What fueled the crypto craze and what are the challenges that lie ahead?

Neeraj Singh Shekhawat Neeraj Singh Shekhawat
Jun 19, 2022 4 min read
What fueled the crypto craze and what are the challenges that lie ahead?

Crypto, blockchain, tokens, and Bitcoin are words that get thrown into conversations quite often these days as if we’ve been using them forever. The truth is they’ve only sneaked into our vocabulary recently, but the frequency with which they are used makes it seem like they’ve been around for much longer. Everyone knows or has at least a rough idea of what cryptocurrencies are about and the importance they hold in the current financial landscape.

But have you ever stopped to wonder how the crypto phenomenon started and what are the factors that led to its astonishing rise and current popularity? As you might assume, crypto’s fame was not built overnight. In fact, cryptocurrencies were several years in the making before they started their ascension onto the global financial scene.

So, before you decide whether digital currencies are worth taking a deeper interest in or not, you might want to take a look at their timeline, from the very beginning and up until the present day.

What is crypto?

Although most people are already familiar with digital currencies, not everyone is up to date with crypto basics, so a short introduction is required in order to set things straight.

A cryptocurrency or crypto is a digital or virtual currency that can be used as a medium of exchange without relying on a central authority such as a government or bank. Cryptos are powered by blockchain technology, and they use strong cryptographic techniques to verify transfers and allow for safe and fast transactions.

Cryptocurrencies exist only in the virtual world, so they have no physical presence. Instead, to keep track of crypto ownership, a record of each transaction is kept on a digital ledger in the blockchain network, ensuring there’s no way for these currencies to be duplicated.

Strictly speaking, cryptocurrencies are not really considered currencies in the traditional sense of the word. That’s why they’re often referred to as commodities, securities, or digital assets. The terms used to define individual crypto units are coins and tokens. These units, whether we’re talking about Ethereum, Bitcoin, or any other crypto, can be traded on crypto exchanges such as Binance and can be used as a means of transaction, to purchase goods and services, as an investment method, or to engage in the development of software programs and the execution of smart contracts.

From humble beginnings to global phenomenon

The concept of cryptocurrencies first appeared in the ‘80s when American cryptographer David Chaum came up with the idea of digital money. He was the first person ever to use cryptography to secure and verify transactions. The first cryptocurrency protocols emerged in the early ‘90s and although there were numerous attempts at creating digital money all throughout the decade, such as Digicash, B-Money, or Bit Gold, none of them enjoyed much success. The only contribution they brought to the crypto sphere is that they served as a source of inspiration for future digital assets.

The real breakthrough came in 2008 when Satoshi Nakamoto, the supposed inventor of Bitcoin, published a whitepaper that presented the concept and scope of the Bitcoin Blockchain network. Bitcoins’ purpose was to address many of the shortcomings and inefficiencies of the traditional financial system which was riddled with limitations, fraud risks, and subjected to the control of central authorities. Nakamoto envisioned a different way to conduct trading by creating the first-ever decentralized currency.

Not long after launching the whitepaper, the first transaction using Bitcoin took place, between Nakamoto and Hal Finney. The next year, another historic transaction was recorded, when someone paid 10,000 Bitcoins for two pizzas from Papa John’s. We could say that the rest is history, as Bitcoin began its rise to fame shortly after and other cryptocurrencies followed suit, but we wouldn’t want to skip any interesting parts of the story.

In 2010, Bitcoin was the only cryptocurrency in the market, so there wasn’t much going on on the crypto front. By 2011, as other people started to catch on to the potential of cryptocurrencies, Bitcoin price had gone up, reaching one dollar, and other cryptocurrencies entered the scene. In 2013, there were already 10 other digital currencies competing with Bitcoin for supremacy, and their prices varied throughout the years.

Then, in 2017, Bitcoin along with other cryptocurrencies such as Ethereum started gaining momentum and their popularity grew by the day. There’s not much consensus when it comes to what exactly made cryptocurrencies skyrocket in recent years, as debates on this subject continue. Some assume that the phenomenon was supported by the emergence of major cryptocurrency exchanges such as Binance which made it infinitely easier for individuals to gain access to digital assets. Others believe that it was the need for a safe, and reliable form of digital currency that would address the pain points of the fiat financial market that was largely responsible for crypto’s rising fame.

It was most likely a combination of these factors that led to the popularization of crypto, along with a favorable social and economic context. But the one thing that we can say for sure is that cryptocurrencies are here to stay, despite the many ups and downs they’ve experienced since their emergence.

What does the future have in store for the crypto sphere?

The already famous volatility of the crypto market makes it difficult to make accurate predations about what’s going to happen in the future. Since cryptos don’t have any intrinsic value, they’re worth and therefore their price is going to be dictated mostly by people’s perceptions.

The only assumptions expert can make at this point are based on the current tendencies that include increasing regulations in the field and transaction fees that have skyrocketed along with crypto’s popularity. Apart from volatility, these are some of the stumbling blocks that influence movements in the market at this point and that will probably weigh heavily on the balance in the years to come as well.

Must have tools for startups - Recommended by StartupTalky

Great! Next, complete checkout for full access to StartupTalky.
Welcome back! You've successfully signed in.
You've successfully subscribed to StartupTalky.
Success! Your account is fully activated, you now have access to all content.
Success! Your billing info has been updated.
Your billing was not updated.