Formal definition

In 1983, the American cryptographer David Chaum conceived an anonymous cryptographic electronic money called ecash.^[9]^[10] Later, in 1995, he implemented it through Digicash,^[11] an early form of cryptographic electronic payments which required user software in order to withdraw notes from a bank and designate specific encrypted keys before it can be sent to a recipient. This allowed the digital currency to be untraceable by the issuing bank, the government, or any third party.

In 1996, the National Security Agency published a paper entitled How to Make a Mint: the Cryptography of Anonymous Electronic Cash, describing a Cryptocurrency system, first publishing it in an MIT mailing list^[12] and later in 1997, in The American Law Review (Vol. 46, Issue 4).^[13]

In 1998, Wei Dai published a description of "b-money", characterized as an anonymous, distributed electronic cash system.^[14] Shortly thereafter, Nick Szabo described bit gold.^[15] Like bitcoin and other cryptocurrencies that would follow it, bit gold (not to be confused with the later gold-based exchange, BitGold) was described as an electronic currency system which required users to complete a proof of work function with solutions being cryptographically put together and published.

In 2009, the first decentralized cryptocurrency, bitcoin, was created by presumably pseudonymous developer Satoshi Nakamoto. It used SHA-256, a cryptographic hash function, in its proof-of-work scheme.^[16]^[17] In April 2011, Namecoin was created as an attempt at forming a decentralized DNS, which would make internet censorship very difficult. Soon after, in October 2011, Litecoin was released. It used scrypt as its hash function instead of SHA-256. Another notable cryptocurrency, Peercoin, used a proof-of-work/proof-of-stake hybrid.^[18]

On 6 August 2014, the UK announced its Treasury had commissioned a study of cryptocurrencies, and what role, if any, they could play in the UK economy. The study was also to report on whether regulation should be considered.^[19] Its final report was published in 2018,^[20] and it issued a consultation on cryptoassets and stablecoins in January 2021.^[21]

In June 2021, El Salvador became the first country to accept Bitcoin as legal tender, after the Legislative Assembly had voted 62–22 to pass a bill submitted by President Nayib Bukele classifying the cryptocurrency as such.^[22]

In August 2021, Cuba followed with Resolution 215 to accept Bitcoin as legal tender, which will circumvent U.S. sanctions.^[23]

In September 2021, the government of China, the single largest market for cryptocurrency, declared all cryptocurrency transactions illegal, completing a crackdown on cryptocurrency that had previously banned the operation of intermediaries and miners within China.^[24]