Three key events have shaped the cryptocurrency industry more than any other. This article goes in depth about the significance of the Satoshi bitcoin whitepaper. Second, the article details the explosion of cryptocurrencies in the wake of bitcoin. And third, Regulation of cryptocurrency markets is looked at for its key historical significance in shaping cryptocurrency markets.

Bitcoin and the Genesis Block

The most important development for cryptocurrency was the bitcoin genesis block. The bitcoin genesis block was the first mined in January 2009. It was in late 2008 that Satoshi Nakamoto released the bitcoin whitepaper.

The historical importance of this document is huge. To support that, according to Google Scholar, the bitcoin whitepaper has been cited in other scholarly articles nearly 10,000 times. To compare, the top artificial intelligence article published in 2016 has 25,000 citations.

Prior to the bitcoin whitepaper, a lot of work had been contributed to digital currency. In particular, David Chaum, the creator of the forerunner to bitcoin, DigiCash, labored for years attempting to create a secure and verifiable means of transferring and storing money online.

The problem was not that funds could not be transacted over the internet. Organisations such as Mastercard and Visa had been moving money across the globe for years prior to Satoshi’s 2008 whitepaper. The problem was known in the industry as the double spend problem.

Essentially, the double spend problem meant that one transaction could be intercepted and sent for a second time. That presented the issue that the network looking to verify the transaction could be manipulated and distorted. What this meant for most online commerce is that banks and other third parties were needed to mediate the transaction and dispute process.

The bitcoin whitepaper introduced a technology called cryptographic proofs of work. Put simply, bitcoin’s cryptography protects the identity of both transacting parties. That is in addition to providing a time stamp that certifies the correctness of the transaction while securing the transaction from fraud or any other tampering.

This is important because it removed the need for a bank or other third party to make the trade. And with bitcoin, there can be no disputed transaction. All transactions on the blockchain are final. However controversial, this is easily understood as basically creating digital gold.

New applications

A second key historical event can be understood by grouping together the explosion of new cryptocurrencies. In 2013 Ethereum was proposed by Vitalik Buterin and was released in July of 2015. Ethereum gained popularity with faster and higher volumes of transactions with a reduced computing power to mine cryptocurrency.

Ripple soon emerged as a major payments gateway. XRP has been on markets since 2013, according to CoinMarketCap, and is the liquidity function for the international payment arm of Ripple. This is important because Ripple is one of, if not the, industry leader of blockchain-based global payments. This is supported by its list of clientele, which includes the Federal Reserve Bank.

With bitcoin, privacy and security was at the heart of its design. Comparing that to ripple, there is a large step away from anonymous transactions. Opposite to that, Ripple uses the blockchain to solve the double spend problem while setting the conditions for Know-Your-Customer/Anti-money laundering laws necessary for the modern global financial system.

In the years since bitcoin’s inception it has become apparent that its technology has privacy flaws. Since these concerns began new cryptocurrencies have emerged as leaders in privacy focussed cryptocurrencies. According to CoinGecko, two of the three largest privacy coins by market capitalisation are Monero and Zcash.

Monero was released in 2014 and Zcash was released in 2016. Monero Has managed to maintain its market capitalisation lead over Zcash. And this is the case despite some very real concerns over Monero’s traceability. And this is without Edward Snowden’s approval of Zcash compared to Monero.

Regulation

The third key historical event in the cryptocurrency industry has been the regulations that various countries have put in place. For example, in 2014 the People’s Bank of China placed an outright ban on cryptocurrencies. This ban was later revised to the extent that Initial Coin Offerings (ICO’s) were banned and cryptocurrencies were deemed not legal tender.

The biggest player with regards to cryptocurrency regulation by far is the United States. The Internal Revenue Service, The Securities and Exchange Commission (SEC) and the Commodity, Futures, and Trading Commission control financial regulation in the US. These are the arms that control and regulate finance in US Dollars.

Around late December 2017 the price of bitcoin was skyrocketing. The surge in interest around bitcoin, cryptocurrencies and ICO’s was overwhelming with exchanges reporting hundreds of thousands of new user accounts every day.

At that time, South Korean regulators began scrutinizing the largely unregulated crypto space. In addition to this, the SEC in America had begun issuing many legal notices to ICO operators, shocking the market. This pattern of sudden and strict regulation occurred also in Japan and Australia.

While all this was happening the first bitcoin futures contracts began trading in the US on the Chicago Board Options Exchange (CBOE). In the one month the contract was set to mature the value of bitcoin reduced by more than half; more than halving the value of the bitcoin contracts on CBOE. What this shows is that regulation on cryptocurrencies has key historical significance.

Historical significance

This article has shown three key events have shaped the cryptocurrency industry more than any other. This has included the significance of the Satoshi bitcoin whitepaper. Next most significant was the explosion of cryptocurrencies in the wake of bitcoin. And third, Regulation of cryptocurrency markets were shown to hold key historical significance shaping cryptocurrency markets and still having impact to this day.

These three key historical events have been the main drivers in this technological advancement. The Satoshi genesis block caused a huge growth in new ideas and financial products, in addition to bringing about some of the liveliest financial markets in the world. To see the impact of this on the global scale causing governments across the world to regulate has left its mark on the world.