The History of Cryptocurrencies: from Video Games to a $2 trillion Market

The History of Cryptocurrencies: from Video Games to a $2 trillion Market


The origins of digital assets such as Bitcoin and Ethereum, non-interchangeable tokens (NFT), smart contracts and thousands of existing altcoins can be traced to the example of video games in which avatars played and sometimes worked, bringing to life fantasies invented by their human creators.

Today, according to when cryptocurrency markets are worth more than $2 trillion, it may seem unlikely that their origins lie in World of Warcraft and Second Life, once popular virtual reality games. In the early 2000s, former child actor Brock Pierce, a candidate for president of the United States in 2020, noticed that players were happy to buy tokens to reach the next level, and not perform tasks to earn them.

“Just because something doesn’t have a material form doesn’t mean it doesn’t have value,” says Pierce. He told how he hired hundreds of people in China and South Korea to play video games and earn game tokens, which he then sold to lazier buyers in the West.

Together with William Quigley, now CEO of Worldwide Asset eXchange, the largest NFT platform, they created an in-game token market, which is now estimated at $200 billion. In the process, they laid the foundations of the cryptocurrency industry.

“After the gold of World of Warcraft, the intellectual leap needed to recognize the value of Bitcoin was very small,” adds Pierce.

Pierce was one of the first followers of Bitcoin, after in October 2008 an unknown author under the pseudonym Satoshi Nakamoto published a document outlining proposals for a new technology called Blockchain. It said the new technology would rely on user agreement rather than function as a centralized structure. It will become the basis for a digital currency called Bitcoin, which can be “mined” using computers to solve puzzles. The BTC offer is limited to 21 million units.

Nakamoto released the first Bitcoin in January 2009, when the blockchain network and digital currency were launched. In May 2010, a Florida man paid 10,000 Bitcoins (the equivalent of almost $420 million at today’s prices) for two pizzas, which was the first purchase using digital currencies.

To say that it made a splash would be an exaggeration. Interest rates have plummeted since the global financial crisis, and central banks have launched massive bond-buying programs to prop up their economies. But against this unstable macroeconomic background, interest in the military-technical cooperation began to grow.

First there were libertarians and tech geeks, then currency traders and the financial community as a whole, some of whom were intrigued by the fact that technology does not allow you to change or erase past transactions. Others, for example, billionaire investor Michael Novogratz, were attracted to Bitcoin because of its scarcity, because its limit is 21 million units.

Milestones of history

Historical data

Let’s run through the most significant milestones in the history of cryptocurrencies together.

  • 2003

The launch of Second Life and World of Warcraft, which laid the foundation for one of the first virtual assets – in-game tokens that can be bought and sold.

  • 2007

The global financial crisis begins.

  • 2008

The Satoshi Nakamoto White Paper describes Bitcoin and the underlying blockchain technology.

  • 2009

The first Bitcoin is being mined.

  • May 2010

The first transaction using Bitcoin as a means of payment occurs when a man in Florida buys two pizzas for 10,000 BTC.

  • 2010

The Mt.Gox trading platform is being launched and is rapidly gaining popularity, processing 70% of all transactions with BTC in 2014.

  • 2013

The Winklevoss billionaire twins have filed an application with the U.S. Securities and Exchange Commission (SEC) to launch a Bitcoin ETF.

Mastercoin launches the first initial coin offering.

  • 2014

The stable Tether coin is entering the market.

Ethereum is raising money ahead of its launch by selling tokens.

Mt.Gox collapses after a major hack.

  • 2015

Ethereum is entering the market.

  • 2018

The price of BTC is falling sharply, and the “crypto winter” is coming.

  • 2020

Bitcoin prices have plummeted as the coronavirus pandemic has wreaked havoc on financial markets.

  • 2021

Bitcoin prices have set a series of records, and Ethereum has soared to a new historical high. Institutional investors, including banks, are entering the market. NFTs are becoming popular, and DeFi is turning into a multibillion-dollar industry.

By 2011, Bitcoin had become popular enough that trading platforms began to gain momentum. These first exchanges – for example, Mt.Gox – were based in Asia and served retail investors in the region who had an appetite for these assets due to their gaming experience. They allowed the first users to mine their own coins and exchange them.

The launch of trading platforms provoked the first “bubble” of Bitcoin, when the rate soared to $ 32, and in 2011 fell to about $ 2. According to Max Boonen, founder of B2C2, one of the largest cryptocurrency trading firms to date, a short-term price spike brought BTC to the playing field. He notes that the currency has gone through a series of bubbles, and each of them was higher than the previous one.

“The big names we call ‘whales’ today (owners of large blocks of shares) entered the Bitcoin market shortly before the 2013 bubble,” says Boonen. He notes that at that time, Greece’s debt crisis and subsequent bailout prompted many wealthy investors to buy digital currencies as a last resort hedge. “This was the first time BTC was affected by macroeconomic events, so it was quite significant.”

The emergence of stable coins, and the beginning of the crypto winter

But the world as a whole still showed little interest, mostly ignoring the launch of Tether, the first stablecoin that was created to connect the world of digital currencies and fiat money. It was also the time of the first ever Mastercoin initial coin offering.

The first application to launch an exchange-traded futures (ETF) for Bitcoin, filed by the Winklevoss brothers, went almost unnoticed in 2013. And the appearance in 2015 of the Ethereum blockchain and Ether, its native currency, the second created cryptocurrency, also failed to contribute to basic finance, despite its key role in today’s cryptocurrency markets.

Ethereum’s ability to transfer data in its code was a major innovation, and forms the basis of decentralized finance (DeFi), in which algorithms carry out transactions, as well as calculations and other functions. This market is estimated at 236 billion US dollars, and for many represents the cutting edge of finance.

Bitcoin’s popularity skyrocketed in 2017 when small investors around the world suddenly became interested in it when the price exceeded $20,000. Initial coin offerings have also become popular. The following year saw the most significant drop, which was a harbinger of the so-called crypto winter, when BTC was rejected by many as a curiosity with no future.

Cryptocurrency sentiment turned more positive last March when the pandemic triggered an influx of hedge funds and family offices into Bitcoin attracted by its limited supply. This turned the crypto asset from a failed currency into the digital equivalent of gold. The asset price rally was joined by billionaire hedge fund managers, which attracted other institutional investors, as well as banks and Tesla electric car magnate Elon Musk.

Over the past 18 months, cryptocurrency markets have exploded in popularity, and new assets such as NFT are flourishing. This boom has spawned thousands of alternative currencies such as dogecoin, some of which have questionable value. On the other hand, blockchains such as Cardano, Solana and Polkadot have appeared, the purpose of which is to make the technology more efficient.


Bitcoin has endured a difficult path and remains exceptionally volatile. But the overall direction was upward: from about $0.08 in 2010, BTC peaked at 69,000 in November 2021.

Not bad for a 13-year-old.