A super speedy walkthrough the grandfather of cryptocurrencies.
DigiCash was a digital money company that existed long before the blockchain. It wanted to make electronic payments anonymous but unfortunately went bankrupt before this could be fully realized.
It’s often said that the history of cryptocurrencies began in 2008. The Bitcoin whitepaper was published as the centralized institutions--the banks--faced the very real threat of liquidation. Written by the pseudonymous Satoshi Nakamoto, it comprehensively outlined a peer-to-peer payments network, in nine pages.
But Bitcoin relied on the work of various computer scientists and cryptographers. The idea of an e-cash protocol existed long before. DigiCash was one of the first serious attempts to create an independent electronic money system.
Users at the time reported buying everyday items such as shirts or CDs online, which could then be delivered to an address or picked up from the store.
But it’s model underpins ideas that were later taken up and expanded on by Satoshi Nakamoto and other cryptocurrency creators. Chaum’s work on cryptography lies behind what keeps transactions on the blockchain secure and valid.
Chaum attributed the failure of DigiCash to the ‘chicken and egg’ problem. Users complained that there weren’t enough merchants; merchants said there weren't enough users to make it worth their while.
More than twenty years later, cryptocurrencies are increasingly adopted, by individuals as well as the financial institutions. Although DigiCash never actually made it, it is a part of the foundations for today’s digital currencies.