Cryptocurrencies have gained popularity in recent months, particularly following the meteoric rise in the price of Bitcoin in December 2017. Investing in cryptocurrency used to be the domain of experts and savvy investors. However, things have changed as a result of Bitcoin's massive success and popularity since December 2017. It has now expanded to include even the most inexperienced and small investors. Before delving into the specifics of hodling and cryptocurrencies in general, it is important to understand how cryptocurrencies came to be what they are today.

It all started in the 1990s, when American cryptographer David Chaum created DigiCash, which was regarded as the first type of online money in the Netherlands. He developed DigiCash as an extension of an encryption algorithm known as RSA, which was popular at the time. The technology he developed, along with its eCash product, attracted a great deal of media attention. It became so popular that Microsoft Corporation attempted to purchase DigiCash for $180 million with the intention of installing it on every computer in the world that ran the Windows operating system. One of the critical errors Chaum and his company made was rejecting Microsoft's $180 million offer, which enraged De Nederlandsche Bank (Netherlands' Central Bank), the country's primary monetary authority. All of these critical errors eventually led to DigiCash's demise in 1998, when the company declared bankruptcy.

Companies of this generation developed alternative payment solutions and money systems that were also Internet-based, but with minor but significant differences. PayPal was the clear winner among these companies. PayPal outperformed its competitors because of its ability to provide users with what they really wanted in the first place, which was money on web browser platforms they were already familiar with. Unlike its competitors at the time, PayPal was able to provide its users with the ability to transfer money to and from merchants and buyers via a seamless peer-to-peer money transfer system. PayPal's massive success is evident by the fact that it is the most popular method of online transaction, second only to credit cards.

But wait a minute, there's more! PayPal's success prompted other companies to follow suit. e-Gold was one of the systems that attempted to follow in the footsteps of PayPal. Unlike PayPal, its primary currency was gold; that is, it accepted physical gold as deposits from its users and issued e-Gold or gold credits in exchange. E-Gold was able to handle a reasonable amount of cross-border gold transactions. However, due to the prevalence of fraudulent investment schemes such as Ponzi schemes, e-Gold was closed.

The 2008 subprime mortgage crisis, which nearly crippled the US financial system and affected many of the world's major financial institutions, is the next significant event in the history of cryptocurrencies. This event served as a wake-up call for many of the world's major economies, resulting in the emergence of what is now commonly known as the blockchain, which is the foundation of cryptocurrencies as we know them today.

In 2009, an anonymous person (or group) using the alias Satoshi Nakamoto published a white paper outlining the source code, technology, and concept of what is now known as the blockchain. And, along with the blockchain, he created the forefather of all cryptocurrencies, Bitcoin. While not a revolutionary, disruptive, or incremental technology, blockchain was regarded as a foundational one.

As a result, we can expect only a few successful cryptocurrencies to stick around and change the way we pay, lend money, borrow money, trade, and do banking in the future. And we can reasonably expect several major cryptocurrencies to be accepted into the financial mainstream in the near future, heralding a new era of digital finance.