A Brief History of Crypto
Bitcoin was launched in 2009 by Satoshi Nakamoto, but the crypto currencies represented a concept for a period of time. In the beginning there were both positive and negative opinions about crypto currency due to the fact that it was launched after the financial crisis from 2007-2008. The acceptance of this currency was relatively slow in the beginning even though the media covered to a high extent the idea of Bitcoin. Bitcoin is known as an actual and innovative way of doing anonymous transfers without making use of the financial intermediaries. An advantage of using this currency is the decrease in transaction costs together with the opportunity of having privacy. Even though Bitcoin has several benefits, there are also some challenges in increasing its popularity and acceptance. This currency is decentralized which implies that there is no control from the government authorities. Therefore, Bitcoin can also be associated with illicit activities. Several government agencies such as the FBI, DHS or SEC are already aware of these aspects. Taking into account the fact that Bitcoin is increasing in diffusion, it should also be mentioned that there is expected an increase in the regulation which destroys the idea of being decentralized. The user trust in Bitcoin also decreased due to some collapse in 2014 and it contributed to the high level of volatility of the currency. Therefore, the usage of Bitcoin was not very trustworthy. However, there is an increasing number of merchants using crypto currencies for payments. A secure way to achieve a high acceptance is to fulfill the following money characteristics: medium of exchange, unit of account and store of value.
A second wave of disruption came with the implementation of smart contracts built on the blockchain technology (Buterin, 2015). Among many possibilities, decentralized computing and legislation by means of automatically executable clauses became not only viable but may have also anticipated the course of history.
In order to reduce computational costs at the expense of decentralization, layer 2 networks (L2) have been advocated. Binance Smart Chain (“Binance Smart Chain whitepaper”, 2020) and the Matic, (now Polygon) (“Matic Whitepaper”, 2018) are great examples of L2 networks. The variety of blockchain protocols has been likened to the variety of life forms created in the preCambrian period of life evolution on Earth, and now, a multitude of cryptocurrencies have evolved.
Among this multitude one project (Reflect.finance, 2021) was the first to develop the novel concept of reflection as a means to incentivise participants of the network to adopt positive behaviors towards the blockchain protocol and community growth. Gundam Token embraces this work.