In January 2009, bitcoin was created by pseudonymous developer Satoshi Nakamoto. It used SHA-256, a cryptographic hash function, in its proof-of-work scheme.[17][18] In April 2011, Namecoin was created as an attempt at forming a decentralized DNS. In October 2011, Litecoin was released, which used scrypt as its hash function instead of SHA-256. Peercoin, created in August 2012, used a hybrid of proof-of-work and proof-of-stake.[19]

Cryptocurrency has undergone several periods of growth and retraction, including several bubbles and market crashes, such as in 2011, 2013–2014/15, 2017–2018, and 2021–2023.[20][21]

On 6 August 2014, the UK announced its Treasury had commissioned a study of cryptocurrencies and what role, if any, they could play in the UK economy. The study was also to report on whether regulation should be considered.[22] Its final report was published in 2018,[23] and it issued a consultation on cryptoassets and stablecoins in January 2021.[24]

In June 2021, El Salvador became the first country to accept bitcoin as legal tender, after the Legislative Assembly had voted 62–22 to pass a bill submitted by President Nayib Bukele classifying the cryptocurrency as such.[25]

In August 2021, Cuba followed with Resolution 215 to recognize and regulate cryptocurrencies such as bitcoin.[26]

In September 2021, the government of China, the single largest market for cryptocurrency, declared all cryptocurrency transactions illegal. This completed a crackdown on cryptocurrency that had previously banned the operation of intermediaries and miners within China.[27]

On 15 September 2022, the world's second largest cryptocurrency at that time, Ethereum, transitioned its consensus mechanism from proof-of-work (PoW) to proof-of-stake (PoS) in an upgrade process known as "the Merge". According to the Ethereum Founder, the upgrade would cut both Ethereum's energy use and carbon-dioxide emissions by 99.9%.[28]

On 11 November 2022, FTX Trading Ltd., a cryptocurrency exchange, which also operated a crypto hedge fund, and had been valued at $18 billion,[29] filed for bankruptcy.[30] The financial impact of the collapse extended beyond the immediate FTX customer base, as reported,[31] while, at a Reuters conference, financial industry executives said that "regulators must step in to protect crypto investors."[32] Technology analyst Avivah Litan commented on the cryptocurrency ecosystem that "everything...needs to improve dramatically in terms of user experience, controls, safety, customer service."[33]