The dream of cryptocurrency is to make a form of digital finance that is as effortless and streamlined as paying by cash, and whilst it has taken a long time, crypto cards have gotten very close to that ideal.
By streamlining the process of getting in and out of various cryptocurrencies, it makes it far easier to buy and sell on exchanges, use crypto as a primary currency if you desire or speculate on potential future value, depending on what you want to use crypto for.
Ultimately, the key to the success of any currency or payment platform is to give people a reason to use it, which usually involves clearly explaining its benefits, making it as easy if not easier than the alternatives, and explaining its complexities in a way that is welcoming and easy.
It’s a very difficult tightrope to walk, one that the inventor of the core technology that crypto relies on rather infamously failed to successfully traverse.
CyberChickens And ElectronicEggs
In 1983, David Chaum invented blind signatures for electronic currencies, which alongside the blockchain (which he also invented the year before), was every core principle but one that cryptocurrencies have used since bitcoin in 2009.
His speciality was digital cryptography, and he strongly advocated for an emphasis on digital security and privacy that proved highly influential to the cypherpunk movement and later to crypto as a whole.
His ultimate goal was to develop a digital currency that allowed people to spend money online or over distances with the same security that cash has, in the sense that institutions cannot trace individual payments.
This came to fruition starting in 1989 with the formation of DigiCash, a company designed around ecash, the world’s first digital currency, quickly implementing his ideas into a workable system the following year.
The system he used was very recognisably similar to the one later used for Bitcoin and other cryptocurrencies, with the major exception that it relied on banking institutions to “sign off” on ecash’s “CyberBucks”.
Once it did, they could be spent pseudonymously, without a link between the blind signatures used for withdrawing money and the ones used for spending it.
The big focus was privacy, something that was a huge concern in the early era of the World Wide Web before secure web pages were the norm and is a priority amongst many people who are evangelists of decentralised finance.
In 1994, ecash made its first online payment, around the time of the first online purchase and the so-called Eternal September, the point when AOL provided access to Usenet to its subscribers and the moment when the Internet started to progress from a technological niche community to a part of everyone’s lives.
With worries about security, online viruses and the potential for online conduct to have real-world consequences, privacy was a common talking point, and DigiCash sought to benefit from this, getting its first banking partner in 1995 for a three-year trial of the technology.
The Mark Twain Bank of Saint Louis, Missouri, explored the concept as a form of micropayment system that could promise bulletproof security and privacy when making online transactions.
It led to several rival electronic currencies and even a trip to Congress for Mr Chaum to explain the effects of digital currency and whether it could potentially replace cash as an easier, more secure alternative.
The answer at that point, unfortunately, seemed to be no. Three years after the Mark Twain Bank trial, just 5,000 customers and 300 merchants had signed up, with combined accounts of around $100,000, or just $20 each.
There was a major chicken-and-egg problem with digital currencies at the time; customers were unwilling to invest in CyberBucks that they might not be able to use anywhere, whilst merchants did not want to pay transaction fees for systems they might not use.
This stalemate left DigiCash in the lurch, and whilst later trials in continental Europe, Japan and Australia showed a little more promise, there were clear issues in demonstrating to the general public why they might want or need this.
Mr Chaum was a cryptography genius, but this also left him with an assumption that people demanded the same level of protection as he did, a mistake that would ultimately cost him his company.
Credit card companies rely heavily on transaction information as an asset to sell to marketing companies, and as such were reluctant to choose an anonymous currency when a secure payment processor that still used traditional cards would be the best of both worlds for them.
Ultimately, successful digital currencies would only start to emerge divorced from the banking system, using decentralised blockchains.