To read the previous installment of BTCManager’s History of Bitcoin series, which focuses on BitTorrent, click here.
While bitcoin is the world’s first decentralized digital currency and opened up the doors for a wave of digital assets, the concept of virtual currency and digital assets dates back much further than 2008.
In this part of the ‘History of Bitcoin’ article series, you will learn about the Hollywood Stock Exchange, an online exchange that allows users to buy and sell virtual shares in celebrities and movies using virtual currency.
What is the Hollywood Stock Exchange?
The Hollywood Stock Exchange (HSX) was launched in 1996 by Max Keiser and Michael R. Burns as an online multiplayer game that enables players to buy and sell shares in actors, actresses, directors, and movies in what became the first virtual entertainment stock market.
Max Keiser, journalist and patent holder for virtual currency, talks HSX, bitcoin, and banking. Screenshot: YouTube
At the Blockchain Economic Event, Keiser spoke about the HSX and the monopoly that exists in the industry of Hollywood on April 19, 2018:
“We were trading virtual assets, with a virtual currency, on a virtual exchange… I invented a technology called the virtual specialist technology.”
To enable the virtual stock exchange, HSX developed its own proprietary Virtual Specialist® technology and uses its own virtual currency called the Hollywood Dollar®. By 2003, the exchange had over one million traders.
After the dotcom bubble burst, New York-based brokerage firm Cantor Fitzgerald bought the Hollywood Exchange with the idea of turning the HSX into a real-world exchange where actual dollars exchange hands. However, this idea faced too much opposition from the Hollywood establishment who managed to successfully lobby congress into passing a bill that outlawed movies futures trading in 2009.
The Hollywood Stock Exchange and Bitcoin
Despite the HSX being an online game and not a “real” exchange, it managed to create a functioning digital ecosystem where virtual currency and assets thrive as witnessed by its over one million users.
Therefore, in a way, the Hollywood Stock Exchange contributed to the growth of virtual currencies and digital assets as we know them today from the crypto asset markets. The Hollywood Dollar may be worthless outside of the Hollywood Stock Exchange but similarly to other online gaming virtual currencies and goods, there have been instances of gamers selling their portfolios on eBay in exchange for US dollars.
Furthermore, the HSX was one of the first digital prediction markets. Prediction markets are markets where traders can bet on the outcome of an event. The market price of a prediction market can then indicate what the crowd thinks the outcome of the event will be. Today, we have blockchain-based prediction markets such as Augur and Gnosis, which have taken digital prediction markets a step further.
While bitcoin was inspired by HashCash, bit gold, and b-money, the Hollywood Stock Exchange showed over a decade before bitcoin was born that virtual currency can thrive in the right ecosystem, which is exactly what bitcoin is now doing on a global scale.
To read the entire History of Bitcoin series, click here.