From virtual currencies to cryptocurrency

Blockchain didn't appear out of the blue. It was the product of the evolution of fintech and virtual currencies over the last few decades.

At the end of the last century, the widespread use of the internet favored the emergence of digital currencies as an extension of electronic cash systems. Many projects were developed to create new digital currencies: E-cash, E-gold, WebMoney, and Liberty Reserve, to name just a few

Despite huge success in the 1990s, these projects had ceased to exist by the beginning of the new century, either through bankruptcy or being halted by authorities. A currency which is capable of disappearing overnight is a real financial nightmare, but this situation was inevitable due to the centralized nature of such digital currency systems.

There was also always a need for a central authority to be involved, to fight fraud and manage trust within the system. 

Because of this fatal weakness, the opposite, decentralized model was presented as a solution. However, it was hard to establish trust in such environments without any central authority. This contrast made creating a reliable digital currency a disentangled Gordian Knot.

Thankfully, the progress of cryptography and the emergence of some clever solutions such as proof of work (for example, the hashcash Project—see http://hashcash.org) brought hope of breaking the deadlock.