Do you know Bitcoin was not the first digital currency ever created? The idea of digital currency or "e-money" has been around for much longer than you think and it existed ever since the first computer network has been created, even before the Internet's existence. You probably don't hear too much about them because none of them were good enough to challenge the fiat money. The better ones among them were highly decentralized and prone to similar kinds of problems faced by regular money and subjected to all sorts of manipulation.
Earliest Attempts at Creating a Digital Currency
One of the first attempts of creating a digital currency was made in the Netherlands 20 years before the actual creation of Bitcoin. At that time, Netherlands petrol stations were facing some severe thefts at night. Instead of deploying guards to protect their stations and risk their safety, some software developers decided to find ways to link money with newly created smartcards. People like truck drivers who required to access the petrol stations carried these smartcards as the stations no longer kept paper money at the stations. This was the first attempt at creating electronic money, which led to the development of cryptocurrency as we know today.
4 Most Popular Bitcoin's Predecessors
E-Gold was initially developed by oncologist Douglas Jackson and lawyer Barry Downey way back in 1996 two years before the creation of PayPal. The idea was to create a digital asset-backed by real gold. It was a radical project at that time, which was fully transparent, showing the number of people using the currency, the number of accounts and total transactions made in the last 24 hours along with the asset denomination. Many people were attracted towards the currency and E-Gold was at its peak in 2006 and also started to support other precious metals. Unfortunately, it did not last long and was ultimately shut down due to many legal issues and also got involved in many scandals.
E-Bullion was another popular digital asset created in 2000 and had attributes similar to E-Gold. It offered a way to instantly transfer gold and silver. The Panama based company offered a debit bank linked to your E-Bullion account as well as a crypto-security card to track illegal use of the system. Unfortunately, the ending of E-Bullion was rather brutal as its co-founder Pamela fayed was murdered in 2008 by someone supposedly hired by her husband Jim fayed, who is now waiting for the death sentence.
B-Money was first proposed by developer Wei Dai in 1998 as an anonymous electronic cash system that will have two different protocols including one that will need a synchronous and unjammable broadcast channel. The B-Money system would use digital aliases to transfer money through a decentralized network. Unfortunately, it was never really taking off and was vastly different from Bitcoin in many ways. The whitepaper proposed by Wei Dai did not garner much attention for a successful launch.
4. Bit Gold
Veteran digital currency advocate Nick Szabo created the Bit Gold protocol and also pioneered the proof-of-work concept used by today's cryptocurrencies like Bitcoin. Bit Gold helped to establish the decentralized network concept and eliminated the third-party verification processes. After many years, Satoshi Nakamoto obtained many of Bit Gold's notions that led to many people believe Nakamoto is Szabo. However, Szabo came out publicly to deny that he is not Nakamoto and ended all the speculation.
Bitcoin paved the way for many digital currencies when it was first launched in 2009. It differed from its predecessors in terms of decentralized functioning as well as pioneering the blockchain technology. However, it is hard to imagine the existence of Bitcoin and hundreds of its peers without acknowledging Bitcoin's predecessors and the earlier attempts at creating a digital currency.