The History Of Digital Currency – Part 1

December 3, 2019

Hey guys and girls Welcome back to the Bitcoin series, where
we learn all about digital currencies and how to turn this into a passive income. My name is Jake Owens and this is Millionaire
Mindset Hub. In this episode, we take a look at the history
of digital currencies to see where they came from and why they were invented. Alright, let’s get into it. David Chaum, an American computer scientist
and cryptographer born in 1955 first introduced the idea of digital cash in 1983 within a
research paper which was the first time the concept of a cryptographic primitive of bind
signature was introduced which would allow anyone to obtain a digital currency from a
bank and spend it while being completely untraceable by that bank or any other third party other
than yourself or the person you’re wanting to exchange the money with. Just an FYI, if you’re interested to read
that original research paper I’ve linked it in the description box below. You should check it out, it’s really interesting. Now, I assume this idea was one of those ideas
that just kept brewing in David’s mind because 7 years later rafter he published that paper
in 1983 in 1990 David founded DigiCash in Amsterdam which was the worlds first electronic
cash company. Unfortunately, that company filed for bankruptcy
in 1998 and was then acquired by InfoSpace on February 19th 2002. Basically, what happened according to David
who talked about this in an interview, he said that the reason it didn’t work out was
because e-commerce hadn’t been fully integrated within the internet. Which as it turned out, was a significant
issue. In 1996 the first successful digital currency
system emerged. E-Gold. This currency was very similar to the traditional
currency tradition of the gold standard as you would purchase E-Gold and it would be
backed by tangible gold metal to ensure its real value which at its peak the company,
Gold & Silver Reserve Inc. held $71 Million United States Dollars worth of gold backing
its E-Gold currency in 2006. What this did, is instead of asking people
to blindly place their trust in an unknown currency that may or may not implode at a
time when the internet was still being thought of as a ‘fad’, you could back it up by something
everyone knew held high value to guarantee the currencies worth which is exactly what
the United States did until they officially moved away from the gold standard in 1973. Even though E-Gold launched in 1998, it didn’t
become popular until 2000, around the time the dot-com bubble was at its peak. However, unlike a lot of companies that went
bust over that time period, E-Gold continued to expand and reached over 1 Million accounts
by 2004. However, due to E-Golds ease of overseas transfers
and other problems with their system and account creation processes such as their customer
verification methods which were virtually non-existant, E-Gold was shut down by the
United States government due to their vast amount of illegal activity on the platform. Which was eventually overturned by a federal
judge, however as they were still not able to initiate a system of reliable user identification
this ended up being the death of the business. It’s important to mention, that in 1998 PayPal
was created. Of course, this isn’t a digital currency,
however the rise and overwhelming success of PayPal just shows the general population
was getting more and more accustomed to online payment processes where no hard cash was involved. Which is of great significance when we look
at the development of digital currencies which is solely dependant on trust and perception
of value rather than a tangible resource that can be seen being exchanged for goods and
services. In 2006, another digital currency emerged
out of Costa Rica. It was called the Liberty Reserve. Which allowed users to exchange Dollars or
Euros to Liberty Reserve Dollars or Euros for a 1% fee. However, like E-Gold it had a very low standard
of validating its users which consisted of a name, email address and date of birth which
made it very attractive for the underground market. And just like E-Gold, the United States government
shut down the platform by using the patriot act and prosecuting the founder, Arthur Budovsky
and 6 others with money laundering and operating with an unlicensed financial transaction company. China is a country of very quick adaptation,
they’re always onto the next thing every single week and are radically technologically different
in their day to day practises than people in the west. Or.. at least that’s what my Chinese Uber
driver said last week. In 2005, a currency called Q coins or QQ coins
were used as a commodity based digital currency on the 10cent QQ’s messaging platform. Which also offers online games, music, shopping,
movies and more. This digital currency was so popular in China
that the government had to regulate the coin because it was having a destabilising effect
on the Chinese traditional currency, the Renminbi, or more commonly known as the Yuan. This just shows the power of these digital
currencies and how they can drastically change the way we live day to day and destabilise
the traditional way we think about money and how it functions in society. The thing to mention about E-Gold and Liberty
Reserve, is that they were centralised currencies which gave the government the ability to holt
the continuance of the service by shutting down the central ledger system which is the
singular way the platform was able to operate, just like how traditional currencies operate. But, in 2008 something revolutionary appeared,
Bitcoin. Which is what we’re going to be covering next
week in the second part to this two part series, ‘The History Of Digital Currency’. So make sure you subscribe so that you know
when the next video is released. Hey guys and girls! Thanks for watching 🙂 I hope you enjoyed If the video provided you with any value,
please hit that subscribe button below and like the video 😀 If you’ve got any questions or comments, or
would just like to reach out and say “hi!” feel free to do so in the comment section,
or feel free to PM me 🙂 Again, thanks a ton for watching! I look forward to seeing you in the next episode Cheers!!

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1 Comment

  • Reply Kris Vette January 19, 2018 at 7:09 pm

    Great explanation. Clear and useful background for anyone interested. Can you do some more on how Private BC's are powered (I assume without tokens?).

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