Last Updated on January 24, 2025
The world’s first cryptocurrency was Bitcoin.
In October 2008 Satoshi Nakamoto published a white paper online explaining his concept of a decentralised peer-to-peer payment network.
Shortly after, in January 2009, Satoshi released the Bitcoin software and mined the first block.
The concept of cryptocurrency actually predates Bitcoin by a few decades. There were several efforts to pioneer a digital currency from the 1980s to the 2000s.
Yet it wasn’t until Bitcoin that the concept took off.
Early Altcoins
In 2011 the first altcoins emerged on the scene.
The term “altcoin” comes from “alternative” and “coin.” Basically they are all cryptocurrencies other than Bitcoin.
Litecoin was developed by a Google engineer called Charlie Lee.
Lee believed that Bitcoin would be too slow to process transactions and therefore could not be used as everyday money.
He wanted to design something that would complement Bitcoin by being faster. The idea would be that Bitcoin would be a store of value while Litecoin would be a more practical means of exchange.
While most of the early altcoins, such as Namecoin and Peercoin, have fallen by the wayside, Litecoin has survived and thrived.
Dogecoin and Meme Coins
Dogecoin is a prominent altcoin that emerged on the scene in late 2013.
It was so successful that it spawned a whole new category of cryptocurrency – the meme coin.
Dogecoin was originally created as a parody, incorporating the popular Shiba Inu dog meme.
However, while many people still treat it as a joke, Dogecoin is actually a cryptocurrency that should be taken very seriously.
Dogecoin is a fork of Litecoin. It is a proof of work cryptocurrency that produces a new block every minute.
Unlike Bitcoin, which has a hard cap of 21 million, there is no supply cap for Dogecoin.
5 billion new coins are added to the supply each year.
This may sound like a lot, but relative to the existing supply it means the rate of inflation will trend towards zero.
A lot of people write off the meme coin craze as just a passing fad. But that is a mistake.
One of the critical things a blockchain needs to survive is a community. Otherwise the network will fail. Without people using it a blockchain will cease to exist.
If a meme coin is popular, the community grows. This strengthens the network.
Dogecoin has survived too many crypto cycles to be written off.
Other prominent meme coins that have been inspired by Doge include:
- Shiba Inu
- Baby Doge Coin
- Doge Elon Mars
- Poly Doge
- Wownero
Monero and Privacy Coins
Monero was created in 2014 and has become the leader of the altcoin category of privacy coins.
One of Bitcoin’s limitations is that it is a transparent network. Monero and other privacy coins have sought to address that issue by providing an anonymous network.
Monero’s technology means that the sender, the receiver and the transaction amount are all invisible on the blockchain.
Now privacy more or may not matter to you. But even if it doesn’t it has an impact on the fungibility of the coin.
For money to be effective it needs to be fungible. This means that each unit is exactly equal to each other and therefore you do not care which one you have.
An example of a store of value that is not fungible is land. Since every piece of land is different it cannot be used as money.
Bitcoin is fungible in theory except for one potential problem. A Bitcoin could be tainted by its use in a criminal transaction. Unlike gold which can be melted down with no trace of its past, a Bitcoin’s record is immutable. This means that “clean” coins may trade at a premium over “tainted” coins, thus destroying the fungibility of Bitcoin.
As a private untraceable coin Monero will not have this problem. It is through privacy that Monero maintains its fungibility. This concept is best explained by Daniel Kim and I highly recommend watching Kim’s presentation on this issue.
The other main competitor in the privacy space is Pirate Chain.
Tether, USDC and Stablecoins
In 2014 the first stablecoin called Tether (USDT) was developed, birthing another new category of cryptocurrency.
A stablecoin pegs its value to a fiat currency such as the US Dollar.
The attraction is that it allows users to trade cryptocurrency and manage volatility by trading back into a fiat denominated unit without actually having to convert cryptocurrency funds back to fiat.
In 2018 a competing stablecoin USD Coin (USDC) was launched.
Both Tether and USDC are backed by US Dollar reserves.
Attempts have been made to create an algorithmic stablecoin that can maintain the peg without reserves. So far those attempts have been unsuccessful, most famously when Luna and UST blew up spectacularly in 2022.
Ethereum
2015 was the year that Ethereum was released.
Founded by Vitalik Buterin, Ethereum has become the largest and most popular altcoin.
While it too offers digital money in the form of Ether, it positions itself as a broader proposition than Bitcoin and offers a use case beyond money.
Ethereum claims its network can be used for just about anything, and its value proposition is that it is the blockchain upon which a new decentralised internet will be built.
A lot of commentators say that owning ETH, the native taken of the Ethereum network, is like buying shares in the internet in the early 1990s.
Whether that is true or not remains to be seen.
Ethereum began its life as a proof of work cryptocurrency but transfered to proof of stake in 2022.
This sparked a massive debate about the nature of proof of work cryptocurrencies vs proof of stake cryptocurrencies.
Bitcoin Blocksize Wars
A key moment in the history of Bitcoin was the blocksize wars of 2015 to 2017.
Satoshi had implemented a limit of 1mb per Bitcoin block and a debate erupted around whether or not Bitcoin should increase the block size to allow for more and cheaper transactions.
The small blockers ultimately won and retained control of Bitcoin, while the big blockers hard forked into Bitcoin Cash and then again into Bitcoin SV.
While this was primarily a Bitcoin issue it had broader implications for the entire cryptocurrency market as it forced developers of various blockchain projects to think hard about governance and scaling solutions.
ICOs
2017 was also the year of the Initial Coin Offering or ICO.
An ICO occurs when the developers of a new crypto platform want to raise funds. They sell some of the coins of their new project in exchange for something like Bitcoin. In a way it is kind of like Kickstarter combined with angel investing. The new project raises money and the investor gets an early shot at picking up an asset they think will perform well in the future.
ICOs had been around for a while. Mastercoin developed the concept in 2013, with Ethereum also having an ICO in 2014 before launching the following year.
But in the crypto bull market of 2017, ICOs took off.
Many projects flopped when the next bear market arrived. But those projects that survived the ICO mania of 2017 went to work building their applications and preparing themselves for the next bull market.
Read More: How To Survive A Crypto Bear Market
Why Buy Cryptocurrency
Cryptocurrency is a fundamental shift in the nature of money.
It is much more than just a way to make a quick buck or as a way to diversify your portfolio.
I simplify things for myself in the cryptocurrency space by splitting coins into three categories.
- Bitcoin
- Attempts to be a better version of hard money than Bitcoin e.g. Monero
- Technology speculations e.g. Ethereum
I think this is a useful lens to view them through.
Bitcoin came first and because of its unique properties it is arguably the hardest money known to man. The case for Bitcoin is quite simply that it is a superior form of hard money. I firmly believe in the case for Bitcoin.
The altcoin world is much more complex. There are thousands of them, some clearly rubbish but others with interesting value propositions.
Some, like Monero with its privacy features and superior fungibility, attempt to do a better job than Bitcoin as hard money.
Most altcoins, however, are essentially technology speculations that attempt to build a network or an app. The largest of these is Ethereum, which makes the case that its blockchain network will form the basis of a new decentralised internet.
I own both Bitcoin and altcoins but I own them for different reasons. In my mind Bitcoin is in a similar category to gold, whereas Ethereum is in a similar category to Apple, Microsoft and Google when they were in their infancy.
I think Bitcoin will stand the test of time as money. I think some altcoins will survive, whether or not they do depends on their technological utility and market adoption.
Read More: Why Buy Cryptocurrency
How To Buy Cryptocurrency
Cryptocurrency can be purchased from a wide range of exchanges.
Each has their own unique features, so it is worth doing a bit of research. Most exchanges carry all the large and mid cap coins. However, smaller coins are not necessarily listed by all exchanges.
Some things you might want to consider when looking at an exchange are:
- Platform security
- Spreads and liquidity
- User experience
- Fees
- Payment methods
Once you have purchased your cryptocurrency you need to think about how to store it. Many exchanges let you leave your assets on their platform, however there is significant risk in doing so given that they might be hacked or go out of business.
It is much safer moving your assets into cold storage.
Read More: Do You Need A Cold Storage Wallet?
Conclusion
Many feel strongly that cryptocurrencies are the way of the future and will continue is rise, while others think it is a ponzi scheme that is destined to fail.
My position is that I am bullish on Bitcoin because it is sound money, while being open to the fact that it may be rejected by the market.
I am cautiously bullish on some altcoins, particularly Monero, while being open to the fact that they may fail to deliver on their promises.
Only time will tell but I think Bitcoin has started a revolution that will shape the history of money forever.
Image Credits
Cryptocurrency by Mariia Shalabaieva on Unsplash
Litecoin by Michael Förtsch on Unsplash
Dogecoin by Kanchanara on Unsplash
Tether by DrawKit Illustrations on Unsplash
Ethereum by Roman Synkevych on Unsplash
