Key takeaways
- The development of digital currencies was already underway before Bitcoin.
- Without Bitcoin, cryptocurrencies like Ethereum, Litecoin and XRP may have been delayed or possibly not developed at all.
- A Bitcoin-less world might have seen greater investment in fintech, artificial intelligence, renewable energy and biotechnology.
- Bitcoin has reshaped global finance, enabling financial inclusivity, faster transactions and lower remittance costs.
Designed to provide an alternative to traditional financial systems plagued by instability and mistrust, Bitcoin (BTC) marked the birth of a digital revolution.
But what if we went back in time and prevented Nakamoto’s white paper from ever seeing the light of day? Would this have halted the emergence of cryptocurrencies, or would an alternative have inevitably filled the void? Moreover, would a world without Bitcoin have created better outcomes for the global financial system — or worse?
This article explores two key questions that lie at the heart of this hypothetical scenario: Would the crypto revolution have occurred without Bitcoin, and how would the absence of Bitcoin have influenced global economic development?
It delves into the trajectory of digital currencies, examining arguments that suggest a Bitcoin-like invention was inevitable, as well as claims that without Bitcoin, blockchain innovation might have stalled for decades.
Finally, it assesses how Bitcoin’s presence — or absence — could have shaped financial systems, investment patterns and regulatory frameworks worldwide.
Did you know? The earliest known use of cryptography dates back to around 1900 BC in Egypt, where an inscription in the tomb of nobleman Khnumhotep II employed non-standard hieroglyphs.
The evolution of digital currencies without Bitcoin
Argument one: A “kind of” Bitcoin was an inevitable development
Bitcoin, though recognized as the first modern cryptocurrency, did not emerge in isolation. Its development was rooted in the groundwork laid by earlier digital currency projects.
DigiCash, founded by David Chaum in 1990, introduced cryptographic payment systems that aimed to provide privacy and security. However, its centralized nature created trust issues, and it failed to achieve mass adoption before going bankrupt in 1998.
Similarly, e-gold, launched by Douglas Jackson and Barry Downey in 1996, offered a digital payment system backed by physical gold but faced regulatory crackdowns due to its susceptibility to misuse.
What’s more interesting, however, is that in 2005, Nick Szabo proposed Bit Gold, a decentralized digital currency concept that combined cryptographic puzzles and a public registry to create a secure, trustless system.
Although Bit Gold was never implemented, it is considered a direct precursor to Bitcoin’s architecture. It even shares the prefix “Bit.”
Indeed, there had been a clear cryptocurrency development trajectory leading up to the debut of Bitcoin, which supports the argument that there would have inevitably been some kind of alternative to Bitcoin in history.
Notably, conceptual roots of blockchain date back to the early 1990s when Stuart Haber and W. Scott Stornetta introduced a cryptographically secured chain of blocks to timestamp digital documents, preventing backdating or tampering. Their work laid the foundation for the decentralized, tamper-proof ledger system that blockchain would later adopt.
Satoshi Nakamoto expanded on this idea by integrating it with a peer-to-peer network and a PoW consensus mechanism, creating the first fully functional blockchain as the backbone of Bitcoin. This innovation marked the birth of decentralized finance and set the stage for a range of blockchain applications beyond cryptocurrency.
Did you know? Stylometric analyses have identified notable similarities between Szabo’s writing and that of Satoshi Nakamoto, leading to speculation that Szabo might be the elusive Bitcoin creator.
Argument two: Without Bitcoin, crypto could have been delayed for decades
There is an alternative argument that suggests life without Bitcoin wouldn’t include crypto at all.
Projects such as DigiCash and e-gold highlighted key challenges: centralization, legal risks and scalability. These issues remained completely unresolved until Bitcoin’s decentralized model provided a breakthrough.
Even Szabo’s Bit Gold didn’t fully address the need for a decentralized consensus mechanism and was instead designed to be a reserve currency rather than a medium of exchange.
Bitcoin essentially cracked the code. Had it not, all of your favorite altcoins would have no foundations to stand on.
Litecoin (LTC), created in 2011, explicitly described itself as the “silver to Bitcoin’s gold,” refining Bitcoin’s design by improving transaction speed and efficiency.
Ethereum’s vision of decentralized applications was conceptually different from Bitcoin’s role as digital cash, but its early development leaned on the success of Bitcoin to prove that decentralized blockchain networks could work.
Ripple, although technically distinct from Bitcoin in its purpose of facilitating institutional payment transfers, still benefited from the overall awareness and legitimacy Bitcoin brought to blockchain technology.
Bitcoin’s consensus mechanism, proof-of-work (PoW), served as a critical model for many early cryptocurrencies. Without it, the industry would likely have faced longer delays in exploring viable alternatives like proof-of-stake (PoS) or directed acyclic graphs (DAGs).
The absence of Bitcoin’s influence might have also delayed innovations in cryptographic security, decentralized governance and blockchain scalability.
So, it can be argued that a Bitcoin-less financial system wouldn’t look like anything that you’re familiar with today.
Impact of Bitcoin on the global financial system
Argument one: A better life without Bitcoin
Without Bitcoin’s compelling use case, the impetus for exploring and integrating blockchain solutions could have been substantially weaker.
Financial institutions, lacking a clear example of blockchain’s efficacy, might have been more hesitant to invest in or develop decentralized systems.
There is a silver lining here. Indeed, investment capital would have likely been redirected to other emerging industries throughout the 2010s.
Fintech, already transforming financial services through mobile banking, online payments and peer-to-peer lending, could have grown faster.
Similarly, artificial intelligence and machine learning, which were gaining traction in areas like natural language processing and automation, might have seen earlier integration across industries.
Renewable energy, driven by environmental concerns, would have attracted more investment in solar, wind and clean technologies.
Lastly, biotechnology and healthcare innovations, including genomics and personalized medicine, could have benefited from increased funding, potentially leading to accelerated medical breakthroughs and improved healthcare systems.
There’s also the fact that without crypto, more taxes would have been paid, increasing government revenues. A study focusing on Norway revealed that approximately 6% of the adult population held undeclared cryptocurrencies, with 88% of crypto holders failing to report their assets on tax returns.
The industry’s nascency has also led to billions of US dollars lost to scams, significant capital outflow from major economies, and, to some extent, the indirect financing of North Korean arms stockpiling and terrorism.
As such, there are arguments to suggest that a no-Bitcoin scenario could have been favorable.
Did you know? In 2024, cryptocurrency platform hacks resulted in $2.2 billion in stolen funds, marking a 21% increase from the previous year’s $1.8 billion.
Argument two: Bitcoin was needed for global financial betterment
Bitcoin’s introduction served as a catalyst for financial innovation, particularly in the realm of decentralized finance (DeFi). Its success demonstrated the viability of blockchain technology, encouraging the development of various applications beyond digital currencies.
Bitcoin introduced new paradigms in data management, security and governance. These concepts have been applied in various industries, including supply chain management, healthcare and voting systems, offering increased transparency and security.
Moreover, transacting in cryptocurrencies nowadays enables:
- Lower remittance fees: Traditional international remittances often involve high fees, averaging around 6.4% for a $200 transfer, with some methods costing up to 10%. Cryptocurrencies can significantly reduce these costs.
- Rapid transaction speeds: Cryptocurrency transactions are processed quickly, often within minutes, regardless of the sender’s or recipient’s location. This speed is a significant improvement over traditional banking systems, where international transfers can take several days to clear.
- Financial inclusivity: Cryptocurrencies enable individuals worldwide to participate in the global economy without the need for traditional banking infrastructure. This inclusivity is particularly beneficial for people in regions with limited access to banking services, allowing them to receive payments and conduct transactions seamlessly.
In the absence of Bitcoin, you might have seen a continued reliance on less efficient, centralized systems.
Moreover, Bitcoin and cryptocurrencies have done wonders for emerging economies. A notable example is El Salvador, which, in 2021, became the first country to adopt Bitcoin as legal tender.
El Salvador’s adoption of Bitcoin has boosted tourism and foreign investment, attracting cryptocurrency enthusiasts and investors, which has benefited local businesses and established the country as a pioneer in the crypto space.
Additionally, the introduction of the Chivo wallet has improved the efficiency and cost-effectiveness of remittances, a key contributor to the nation’s gross domestic product (GDP), by reducing transaction fees for Salvadorans sending money from abroad.
Another example is Kenya, where Bitcoin has been utilized to facilitate transactions and provide financial services to the unbanked population, demonstrating the potential of cryptocurrencies to enhance financial inclusion in regions with limited access to traditional banking.
Without Bitcoin: Would the world be better or worse? The debate continues
Speculating on what the world would look like without Bitcoin reveals a complex web of possibilities, each contingent on numerous interconnected factors.
Could a different form of digital currency have emerged in Bitcoin’s place, or would blockchain innovation have been delayed indefinitely?
This article demonstrates that while you can hypothesize, you’ll never truly know how different the world would be without Bitcoin.
The evolving nature of technology, government regulations and market forces makes it impossible to predict with certainty whether a no-Bitcoin world would be better or worse.
What this article concludes is that Bitcoin’s introduction has left a lasting impact on the global financial system, with lessons from its influence continuing to shape innovation for years to come.
Written by Bradley Peak