2017 — The year blockchain went mainstream.
Here’s the entire year in a single article.
/ An yearly roundup by — Nitansh Rastogi & Mohit Mamoria /
It’s almost been a decade since the anonymous person (or group of people) by the name of Satoshi Nakamoto floated the idea of a P2P electronic cash system dubbed Bitcoin.
While it was initially limited to geeks, software developers, libertarians, and cyberpunks, 2017 was the year when the virtual currency and its underlying technology started going mainstream. It was also the year when we started seeing how it would change the world around us, rather than just hearing about the benefits of a trustless society enabled by Blockchain (read this comprehensive guide to understand the tech, but long story short, it’s a decentralized, public ledger of records).
The general population started realizing that the most important things in our lives are mostly just records in some database. Think about it — our names, our citizenship, our bank accounts, our vehicle and land ownerships, our marriages, our fundamental rights, our laws, our court cases — all of these are just a record in some database.
And to protect the integrity of these databases, we have an authority looking after it. But what makes us trust the authority? We don’t know. The assumption, “we need someone to look after our data,” has finally been questioned. The pursuit to find an answer to this question led to an even stronger belief in a decentralised world, and the seeds of this finally germinated in the year 2017.
Of course, the past 12 months were just crazy when one looks at the growth of the value of the cryptocurrencies — which surpassed all expectations. With so much happening within a span of just 365 days, it is important to look at the rear-view mirror into the wild world of virtual coins to put things into perspective.
Also, we do a weekly roundup of everything that happens in the crypto world at LastWeekInCrypto. But it makes a lot of sense to push out a yearly roundup of things that mattered in this space. Let’s begin.
Blockchain > Bitcoin 💰
“The blockchain does one thing: It replaces third-party trust with mathematical proof that something happened.” — Adam Draper
As Bitcoins soared in popularity, so did the tech that powers it and makes it truly decentralized — Blockchain. Governments across the world as well as major corporations, have started looking at how to harness its potential. In India, Visakhapatnam has collaborated with Swedish start-up Chromaway to utilise Blockchain for keeping land records in order to avoid property fraud and corruption.
Legacy tech giants like IBM and Microsoft have already had projects on the distributed ledger technology, and they took them even further this year. International Blue Machines joined hands with Stellar (the company behind Stellar Lumens virtual currency) to enable cross-border payments that are faster, yet cheaper. Using the tech, the company is also enabling leading food brands such as Nestle and Unilever to monitor and uphold food safety standards. From food chain to supply chain, Blockchain is disrupting every chain.
[Takeaway] Blockchain became bigger than the bitcoin itself. Bitcoin made the idea popular but now that it’s popular, we are experimenting by building several ideas on top of it.
Wall Street joins the action 🏦
“The main event isn’t bitcoin. It’s using the blockchain to disrupt other industries and Wall Street.” — Patrick M. Byrne
Even financial institutions and the Wall Street — which earlier played down Bitcoin and its ilk — have started understanding (and acknowledging) its significance. Towards the end of the year, we saw CBOE and CME offering Bitcoin Futures, which allowed anyone to place a bet on whether it’ll go up or down, without going through the complicated process of buying a Bitcoin.
This is a big win for Bitcoin because people who were wary of it being a speculative value, will get to play with it within the regulatory framework. Next year, even NASDAQ is expected to offer Futures on its exchange, and we’ll possibly be seeing the launch of Bitcoin ETFs (exchange traded funds).
Banks, on the other hand, have started using Blockchain for tamper-proof record-keeping. In India, SBI and 27 other banks joined hands to form BankChain to enable smart contracts and store KYC details. The US-based American Express and UK’s Santander has partnered with Ripple to enable real-time cross-border transactions.
All large institutions played in silos until now, and in the pursuit to stay relevant in the new world that is fast approaching us, they’ll have to adapt, which we saw happening in the year 2017.
[Takeaway] The institutions who dismissed the cryptocurrencies for their volatility acknowledged the potential of blockchain and started experimented with it.
Rise of Altcoins 📈
“Kites rise highest against the wind — not with it.” — Winston Churchill
A simple glance at coinmarketcap.com (a website that lists cryptocurrencies, their price, and market cap among other things) will tell you that there are close to 1,400 digital coins out there. However, what’s even more significant is the fact that while Bitcoin is the first and the most dominant cryptocurrency, its dominance is reducing.
The share of Bitcoin was more than 90 percent at the beginning of the year, and that has now almost halved at 47 percent. That’s notable in terms of the valuation too. While it grew almost 2,000 percent from $963 on January 1, 2017, to almost touching $20,000, there are coins which have witnessed even more explosive growth.
Ethereum for example, rose to almost $800 from single digit number ($8.26) at the beginning of the year. It’s also worth noting that now we’re seeing the second- and third-gen virtual currencies that aim to be more than just a store of value, and that brings us up to the next point.
[Takeaway] Bitcoin is not the only giant currency around. It still has the largest market cap, but the others cannot be ignored any more. It’s time, we should be done with the term ‘altcoins’.
The ICO boom 💥
“Making money is art and working is art and good business is the best art.” — Andy Warhol
Initial Coin Offerings — a term created to mimic IPOs, but should actually be referred to as Token Generation Event (TGE) — aren’t a new thing. But this year, they become a phenomenon as they disrupted the traditional VC companies by raising more than $3 billion according to Coindesk’s ICO Tracker.
The interesting part was that unlike any other form of raising money, ICOs allowed any company –without even a working product — to get money from consumers in exchange for their tokens. As can be expected, while several projects deservedly raised millions, many turned out to be a scam.
Thankfully, with regulation and awareness, this year, we can expect to have only genuine companies looking to raise money through ICOs. Of course, like any gold rush, a lot of stupid money has come in the crypto market, but we’ll see some sanity prevailing in this year.
ICOs also made it easier for companies that are already in the market to raise money. Popular messaging app Kik, for instance, launched its own token referred to as Kin. With such developments, we can expect to see some very feeble but decentralised ecosystems cropping up in the coming year.
[Takeaway] ICO allowed companies to raise hundreds of millions of dollars in 2017. This year, we’ll see some of these companies going live with their products and some will go bust.
Governments and regulators crackdown 🌪
“Government’s first duty is to protect the people, not run their lives.” — Ronald Reagan
Did you know that Estonia aims to be the world’s first digital nation with its own cryptocurrency? As part of its e-residency initiative, it will be introducing Estcoins, which will enable individuals to have their digital signatures as well as use them as loyalty points. Belarus on the other hand, not only gave them a legal status, but made cryptocurrencies tax free for the next five years. Japan has also legalised cryptocurrency trading exchanges.
Not every country, though, had a rosy approach towards Bitcoin and its peers. China first banned ICOs in June and later, it banned trading of fiat money to cryptocurrencies on Chinese exchanges. The SEC (Securities and Exchange Commission) in the US issued warnings about ICOs. Back in India, the government continued to be have a neutral stance towards virtual currencies. While it suggests to have a proper caution because of the volatile nature and says that it is users’ responsibility in case they lose their money, it remains to be seen whether they’ll be legalised or not.
[Takeaway] While some governments are welcoming this new world with open arms, some are going after these projects in the name of protecting an average investor. And like always, some countries are still mulling over. But one thing is certain that no country is simply ignoring the disruption.
Hackers doubled down ☠️
“Garbage can provide important details for hackers: names, telephone numbers, a company’s internal jargon.” — Kevin Mitnick
Cryptocurrencies are supposed to be extremely secure — but not when you’re storing them on exchanges. While we used to rarely hear hacking instances until last year, this became a common phenomenon in 2017. Major trading exchanges and mining marketplaces like Bitfinix (Tether stolen worth $31 million), NiceHash and Youbit got hacked losing millions of dollars. Sadly, even wallets weren’t safe, as popular wallet-provider Parity got hacked — twice! It had a critical bug in its code, which led to the same. In total, as per various estimates, we saw close to $500 million stolen this year.
Ransomware makers also started using cryptocurrency to demand money. WannaCry quickly spread on Windows laptops widely this year in May. Hackers demanded BTC worth $300 to $600 to release the victims’ files.
[Takeaway] While the blockchain itself is very secure but there are so many points of failure that hackers exploited to steal away millions of dollars in 2017. The advice, “save your private keys as if your life depends on it,” still holds true.
To fork or not to fork 🍴
“Every team boat will have its disagreements and arguments, but if it doesn’t kill us or the boat, it will make us stronger.” — Ken Wallace
One of the biggest achievements of Bitcoin and the tech that underpins it is the consensus mechanism for authorising transactions. But what if the community doesn’t agree on something? That’s the basis of forks — a concept which means that communities diverge on a different path (or blocks, in this case), thus creating another virtual coin as a result, which promises to have a similar philosophy, along with better features.
With bitcoin’s soaring popularity, its transaction throughput of seven transactions per second is significantly low, and the transactions fees are also becoming high. To alleviate the issue, different stakeholders aim to reach an agreement with Segwit2X to tackle this problem. But after that getting cancelled, a group of people decided to fork Bitcoin to create Bitcoin cash, which has a bigger block size to handle more transactions.
Of course, this wasn’t the year when these forks started happening, but it certainly was the one when the forks actually seemed to have gained importance — considering Bitcoin’s network is clogged with transactions. We also saw many other forks of Bitcoin in the form of Bitcoin gold, recently-released Bitcoin diamond and even a fork that was created around December 25, aptly named Bitcoin God. This trend is expected to continue the next year as well; and perhaps, with more currencies than just bitcoin. EtherZero is expected to arrive on January 10, 2018.
[Takeaway] The 2017 year saw bitcoin going under almost half a dozen forks. It seemed as if forking has became cool. This year, we’ll get to witness a lot more forks, and in more currencies.
So, what does the next year hold for us? 🗓
Well, no one really knows. But one thing is clear, that cryptocurrencies are here to stay, and Blockchain will change the world around, sooner than later.
It is for the first time in the history of humanity that we are able to trust a group of strangers more than an individual familiar face.
It seems that we’ve finally learned the lesson that if we all work together honestly, we don’t need an authority upon us telling us what to do and what not to do.
And in the end, you can follow our weekly roundup of everything happening in the world of crypto on our newsletter 👉🏻 LastWeekInCrypto.
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Mohit Mamoria is the CEO of Authorito Capital (a crypto fund) and the editor of a weekly newsletter, Last Week In Crypto, which delivers an email every Monday containing everything that has happened in crypto space in the previous week.
This story first appeared on YourStory. Have feedback? Let’s be friends on Twitter. 🙌🏻