a context of personal financial sovereignty for the first time in human history, stating in a 1994 interview with Wired Magazine that:
Cyberspace doesnʼt have all the physical constraints. [...] There are no walls...itʼs a different, scary, weird place, and with identification itʼs a panopticon nightmare. Right? Everything you do could be known to anyone else, could be recorded forever. Itʼs antithetical to the basic principle underlying the mechanisms of democracy.
Chaumʼs digital cash effort, eCash, launched in the early 90ʼs but failed to gain traction over the course of the decade. Perhaps more important was the movement it spawned of subsequent digital currency attempts leading all the way to Bitcoin.
Next lesson: B Money - A Big Step Towards Bitcoin