What was the first cryptocurrency: Crypto before Bitcoin?

2023-02-08, 07:01

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![](https://gimg2.gateimg.com/blog/167583907498183482111.jpg)
**<font size=3>[TL; DR]</font>**

DigiCash, HashCash, Bit Gold and Flooz.com are examples of digital currencies that existed before cryptocurrency.

There was no government control or intermediaries with most of the early digital currencies.

Satoshi Nakamoto borrowed some concepts from some of the early digital currencies  to develop [Bitcoin](https://www.gate.io/trade/BTC_USDT).

The main reason why most early virtual currencies failed was lack of grassroot support. 
## Introduction
In the crypto circle, many people believe that [Bitcoin](https://www.gate.io/trade/BTC_USDT), introduced in 2009 was the first decentralized digital asset.  However, the truth is that [Bitcoin](https://www.gate.io/trade/BTC_USDT) was not the first project to develop a decentralized currency.  Before [Bitcoin](https://www.gate.io/trade/BTC_USDT) there were several digital currencies which people used but for short periods and on a smaller scale than BTC. Today, we discuss some of the centralized and decentralized digital currencies that were invented before [Bitcoin](https://www.gate.io/trade/BTC_USDT) such as **Hashcash, B-Money, Bit Gold and eCash. **
## Virtual money on gas station
The virtual money on a gas station was one of the first recorded cases of virtual currencies, developed in the 1980s. In fact, David Chaum, an American cryptographer devised a digital currency in 1983 that was briefly used at filling stations in the Netherlands.

The main trigger for this innovative move was to deal with high cases of thefts that used to take place at gas stations. Thefts of cash were rampant at filling stations that operated during the nights.Therefore, to minimize cases of these thefts a group of developers connected fiat cash to smart cards. As a result, truck drivers used the cards to pay for fuel .

With time, shoppers were able to pay for goods using point of sales (PoS) linked to their bank accounts. Chaum’s eCash payment system was designed to bring privacy in the banking system. Interestingly, Chaum published two documents, similar to present day whitepapers, which detailed how the eCash payment system would work. 
![](https://gimg2.gateimg.com/image/article/1675839251111.png)
David Chaum - Embnation

Chaum published the first “paper” on the eCash payment system in 1981, entitled “Untraceable Electronic Mail, Return Addresses, and Digital Pseudonyms. A year later in 1982 Chaum published another paper with the title, “Blind Signatures for Untraceable Payments.” It is this paper which laid a firm foundation for the anonymous transaction system we use today, involving [cryptocurrencies like [Bitcoin](https://www.gate.io/trade/BTC_USDT) and ETH. ](https://www.gate.io/learn/articles/what-is-cryptocurrency/367 "cryptocurrencies like [Bitcoin](https://www.gate.io/trade/BTC_USDT) and ETH. ")

In 1989, Chaum and his team of developers created an eCash Protocol. However, Chaum and the team failed to forge partnerships with banks and merchants to push for the greater adoption of the eCash payment system. Therefore, he declared bankruptcy in 1989. 
## Digicash
We mentioned a bit about Digicash above, but let’s discuss more about it. Chaum aimed to make Digicash anonymous digital cash and many business people were charmed by the transaction privacy it would bring to its users. Even Microsoft wanted to integrate DigiCash into its Windows 95.

The main difference between DigiCash and most digital currencies like [Bitcoin](https://www.gate.io/trade/BTC_USDT) is that DigiCash was a private virtual currency while cryptocurrencies are open-source assets.

What crypto developers gained mostly from DigiCash is the use of Blind signatures, which use a mixture of private and public keys to conceal the content of the messages. The concepts of private and public keys are critical aspects of cryptocurrency technology.
## Bit Gold 
Nick Szabo, a prominent member of the extropian and cypherpunk communities, was instrumental in the development of cryptocurrencies and the blockchain system. With experience in computer science and cryptography to law, Szabo proposed the use of smart contracts which depended on specialized codes rather than jurisdictional law.

Later on, Szabo proposed using a native digital currency that would flow in the digital contract and be transferred electronically from one person to another. He focused on making improvements on the concept of Digicash to create a virtual currency which was scarce, expensive to produce and would not rely on intermediaries like banks.

As a result, Szabo developed Bit Gold which used the proof-of-work protocol, similar to that of [Bitcoin](https://www.gate.io/trade/BTC_USDT). The production, ownership and distribution of Bit Gold would be recorded on a distributed property title registry, governed by a quorum-based voting system.

Nonetheless, Bit Gold has some shortcomings. It was not fungible which made it difficult to use on a day-to-day basis. Szabo’s other improvement proposal of having a secure, trusted, auditable bank was prone to Sybil attacks which might lead to the split of the network.

Although Szabo wanted to continue with his development of a functional Bit Gold currency, he halted the project soon after Satoshi Nakamoto launched [Bitcoin](https://www.gate.io/trade/BTC_USDT). This is because he believed that [Bitcoin](https://www.gate.io/trade/BTC_USDT) solved the problem which prevented the full scale launch and adoption of Bit Gold.

Even the [Bitcoin](https://www.gate.io/trade/BTC_USDT) founder, Satoshi Nakamoto acknowledged the contribution [which the Bit Gold project made to the successful development of [Bitcoin](https://www.gate.io/trade/BTC_USDT)](https://www.gate.io/blog_detail/626/who-is-satoshi-nakamoto-here-are-the-best-guesses "which the Bit Gold project made to the successful development of [Bitcoin](https://www.gate.io/trade/BTC_USDT)"). In one of the Bitcointalk forums, Nakamoto wrote, “[Bitcoin](https://www.gate.io/trade/BTC_USDT) is an implementation of Wei Dai’s B-money proposal [...] in 1998 and Nick Szabo’s Bitgold proposal.” 
## HashCash
Another great forerunner of [Bitcoin](https://www.gate.io/trade/BTC_USDT) and other cryptocurrencies is HashCash, suggested and developed by Adam Beck, a renowned cryptographer. What triggered the HashCash was a research carried out by IBM researchers Cynthia Dwork and Moni Naor in 1992 which explained how to  prevent Sybil attacks, denial-of-service attacks and spam messaging.

They devised a proposal to combat these problems. In this case, the sender of an email would complete a puzzle as a proof that it is not an unsolicited email or message. This individual would then attach the copy of the solution to the puzzle to the email which acted as a proof-of-work, authenticating that the message was from him/her. This could prohibit the sending of spams.

Consequently, Adam Beck proposed a similar system for a digital currency. The virtual currency Beck proposed called HashCash would rely on hashing instead of solving complex puzzles.
![](https://gimg2.gateimg.com/image/article/1675839515222.png)
Adam Beck - Bitkub

Hashing is the process of using computational power to turn specific data into random strings of characters. Therefore, HashCash used proof-of-work to confirm transactions. 
## B-Money 
Wei Dai, an active cypherpunk, planned to introduce a type of peer-to-peer financial system, not regulated by the government or any central authority. It would involve the use of smart contracts with a system to solve disputes that might arise.

The virtual currency would use a shared ledger system which could connect all the participants.  Also, this system would utilize the proof-of-stake consensus algorithm and had public keys, representing the users. Notably, there was a need for a server to store the transaction records for future use.

Although B-Money was never used, its system was similar to that of most cryptocurrencies which is electronic, secure, private and anonymous. More importantly, [Satoshi Nakamoto](https://www.gate.io/learn/articles/who-is-satoshi-nakamoto/286 "Satoshi Nakamoto") gave reference to B-Money in the [Bitcoin](https://www.gate.io/trade/BTC_USDT) whitepaper. The B-money was similar to blockchain based digital cash in that it would not involve any intermediaries. 
## Flooz.com
The Flooz eCash is an example of digital cash that existed before cryptocurrencies. Flooz introduced eCash in 1998 as part of its promotional and marketing strategy. Particularly, the customers who purchased goods on Flooz.com would get customer bonus cards which they could redeem at any time. 
However, the customers would also purchase the Flooz eCash from the platform for $1.00. Apart from using the eCash to purchase products on the platform, its holders would also buy goods from other online merchants who were affiliated to Flooz.com. Sadly, Flooz.com was closed down because there were many criminal activities occurring using that payment system.  
## Conclusion
Basically, several prominent people tried to develop and use electronic cash well before the launch of [Bitcoin](https://www.gate.io/trade/BTC_USDT). The history of cryptocurrency cannot be complete without virtual money such as DigiCash, HashCash, Bit Gold, B-Money and Flooz.com. Subsequently, the developers of cryptocurrencies such as Satoshi Nakamoto got hints from these earlier digital currencies when they developed their own cryptocurrencies.
## FAQs about cryptocurrency before [Bitcoin](https://www.gate.io/trade/BTC_USDT)
### What was the very first cryptocurrency before [Bitcoin](https://www.gate.io/trade/BTC_USDT)? 
The first cryptocurrency before [Bitcoin](https://www.gate.io/trade/BTC_USDT) was eCash created by the company DigiCash in 1990.  The cryptographer David Chaum created Ecash. Other virtual currencies that existed before [Bitcoin](https://www.gate.io/trade/BTC_USDT) were eCash, B-money, Bit Gold, and Hashcash.

### What year was [Bitcoin](https://www.gate.io/trade/BTC_USDT) created?
[Bitcoin](https://www.gate.io/trade/BTC_USDT), a peer-to-peer digital currency, was created in 2009. In fact, Satoshi Nakamoto, the founder of [Bitcoin](https://www.gate.io/trade/BTC_USDT), published the [Bitcoin](https://www.gate.io/trade/BTC_USDT) [whitepaper ](https://www.gate.io/blog_detail/1812/what-is-a-crypto-whitepaper-light-paper "whitepaper ")in 2008 before launching it in 2009. The main purpose of creating BTC was to make it a decentralized means of payment for goods and services. However, some investors use it as a store of value and an investment asset.

### What is the second oldest cryptocurrency? 
[Litecoin](https://www.gate.io/trade/LTC_USDT), Created by former Google engineer Charlie Lee and launched in 2011, is the second oldest cryptocurrency after [Bitcoin](https://www.gate.io/trade/BTC_USDT). It was created to overcome the problems of [Bitcoin](https://www.gate.io/trade/BTC_USDT) such as slow transaction speed and high gas fees. Therefore, [Litecoin](https://www.gate.io/trade/LTC_USDT), a fork of [Bitcoin](https://www.gate.io/trade/BTC_USDT), was designed to be fast, low cost and secure.

### What was the first thing bought crypto? 
The first recorded things which cryptocurrency purchased were two large Papa John’s pizzas. As a fact, Laszlo Hanyecz, a Florida programmer purchased the pizza on 22 May 2010 using [Bitcoin](https://www.gate.io/trade/BTC_USDT), at a cost of 10 000 BTC, worth $30 at that time. This is the reason why crypto fans celebrate [Bitcoin](https://www.gate.io/trade/BTC_USDT) Pizza day on 22 May, every year.

### What is the oldest cryptocurrency exchange? 
Bitstamp, established in Slovenia in 2011, is the oldest cryptocurrency exchange still in existence. However, the first crypto exchange to be launched was [Bitcoin](https://www.gate.io/trade/BTC_USDT) Market, founded on 17 March 2010. The other early exchanges include Mt. Gox established in 2010 and BitInstant launched around the same period.

<div class="blog-details-info">
<div>Author:** Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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