International markets roiled in a global financial crisis declared to be the worst since the Great Depression. Barack Obama is inaugurated as America’s 44th president — and America’s first African American president. Michael Jackson, the king of pop, dies at the age of 50 from unknown circumstances. This was 2009, a year to forget for many reasons, but a year to remember for others.
For HODLers, NFT flippers, and GameFi gamers alike, 2009 was one to remember for one key innovation: the creation of Bitcoin. Developed as a peer-to-peer cash transfer system by someone under the pseudonym of Satoshi Nakamoto, Bitcoin gave way to a revolution. Cryptocurrency and its underlying blockchain technology have become key drivers of the decentralization and digitization of technologies over the past ten plus years, and many believe that blockchain will continue to displace modern day technologies over time, similar to the introduction of the Internet.
The cryptosphere has developed at an eye-watering pace since 2009, and there have been more blockchain-based innovations than one could count. From Bitcoin and Ethereum to DeFi and GameFi, crypto and blockchain present a vibrant history. In case you’ve been sleeping for the past 12 years, read on to get a sense of what you may have missed.
A Walk Back in Time: From Bitcoin to GameFi
Where else could we begin but Bitcoin? Created by Satoshi Nakamoto, an anonymous developer or group of developers, the concept of Bitcoin was introduced through a whitepaper published in 2008. The revolutionary peer-to-peer cash transfer technology would build upon years of research and technology, though it provided unheard of capabilities, including “a digital chain of signatures” that supported verifiable transactions without the need for third-parties. The concept is relatively simple: transactions become decentralized and immutable by “digitally signing a hash of the previous transaction and the public key of the next owner and adding these to the end of the coin.”
Nakamoto turned theory into reality in 2009 when he/she/it/they mined the first Bitcoin block, known as the ‘Genesis block.’ Aptly named, the Genesis block is the block that sparked a revolution, particularly as developers later came to realize that the powerful underlying blockchain technology could be separated from its native cryptocurrency.
The Early Years and the $500 Million Dollar Pizza
As with all things revolutionary, progress does not happen overnight. In fact, Bitcoin flew under the radar for many years before it gained any sort of mainstream traction. Though, early adopters began to put the token in use through purchases across the internet and, notoriously, the dark web.
Famously, in 2010 a Floridian named Laszlo Hanyecz became the first person to use Bitcoin –or BTC — in a commercial transaction. He paid 10,000 BTC for two pizzas from Papa John’s. Little did Laszlo know, those pizzas would cost him a future value of $500 million, based on today’s BTC prices.
(May 22 is actually known as Bitcoin Pizza Day, which commemorates this historic transaction. Make sure to order Papa John’s and pour one out for Laszlo’s losses on this day).
Ethereum and Smart Contracts — The Concept of the Second Revolutionary Technology
Bitcoin is a revolutionary token, but it was not a revolutionary technology, at least on its own. At the end of the day, all that you could do with Bitcoin is transfer value between parties without the need for costly intermediaries like banks. Instead, it was the realization that the blockchain could be separated from the cryptocurrency to create new innovations that sparked a technological revolution.
This concept could be pinpointed to the advent of Ethereum. Vitalik Buterin, the founder of Ethereum, was reportedly disheartened after World of Warcraft updates weakened his main character, and he was inspired to find an alternative to centralized systems. Seeing the Bitcoin technology as too limited in its real-world use, Vitalik envisioned “a next-generation smart contract and decentralized application platform,” which he first discussed in his 2013 whitepaper on Ethereum.
Two years later, Vitalik released Ethereum 1.0 — which was known as “Frontier” — on July 30, 2015. Ethereum revolutionized the cryptosphere with the introduction of smart contracts, which are programs that run when certain conditions are met. With this programmable computing wisdom, Ethereum enabled developers to create a variety of decentralized applications, known as “DApps,” on the blockchain. Under this pretense, the sky became the limit in terms of what could be done with blockchain.
The Rise of Decentralized Apps (“DApps”)
From the perspective that DApps are simply apps that are not controlled by any one entity, DApps have been around since before the blockchain. All our fellow millennials probably remember BitTorrent vividly, right? Well, this was a distributed data sharing application that ran without a central party — hence, a DApp.
However, blockchain and DApps became a match made in heaven since the creation of Ethereum. The earliest guidelines surrounding DApps were agreed upon in a 2014 whitepaper titled The General Theory of Decentralized Applications, Dapps. The Emerging Wave of Decentralized Applications.
There are many key benefits that blockchain brought to the development of DApps. First, Ethereum, as a smart contract-enabled blockchain, became the underlying platform for development. So, engineers were freed from having to spend time and resources on building new backend infrastructure for their applications, and instead could directly deploy on these existing networks.
Second, blockchain created a framework for developers to financially support a project. Developers could directly distribute tokens to project backers and team members through initial coin offerings, or “ICOs,” as well as track token distribution. These tokens acted as a type of equity and gained value when listed on exchanges.
Third, DApps are decentralized, of course. But what does that really mean? Well, for one, there should be no single point of failure, as these blockchains are supported by many nodes, which (in theory) should be difficult for malicious hackers to attack. Also, decentralization means no central party that can censor activity on the app, sell user data, or do anything else to infringe on a user’s experience. Lastly, DApps are open source, which allows for a higher degree of transparency between developers and users.
DeFi and Expanded Financial Services
Decentralized finance, known as “DeFi” was directly enabled through the creation of smart contract technology and DApps. What is DeFi? Well, DeFi is a collection of blockchain protocols that expand access to financial services. Various applications have been built out under this umbrella term, including decentralized exchanges, lending protocols, prediction markets, yield aggregators, and others. Together, they form a movement that seeks to widen access to financial services by removing the middleman — traditional banking and financial institutions. In DeFi, the code is king.
Perhaps, the most notable project for the future development of DeFi was MakerDAO, a protocol that allowed for the creation of a stablecoin — DAI. By creating a token that would be pegged to the value of a stable fiat currency like USD, the volatile nature of cryptocurrencies that made activities like decentralized lending impossible was no longer an issue. Following Maker’s launch in 2017, a wave of ICOs followed, giving us many of the DeFi protocols that we are familiar with today. Consider all of the following innovations we’ve seen in years following:
- Decentralized exchanges (“DEXs”) and decentralized exchange aggregators: PancakeSwap, SushiSwap, Uniswap, Kyber, etc.
- Lending protocols: Aave, Compound, etc.
- Yield aggregator protocols: Yearn.Finance, Pickle, etc.
DeFi has taken the crypto world by storm, and the CFO of Bitwise Asset Management was even quoted, saying “DeFi is the story of 2021.”
GameFi, the Story of 2022?
With more than 50% of all cryptocurrency wallets plugged into GameFi applications, GameFi could well be the story of 2022. GameFi is the combination of “gaming” and “finance,” and it most commonly refers to the concept of play-to-earn gaming (“P2E”), in which gamers can play online video games to earn cryptocurrency or other digital assets.
While the trend is currently making waves across the cryptosphere, technically, P2E has been around for quite a few years. The earliest instances of playing games for cryptocurrency appeared in Minecraft Treasure hunt and mining servers, which appeared around 2012.
Later, early instances of true GameFi, such as CryptoKitties, appeared in 2017. In the game, players could purchase, breed, collect, and sell virtual cats. CryptoKitties was among the early adopters of games that leveraged the Ethereum blockchain to represent in-game assets as NFTs — or non-fungible tokens — which means that each cat is unique, non-interchangeable, and holds value.
Though, the movement didn’t really take hold until the release of Axie Infinity, a turn-based combat game that was inspired by Pokémon. Since the game was released in 2018, many gamers, particularly those in developing nations like the Philippines, have found that they are able to earn full-time incomes simply by playing games like Axie Infinity. The game saw over$1 billion in transaction volume in late 2021, and it will continue pushing the space forward in the year to come.
What’s Next for Cryptocurrency and Blockchain?
The cryptosphere has developed at a rapid pace since 2009. It started with a $500 million dollar pizza, and today it has become a solution for many day-to-day issues. Through the widespread adoption of DApps across the DeFi and GameFi space, cryptocurrency and blockchain are beginning to appeal to a wider user base.
That wide user base is what will drive the next wave of innovation. Poignantly, there are two key issues that need to be solved in order to see the next level of cryptocurrency adoption. First, using blockchains has become incredibly expensive due to the high cost of gas, which are fees required to successfully conduct a transaction or execute a contract on the Ethereum blockchain platform. The more congested the Ethereum network is, the higher gas becomes. In order to create a world in which the blockchain could have a billion users, scaling is required, which will work to upgrade transaction times and efficiency. This will be done through three different types of innovations:
- Updated Layer 1 Blockchains: the release of an updated Ethereum 2.0.
- Sidechains: blockchains that are complementary to Ethereum
- Layer 2 Networks: scaling solutions, like Polygon, which build on top of Ethereum.
The second issue is interoperability. With the rise of various blockchains, including Solana, Binance Smart Chain, OkChain, among others, users are being siloed across blockchains. Some will choose the blockchain with which they are most familiar or which they believe offers the best solutions to their needs. Though, sometimes, users will seek out applications on more than one blockchain. For example, gamers may play play-to-earn games across Ethereum and the Hive blockchain, and they want to send assets between the two chains. That’s where Kyoko.Finance comes into play. On Kyoko’s platform, guilds and players can lend in-game assets from various gamechains through its cross-chain asset lending platform. In other spaces of the cryptosphere, cross-chain solutions will continue to crop up — so you could say that we’re ahead of the game.
Crypto is on pace to have one billion users within the next five years. While this will be an enormous milestone for the reputation of crypto, we’ll never make it there without proper scaling and interoperability. Try your best to keep up with the flurry of innovations that attempt to solve these issues in 2022.
Kyoko.Finance is a cross-chain GameFi NFT lending market for guilds and players. Kyoko’s Guild-to-Guild lending, P2P NFT lending, and cross-chain asset lending platform aims to solve the most pressing issues challenging the GameFi market, including the rising cost of entry and siloed in-game assets across different blockchains. Kyoko’s metaverse will also allow Guilds to display their history, progress, and other accomplishments, while players can connect with others in a world that can be built in, developed, and sold off.
Follow Kyoko at the links below to stay up to date on upcoming events, releases, and news.