In 1983, a research paper by David Chaum introduced the idea of digital cash. In 1990, he founded DigiCash, an electronic cash company, in Amsterdam to commercialise the ideas in his research. It filed for bankruptcy in 1998. In 1999, Chaum left the company.
In 1997, Coca-Cola offered buying from vending machines using mobile payments. After that PayPal emerged in 1998. Other system such as e-gold followed suit, but faced issues because it was used by criminals and was raided by US Feds in 2005. In 2008, bitcoin was introduced, which marked the start of Digital currencies.
Origins of digital currencies date back to the 1990s Dot-com bubble. One of the first was e-gold, founded in 1996 and backed by gold. Another known digital currency service was Liberty Reserve. Founded in 2006; it let users convert dollars or euros to Liberty Reserve Dollars or Euros, and exchange them freely with one another at a 1% fee. Both services were centralised, reputed to be used for money laundering, and inevitably shut down by the US government.
Q coins or QQ coins were used as a type of commodity-based digital currency on Tencent QQ’s messaging platform and emerged in early 2005. Q coins were so effective in China that they were said to have had a destabilising effect on the Chinese Yuan currency due to speculation.
Recent interest in cryptocurrencies has prompted renewed interest in digital currencies, with Bitcoin, introduced in 2008, becoming the most widely used and accepted digital currency.
The modern age of digital currencies began when Bitcoin was released as the very first decentralised digital currency. Until the release of Bitcoin, any digital currencies had been centralised, but Bitcoin changed all that.