Facebook’s decision last month to rename itself Meta is actually pretty retro. The Metaverse may look like a cutting edge concept where people create digital versions of themselves to interact with other avatars in a virtual world, but this is an idea nearly 20 years old that has only been slightly updated.

The origins of digital assets – like bitcoin and ether, non-fungible tokens, smart contracts, and the thousands of “shitcoins” out there – can be traced back to video games in which avatars played and sometimes worked to live out fantasy lives that they imagine human Creator.

Today, with cryptocurrency markets valued at over $ 2 trillion, it may seem unlikely that their ancestors can be found in World of Warcraft and Second Life, the once popular virtual reality games. In the early 2000s, former child actor Brock Pierce, a U.S. presidential candidate in 2020, realized that gamers like to buy tokens to get to the next level rather than doing tasks to earn them.

“Just because something is intangible doesn’t mean it’s worthless,” says Pierce, describing how he employed hundreds of people in China and South Korea to play video games and earn the tokens that he then sold to lazy people Customers in the west.

Together with William Quigley, now CEO of Worldwide Asset eXchange, the largest non-fungible token (NFT) platform, they created a marketplace for in-game tokens worth $ 200 billion. In doing so, they laid the foundation for the cryptocurrency industry.

“After World of Warcraft Gold, the intellectual leap it took to discover the value of Bitcoin was very small,” added Pierce.

Pierce was an early adopter of Bitcoin after an unknown author, using the pseudonym Satoshi Nakamoto, published a paper in October 2008 outlining proposals for a new technology called blockchain, which would be based on user consent rather than a centralized entity to work . It would be the basis for a digital currency called Bitcoin, which can be “mined” through the use of computers to solve puzzles. Bitcoin’s supply is limited to 21 million units.

Nakamoto then mined the first bitcoin in January 2009, marking the date the blockchain network and digital coin went live. In May 2010, a man in Florida paid 10,000 Bitcoin (that’s more than $ 600 million at today’s prices) for two pizzas, the first purchase with the digital coins.

To say this caused a sensation would be an exaggeration. Interest rates had slumped in the wake of the global financial crisis and the central banks had launched massive bond purchase programs to prop up their economies. But against this shaky macro backdrop, interest in Bitcoin began to surge.

Libertarians and geeks came first, followed by forex traders and the wider financial trading community, some of whom were intrigued by the fact that technology made it impossible to change or delete past transactions. Others, like billionaire Michael Novogratz, were attracted to Bitcoin with the 21 million unit cap because of its scarcity.

By 2011, Bitcoin had become so popular that trading platforms were gaining traction. These early exchanges – Mt.Gox, for example – were based in Asia and aimed at retail investors in the region who had developed an appetite for the asset due to their gaming background. They allowed early adopters to mine and trade in their own coins.

The advent of trading platforms triggered the first bubble in Bitcoin price as the exchange rate rose to $ 32 before collapsing to around $ 2 in 2011. The short-lived price hike put Bitcoin on the map, according to Max Boonen, founder of B2C2. one of the largest trading companies for crypto today. He notices that the coin has gone through a series of bubbles, each point higher than the previous one.

“The big names we know as ‘whales’ [owners of large holdings] today got into Bitcoin just before the 2013 bubble, ”says Boonen. He notes that Greece’s debt crisis and subsequent bailout then led many wealthy investors to buy digital coins as a last resort. “It was the first time Bitcoin was affected by macroeconomic events, so it was pretty significant.”

But the world still showed little interest, largely ignoring the launch of Tether, the first stablecoin created to connect the world of digital currencies and fiat money. It was also the time of Mastercoin’s first Initial Coin Offering.

The first filing of an exchange-traded Bitcoin fund – by the Winklevoss brothers – went almost unnoticed in mainstream finance in 2013, despite its key role in crypto markets today.

Ethereum’s ability to carry data in its code was a major innovation and forms the basis for decentralized financial markets where algorithms perform transactions as well as settlements and other functions. This market is valued at $ 236 billion and is the leading financial market for many.

Bitcoin’s profile then rose in 2017 when retail investors around the world suddenly showed interest when the price soared over $ 20,000. Initial coin offerings also became popular. The following year marked the biggest crash to date and heralded the so-called crypto winter, in which Bitcoin was written off by many as a gimmick with no future.

An influx of hedge funds and family offices into Bitcoin made it the digital equivalent of gold for some

Crypto sentiment turned positive in March last year when the pandemic hit, sparking an influx of hedge funds and family offices in Bitcoin, attracted by its limited supply. This shifted the narrative from Bitcoin as an unsuccessful currency to a digital equivalent of gold for some. Billionaire hedge fund managers then fueled the rally in Bitcoin price, attracting other institutional investors as well as banks and Tesla electric car tycoon Elon Musk.

Over the past 18 months, cryptocurrency markets have grown in popularity and new assets such as NFTs are thriving. The hype has spawned thousands of alternative coins like Dogecoin, some of which have questionable value propositions. On the other hand, blockchains like Cardano, Solana and Polkadot have also emerged with the aim of making the technology more efficient.

Bitcoin has had a bumpy ride and remains exceptionally volatile. But the overall direction is up: from around $ 0.08 in 2010, Bitcoin hit a high of just under $ 67,000 in October this year. Not bad for a 13 year old.

A crypto timeline

2003

Second Life and World of Warcraft launch, laying the foundation for some of the first virtual assets – tokens that can be bought and sold

2007

Global financial crisis is triggered

2008

The whitepaper “Satoshi Nakamoto” (pseudonym) describes Bitcoin and its underlying technology, blockchain

2009

The first bitcoin is mined

May 2010

The first transaction takes place with Bitcoin as a means of payment when a man in Florida buys two pizzas for 10,000 Bitcoin

July 2010

The Mt.Gox trading platform is launching and rapidly gaining popularity, processing 70 percent of all Bitcoin trades by 2014

2013

The billion dollar Winklevoss twins file an application with the US Securities and Exchange Commission to set up an exchange-traded Bitcoin fund. Mastercoin starts the first initial coin offering

2014

Stablecoin Tether goes live. Ethereum collects money with a token sale prior to launch. Mt.Gox collapses after a major hack

2018

Bitcoin prices collapse and ring in the “crypto winter”

2020

Bitcoin prices collapse as the coronavirus pandemic ravages financial markets

2021

Bitcoin’s price hits a series of records and Ethereum hits a new all-time high. Institutional investors, including banks, enter the room. Non-fungible tokens are becoming popular and decentralized finance is growing into a multi-billion dollar industry

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