Bitcoin 2015 Highlights: A Review of our Journey
2015 has been an interesting time for Bitcoin, with many ups and downs, and never a dull moment. I was recently invited to speak at a meet-up and took the opportunity to round up the highlights of the year. This post will cover events from both a trader / engineer’s point of view. It will look back at how far we’ve come, and summarize the current state of Bitcoin.
January
Bitcoin began in January trading at $315, with Bitstamp taking heat shortly after when their hot wallet was compromised. Price action took a downward turn, hitting what would be lows for the year in the $170s. Braintree (Paypal) completed their integration with Coinbase, making it easy for merchants to accept Bitcoin. Later that month, Xapo announced that they would be bringing Bitcoin to satellites.
February
The conviction of Ross Ulbritch, founder of the silk road dark marketplace, was not a surprise; what did shock many was the subsequent discovery of corrupt agents involved in the investigation. That same month, Seals with Clubs, famed Bitcoin-only poker site, was shut down after a police raid. In better news for Bitcoin’s reputation, the first Bitcoin insurance policy with an A-rated insurer (XL Group) was announced by BitGo, the multi-sig platform running Bitstamp’s hot wallet.
March
BTCUSD rallied to just under $300 and then moved back down, where it would remain “stable” (in Bitcoin terms) in the $230-$250 range until July.
Abra announced their end-to-end remittance service to much fanfare, involving a network of mobile tellers in multiple countries (locking in the price of Bitcoin to prevent fluctuations).
Third Key Solutions launched it’s premium Key Recovery Service for handling backup keys in multi-signature wallets. Meanwhile, Chainlysis drew flak for launching fake Bitcoin nodes for the purposes of data forensics.
April
With an increasingly crowded exchange space and the lack of bull market trading volume, Buttercoin exchange abruptly closed it’s doors, unable to secure additional funding. It did not help that DD4BC, the hacking group attacking websites to demand Bitcoin ransoms, went full steam targeting Bitcoin companies. In other worrying news, problems brewing with the Bitcoin foundation surfaced, with an elected board member claiming funds were running dry (confirmed in December with 2 other members leaving).
May
This time it was Bitfinex in the spotlight as their hot wallet was compromised, losing 0.5% of the funds. They rebounded quickly and launched segregated multi-sig wallets with BitGo, where individual customers each have on-blockchain wallets. Also a watershed moment for Bitcoin was the opening of trading for $GBTC on public markets, and the launch of the NYXBT Bitcoin ticker on the New York Stock Exchange.
It was around this time that the block size / scalability debate surfaced, with many arguing for a larger block size to support the increased transaction throughput demands seen on the network. On the other hand, opponents pointed to the need for a fee market and the technical limitations of block propagation. The controversy continued for the rest of 2015.
June
Chain.com announced a partnership with Nasdaq to leverage “Blockchain technology” for stock issuance and transfer on private markets. This was part of the growing “blockchain” trend, a buzzword that grew in popularity with banks and financial institutions who wanted control of the technology. The New York Bitlicense was also released, imposing “Know Your Customer” requirements on even global companies, causing some of them to leave.
Blockstream released Elements, a working side-chains implementation capable of pegging tokens on a seperate blockchain to Bitcoin. This solution was seen by some as an alternative to scaling Bitcoin for payments. Coinwallet.eu also made reddit fame with their intent to “stress test” the Bitcoin network by spamming it with small transactions. Their “test” was scheduled for June 22 to demonstration the fragility of Bitcoin and as a statement against the block size. However, this first attack failed because their own servers and wallet couldn’t handle it.
July
Bitcoin transaction spammer Coinwallet.eu continued their spam attack, causing massive delays in transaction confirmations and forcing users to pay increased fees on the network. The adversarial network conditions also revealed many issues with unspent chains, dropped transactions and double spends. This continued until October where it was noticed that Bitcoin node numbers began to fall. Meanwhile, the price of Bitcoin tested the $300 point again, but did not succeed in breaking out.
August
Mark Karpeles, CEO of the failed MTGox exchange, was re-arrested and convicted of embezzlement. The blockchain vs bitcoin discussion continued. Bitcoin XT, a client running the BIP101 big blocks patch, was released, with the community divided and a potential fork of the currency looming on the horizon. As a response, the Scaling Bitcoin conference was planned to take place in September with hopes to bring developers / influencers together to deal with the issue.
September
BitPay, my favorite Bitcoin company (thanks to their selfless promotion of Bitcoin and contributions to open source), revealed that they had lost 5000 BTC as a result of a social engineering hack. Rumors had already been brewing, but the public saw visible cracks in their business when they laid off half their workers. While this was happening, blockchain startup R3 began gaining momentum, starting with support from 9 banks and growing to more than 40 by year end.
October
The blockchain narrative gained further steam with Coinprism launching OpenChain, Factom valued at 11m, and Microsoft Azure integrating Ethereum to provide blockchains-as-a-service. These organizations and several other startups (ChangeTip / Uphold / Circle) faced community backlash from their pivots towards blockchain / financial terminology. Will Bitcoin remain a settlement layer unknown to the common man? Not if the Cryptowall ransomware developers continue to infect computers — their virus netted them with $325 million in profit. Meanwhile, the adversarial environment on the Bitcoin network continued, with a transaction malleability attack causing more confusion and double-spending on users and wallets.
Bitcoin.com re-launched with a successful series of AMAs and /r/btc, gaining momentum due to certain amounts of censorship occurring on other popular communities such as /r/bitcoin and Bitcoin.org.
November
Just as the situation looked bleak for Bitcoin, hope appeared on the horizon when BTCUSD spiked up to the $400 range, reaching a short-lived high of $500 on the 4th of November and making headlines again. The price spurt caused increased interest, new entrants to the market, greater volumes on exchanges and more purchases using Bitcoin!
Coinbase partnered with shift card, making it possible to spend Bitcoins anywhere Visa was accepted. Also worth a particular mention was the release of the 21 Bitcoin Computer, promising a 402 Payment Required API marketplace where machine-to-machine payments and a self-sustaining Bitcoin ecosystem could thrive as the currency of the internet.
December
Scaling Bitcoin 2 was held in Hong Kong, with many core devs, important ecosystem players and almost all the miners in attendance. Shortly after, a roadmap of capacity increases for Bitcoin was published, involving segregated witness, IBLTs and the lightning network (all recommended reading). The improvements are possible with a soft-fork, as opposed to a block size increase. In other news, the SEC approved Overstock’s plan to issue stock on the Bitcoin blockchain. And on the 24th of December, Bitcoin celebrated the season with its 100th million transaction amid ever increasing usage volumes.
An action-packed 2015
Closing out on 2015, I have mixed feelings for the year. We have come far: just one year ago, exchange hacks were common and hardly anyone used multi-sig — today, it’s standard practice. We now have commercial deployments of payment channels and machine-to-machine APIs. But while Bitcoin has performed well enough to be declared the world’s strongest currency, the community is strongly divided over issues. Even though recognition of the blockchain has gone mainstream, many look to the blockchain and not Bitcoin as the catalyst to change the world.
Happy 2016, everyone! 2015 has been an exciting year. Here’s to the many more challenges we shall brave together on our epic journey to the moon!
