Where cryptocurrencies come from

Cryptocurrencies are a digital asset that uses cryptographic encryption to guarantee their ownership and ensure the integrity of transactions.

But where do cryptocurrencies come from or what is their origin? It all begins in 2008 when the United States was going through a financial crisis that caused the devaluation of the dollar, which in turn affected the rest of the world.

Due to the low value of the currency and the cut in interest rates, central banks manipulated and devalued currencies around the world. Eventually, with low-interest rates and taxpayer bailouts, the banks responsible for the financial problems were the ones who benefited from the “collapse”, this was the trigger for a man known as Satoshi Nakamoto whose identity remains unknown to this day to decide that there was a need to invest with a disruptive force, with something that could change the way we think about money.

In 2008 he first published his paper on Bitcoin technology detailing the peer-to-peer system that runs Bitcoin transactions and months later provided the software to perform these transactions.

Bitcoin would thus be the first completely decentralized currency open to all, without a central bank controlling it. This means that we are all part of the Bitcoin economy, instead of a bank defining how much it is worth and how much of it we have available in our economy.

However this was not simple since it was necessary to have a global ledger of transactions in which transaction information is stored, normally a bank would be responsible for performing this procedure but being a decentralized system there is no associated bank this allows anyone to send a transaction request to the decentralized network and this makes the decentralized ledger very vulnerable to attacks. This was the main impediment to the creation of a functional cryptocurrency.

So Satoshi needed to innovate and create the technology we now call “Blockchain“, which allows keeping the ledger secure using timestamps, a lot of decentralized computational processing power, and cryptography.

Because of this, we can say that Bitcoin (BTC) is the origin and maximum representative of cryptocurrencies, which went from having a practically worthless value has achieved figures never imagined.