In our previous article “Why Would Cryptocurrencies Survive and Prosper?”, we mentioned that one of the first ever transactions done in Bitcoin was the sale of two pizzas — 10,000 BTC in 2010.
Today, we will like to take some time to review the evolution of blockchain and cryptocurrency that characterized the industry after 2010, starting from 2011.
June 2011: Silk Road
In the early days of cryptocurrency, one would think of Bitcoin solely as a cryptocurrency, overlooking the potential of the “blockchain” — the very technology that underpins it. Besides the wild fluctuations in its value, skepticism also followed because of its degenerate uses, such as the ability to buy any drugs imaginable on the darknet — Silk Road.
However, Silk Road demonstrated Bitcoin’s significance far beyond cryptocurrency, it championed Bitcoin’s vision. More than just anonymity — masking user’s identities by sitting on TOR, and accepting Bitcoins as the only payment method, Silk Road showed the future of blockchain and the benefits distributed digital economy could bring. One based on cryptographic proof instead of trust, allowing people who have no confidence in each other to transact directly, without the need for a neutral central authority and fear of fraud.
Most sites do not record the prices of Bitcoin in 2011, but it wildly fluctuates between $3 to $8.67–50 Bitcoins could buy around $150 USD [3] worth of drugs then — a premium for convenience.
February 2013: Introducing Ripple
Bitcoin wasn’t the only star player in the field, a strong alternative was Ripple (XRP).
Before Vitalik Buterin co-founded Ethereum (ETH) (more on that below), he was a co-founder and leading writer of Bitcoin Magazine — the first serious and dedicated cryptocurrencies publication, from September 2011 to mid-2014.
One of the articles he wrote introduces Ripple [2]. Ripple’s intent was to create a decentralized monetary system — one that would empower people to be their own bank: issuing, accepting and acting as a conduit for loans all at once.
Ripple was different from Bitcoin in many ways. It had no proof of work and no concept of mining. Its consensus mechanism allowed nearly instant confirmations, processing it much faster than Bitcoin block. This was made possible by having individual nodes decide which version of the ledger to accept based on majority opinion. However, it was not susceptible to causing chain fragmentation nor undergo a Sybil attack compared to Bitcoin because every Ripple user has a “unique node list” — a list of nodes that are not likely to collude. This means that the nodes will not be able to garner majority consensus and push fraudulent transactions forward.
Ripple allowed users to send, receive and hold any currency, be it USD, gold or even air miles in a decentralized manner; with an added benefit of not having to deal with price volatility, unlike Bitcoin, due to its rapidly deflationary nature.
With a strong contender to Bitcoin like Ripple, it is clear to see that the idea of cryptocurrency is here to stay.
July 2014: Ether Sale
More players have sprung up since Ripple, and one of those high caliber ones is ETH.
For the benefit of those new to the industry, in brief, ETH is both a decentralized mining network and software development platform. It allows the creation of decentralized applications (dApps) that share a single blockchain. ETH was first mentioned in a whitepaper in late 2013, although the ether sale was launched in 2014 and the official initial release was only in 2015.
On the ETH blog post written by Vitalik Buterin, he thanked the community for the patience and confidence with the launch of the Ether sale. The long-awaited Ether sale was delayed from 2 weeks to 6 months [5] due to a multitude of issues such as (a) Funding Delays (b) Difficulty in Navigating Legal Regulations and, (c)Technical Difficulties in Setting up a Secure Sale Website and Cold Wallet System.
More importantly, he stressed and clarified that “Ether is a product, NOT a security or investment offering”, at a time that cryptocurrency was under the scrutiny of the law. It is simply a token useful for paying transaction fees or building or purchasing dApps on the ETH platform.
Launching the Ether sale was an important milestone in ETH’s history, and a concrete step towards the building of the ETH’s community.
2015: ConsenSys
Another critical step forward for ETH is to have an environment that fosters projects built on ETH. The answer and leader at that time were ConsenSys — a software production studio, founded by Joseph Lubin (more on him later) in 2015. He is a heavy contributor to ETH’s ecosystem having co-founded Ethereum, Ethereum Switzerland GmbH (EthSuisse) and Ethereum Foundation.
The projects fostered by ConsenSys covered ETH’s ecosystem holistically, from infrastructure projects to developer tools to enterprise solutions, and many more. Social impact projects and educating the ecosystem are also critical missions set forth by them with their education training academy and their media platform.
One of the more well-known projects is MetaMask.
A little more about them — MetaMask allows you to visit the distributed web through your browser via an extension. You can now run ETH dApps without the need to run a full ETH node. Two new and exciting features include Privacy by Default (EIP 1102) and MetaMask Mobile! [4] Taking a huge leap forward on user privacy on Ethereum, “privacy mode” feature will allow you to stop your account address from automatically being exposed to websites.
July 2016: Everything You Need to Know About ICO
Our founder, Tony wrote an article about ICO in its early days — what it is, debunking myths and famous Initial Coin Offering (ICO) cases.
ICO became the talk of the town because it was a great alternative to Initial Public Offering (IPO) — you are still able to let your money work for you, less the lengthy legal and compliance process, and minimum earnings requirements, just to name a few. It allowed people to be part of a community and become invested in a project (dApp) they are interested in by purchasing the tokens at a very early stage.
The value of the token comes from the corresponding digital currency and the blockchain itself. Citing the example of ETH, its market capitalization value is made up by totaling the price of all ETH tokens. The price of these tokens is derived from the quality of its consensus, subsequent development of the blockchain project and token design. One of the main reasons that ETH is highly sought after and valuable, is due to its Turing-completeness feature, which results in its rich statefulness.
That sounds like a mouthful. Let us break it down in simple terms.
Turing-completeness refers to any device or system which in theory can calculate everything assuming enough memory is available. The ETH blockchain behaves like a distributed Turing machine, with the ability to take on contracts, understand them, and codify them so that the contract can be fulfilled. It has to be Turing-complete so that it is able to potentially understand anything since it has no way of knowing what agreements it might be asked to understand ahead of time.
Also quoting Vitalik: It is Turing-completeness which allows the rich statefulness, but it is the rich statefulness which is necessary for Ethereum’s flexibility [1].
Rich statefulness refers to the flexibility of the processing units on which these systems are built.
One of the famous ICO cases that are particularly worth mentioning would be the NXT (Future Coin). In December 2013, NXT, an open source cryptocurrency and payment network was launched by an anonymous software developer BCNext. It uses proof-of-stake (PoS) to reach consensus for transactions resulting in static money supply, with no mining involved. To determine how to distribute the initial stake, BCNext created a forum thread on Bitcointalk.org announcing the launch and asking for donations. Lo and behold, with a strong community, it raised 21 BTC (worth about $6,000 USD at the time) — at peak market value, it reached $100M USD [9].
December 2018: Joseph Lubin’s 20-Tweets Storming
December 2018 marked the start of crypto winter, just a year after most cryptocurrencies reached its peak. On 17 December 2017, BTC reached its peak value of $19,783.06 USD/ BTC and on 15 January 2018, ETH reached its peak value of $1329.67 USD/ETH. [6]
To recharge the crypto community and help people prepare for the cold, Joe Lubin — ETH Advocate, went on a tweetstorm, sending 20 tweets [7] consecutively encouraging people to continue believing in the blockchain and cryptocurrency.
His tweets centered on the state of blockchain technology and decentralization. Governments, enterprises of developed and even developing countries are adopting it to solve real-world problems. Besides leapfrogging outdated financial systems, it also brings relief to people on a social impact level such as bounties ocean clean-up in Manila. While the technology may still be in its nascent stages, it already has many existing standards and development tools to allow the community to work towards common goals. That said, concrete and scalable solutions are being proposed every day.
We believe.
December 2018: Waves
Although December 2018 marked the start of the crypto winter, Waves was making waves in the crypto market having raised $120M USD for its private blockchain. It resulted in Waves price jumping almost 50% to $3.80, with a market value of $383M USD [8]. The funds raised were to be used for rolling out a private version of its public blockchain (Vostok System) for corporations and governments. This was to address the concern of large firms and entities who often find the speed and security of public blockchains to be insufficient, officially putting Vostok in competition with IBM’s Hyperledger.
To end, let’s take a look at the history of Ethereum:
References
[1] Allen, Ben. “Turing-Completeness: How Ethereum Does What It Does — The Bitcoin Mag.” Thebitcoinmag.com, 28 Dec. 2017, thebitcoinmag.com/turing-completeness-ethereum/1712/.
[2] Buterin, Vitalik. “Introducing Ripple (XRP).” Bitcoin Magazine, Bitcoin Magazine, 26 Feb. 2013, bitcoinmagazine.com/articles/introducing-ripple/.
[3] Chen, A. (2011, January 06). Underground Website Lets You Buy Any Drug Imaginable. Retrieved February 7, 2019, from https://www.wired.com/2011/06/silkroad-2/
[4] Dresser, Bobby. “MetaMask at DevCon: Privacy Standards, Mobile, and More!” ConsenSys Media, 1 Nov. 2018, media.consensys.net/metamask-at-devcon-privacy-standards-mobile-and-more-d826225b9b4b.
[5] Ethereum Foundation. “Launching the Ether Sale.” Ethereum Blog, 22 July 2014, blog.ethereum.org/2014/07/22/launching-the-ether-sale/.
[6] “Ethereum USD Chart (ETH/USD).” CoinGecko, www.coingecko.com/en/coins/ethereum/usd.
[7] Kao, Rhett. “寒冬中，信仰不夠？以太坊聯合創辦人 Joseph Lubin 用20條推特為您充能.” BlockTempo 動區動趨, 12 Dec. 2018, www.blocktempo.com/joe-lubin-20-tweets-storming.
[8] Khrennikov, IIya. “Waves Platform Raises $120 Million for Private Blockchain.” Bloomberg.com, 19 Dec. 2018, www.bloomberg.com/news/articles/2018-12-19/waves-raises-120-million-for-private-blockchain-after-ico-boom.
[9] 荣祺 陶. “陶荣祺：关于ICO这里有你想知道的一切.” 比特币价格波动与人民币汇率的联系_巴比特_服务于区块链创新者, 20 July 2016, www.8btc.com/article/97311.
