The technique of scratching began in the late 1970s with the baby scratch. As the story goes, Grand Wizard Theodore came across the sound accidentally. He was practicing on his turntables when his mom called out to him. He put his hand on the record to stop it, then absentmindedly started moving back and forth. A new sound was born.
It was Grandmaster Flash, though, who popularized the sound, using it in live shows and recordings.
Sources: Wikipedia, Scratch, DJ Axel Foley
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