Financial markets in the world are plentiful, with many stretching back centuries like stocks, metals, and commodities. Such inventions are essential nowadays, predominantly in capitalist economies. 

With the advancement of technology, interesting variations of buying and selling in these spaces have emerged. Over the last ten years, one financial market that has undoubtedly taken the world by storm is cryptocurrencies. 

Fortunately, as crypto is relatively new, it is not difficult to trace its beginnings due to the recency. Despite arguably being the most controversial of all markets, cryptocurrencies continue attracting an increasingly high speculative interest, currently boasting a market cap of about $1.4 trillion.

This statistic is quite impressive for an instrument that’s only become prevalent within the last seven years or so. 

The birth of cryptocurrencies in 2009

It’s only natural to begin tracing the history with the emergence of the world’s first recognized cryptocurrency, Bitcoin, in 2009. The concept was pioneered by the still mysterious and pseudonymous individual or group, Satoshi Nakamoto.

Like any invention, sophisticated developers had been dabbling with the idea of non-physical digital money as far back as the 80s. It wasn’t until January 2009 when the concept finally had a working product that an actual cryptocurrency existed, the idea of which was unprecedented for its time. 

The creation of Bitcoin was a digital version of money where ownership was distributed on a decentralized, publicly distributed, user-driven ledger or blockchain instead of relying on a financial institution like a central bank or government.

2009 was also a pivotal year for the blockchain, which is the backbone technology for cryptocurrencies in storing transaction records, authenticating the ownership of digital assets, and, more importantly, creating new coins.

As expected, Bitcoin was a very obscure invention in its early days. The earliest transactions of the cryptocurrency are credited to a few reclusive cypherpunk supporters such as Hal Finney, who were essentially testing the coin through a proof of concept of sorts.

One of the first commercially recognized transactions with Bitcoin occurred on 22 May 2010 when programmer Laszlo Hanyecz purchased two pizzas from Papa John’s for a reported ₿10,000. This day is now known as ‘Bitcoin Pizza Day.’

The birth of the first cryptocurrency exchange (2010-2011)

Much of the history for the expansive trading of cryptocurrencies is traceable to Bitcoin as it catalyzed other inventions like exchanges that were essential for mainstream acceptance and adoption. 

Likewise, due to the obscurity, obtaining Bitcoin was far more difficult back in the day. Most research suggests one could either mine the coin or arrange a transaction on a few dedicated Bitcoin forums or websites.

Software developer Gavin Andresen (known as the man Nakamoto handed the code repository to before reportedly disappearing) was instrumental in what would probably become the first official cryptocurrency exchange, Bitcoin Market. 

Here, users could buy Bitcoin with US dollars through PayPal. Perhaps one of the first globally-recognized exchanges was the now-defunct Mt. Gox, short for “Magic: The Gathering Online eXchange.”

It was created and launched in 2010 by American programmer and entrepreneur Jed McCaleb, who would later co-found Ripple and Stellar. At its prime, Mt. Gox handled the bulk of cryptocurrency transactions, along with the likes of BTCC, VirWoX, and Tradehill, 

As word began to spread about digital currencies, a host of altcoins like Litecoin, Namecoin and iXcoin began emerging from 2011, spurring an even greater introduction of other projects throughout the years.

Other exchanges that were established in the same year include Bitstamp, Kraken, and BTC-e. Similar to the coins, more and more exchanges came into the picture from 2012 onwards.

More popularity and eventful years from 2012

The popularity of cryptocurrency trading grew exponentially from 2012, introducing a myriad of influential concepts. For starters, hundreds of new coins came onto the market. 

Before the launch of proof-of-stake protocols, mining transitioned from simple CPUs (central processing units) or personal computers to GPUs (graphical processing units) or graphics cards because of the intense competition.

Eventually, specialized ASIC (application-specific integrated circuit) hardware became the standard for mining coins like Bitcoin to process astronomically more hashes than ever before. 

2013 was probably the introduction of such machines, with the Chinese-based and world-leading ASIC developer, Bitmain, spearheading the wave. The same period also introduced the first ICO (initial coin offering) with Mastercoin and later Ethereum.

In the same year, Bitcoin and several other coins experienced massive price declines that would become commonplace in the following years. 

In 2014, people first began seeing large-scale scams and theft of cryptocurrencies through events like the 850 000 bitcoins stolen from Mt. Gox, partially leading to the company’s demise.

The idea of cryptocurrency CFDs on online trading platforms through brokers must have emerged somewhere in the mid-2010s. As with any financial market, we now have several interesting derivatives for trading this instrument like perpetual swaps, futures, etc.

Future of cryptocurrency trading

Criticism for cryptocurrencies has been remarkable, despite increasingly growing in popularity. Perhaps one of the biggest concerns for coins is their regulation which is largely minimal at this point. 

Some countries are quite welcoming of the concept while others have totally banned it. Stronger regulation is crucial for more mainstream acceptance and minimizing the number of criminal activities in the industry. 

Another unanswered question is how feasible it is for crypto to replace fiat money. Some theorists believe it might occur sometime within this decade but not in the present decentralized manner. 

It is possible for many governments to have their own cryptocurrencies for their respective countries and perhaps severely restrict many of those we have nowadays. Others believe crypto is still too young to substitute fiat currencies totally and would act more as an addition.

Overall, there are more questions than answers at this point, which leaves ordinary folk and enthusiasts both excited yet unsure.

What one could say with confidence is that cryptocurrencies are very unlikely to cease in existence, despite the number of fearmongers who strongly refer to them as a speculative bubble.