In the late 1980s, David Cham hired a handful of cryptocurrency enthusiasts to commercialize the concept of hidden money. After moving to the Netherlands, he founded a for-profit company called Digi Cash, which generated currencies based on the blinding algorithm. Unlike Bitcoin and other modern currency cryptocurrencies, Digi Cash control was not decentralized. Cham had a monopoly on supply control, similar to the monopoly of central banks on Fiat currencies.
DigiCash initially dealt directly with individuals, but the Bank of the Netherlands stopped it. In the face of the central bank ultimatum, DigiCash agreed to sell only to authorized banks and severely limit its market potential. Microsoft later turned to DigiCash for a potentially lucrative partnership that allowed early Windows users to buy in their own currency, but the two companies could not agree on terms, and DigiCash went bankrupt in the late 1990s.
Around the same time, a software engineer named Wei Dai published an article on b-money. b-money was a virtual currency architecture that incorporated many of the key cryptocurrencies of modern currencies, such as anonymous identity protection and decentralization. However, b-money was never used as a medium of exchange. Shortly afterwards, Cham co-founder Nick Szabo developed a currency code called Bit Gold, which was notable for its use of the Chinese blockchain system, which is the basis for most modern currency codes. BitGold, like DigiCash, has never been considered and is no longer used as a medium of exchange.
Virtual currencies before Bitcoin
After DigiCash, research and investment in e-financial transactions became more common, including PayPal, which has gained popularity over the past 10 years, and a number of DigiCash followers, such as Russia’s WebMoney, have appeared in other parts of the world. In other words, DigiCash paved the way for the emergence of other digital currencies.
In the United States, the most popular virtual currency in the late 1990s and 2000s was known as e-gold. e-gold was created by a company of the same name in Florida. The company basically acted as a buyer of digital gold. Customers or users sent their old jewelry and coins to the e-gold warehouse and received digital e-gold (an ounce of gold). E-gold users could then trade their assets with other users or exchange their e-gold for US dollars.
At its peak in mid-2000, e-gold had millions of active accounts and traded billions of dollars annually. Unfortunately, relatively weak security protocols have made e-gold a popular target for hackers and phishing scammers, exposing its users to financial losses. In the mid-2000s, many e-gold trading activities were legally suspicious; In other words, flexible legal policies made it attractive for money laundering activities and small Ponzi schemes. The platform came under legal pressure in the mid-to-late 2000s and finally shut down in 2009.