It’s been a polarizing year for Bitcoin. But despite the 83% decline in its price, it has been making significant moves in 2018. When speculators see a falling price it is difficult to admire everything that the Bitcoin network has accomplished – but the work goes on, whatever the price.
Over the last twelve months, Bitcoin has seen greater adoption, institutional involvement, and code development that all point to a bullish future.
As 2019 approaches, here are the highlights of the last year in Bitcoin’s fascinating history.
1. Segwit Adoption
Segregated Witness was a Bitcoin protocol upgrade that was activated in the summer of 2017. The upgrade enabled a greater number of transactions in Bitcoin blocks.
SegWit slimmed down transactions by making them lighter, because they no longer contained witness information, and also supported second layer development, such as the lightning network.
A major roadblock in SegWit adoption was having wallets and exchanges transition their infrastructure from legacy bitcoin addresses to SegWit compatible ones. In 2018 we’ve seen almost all major exchanges and wallets, such as Coinbase, Bitfinex, Ledger, and Trezor, adopt SegWit addresses and total adoption has increased from 10% to 40% of addresses in the last 12 months.
This is a huge step forward for bitcoin, especially considering how contentious the adoption was in the first place in 2017.
2. Institutional Adoption
A dominant narrative in 2018 has been the lack of a Bitcoin ETF being approved, but 2018 has been an impressive year for institutional adoption for Bitcoin nonetheless. We’ve seen players such as Fidelity Investments, Yale University, the New York Stock Exchange, and Square Inc. show interest in the space.
Fidelity Investments is launching an institutional platform for Bitcoin and Ethereum and the investment company currently provides financial services for $7.2 trillion in assets.
Yale’s $30 million endowment fund, with the most influential endowment managers in the world, has made strategic investments in crypto assets (rumoured to be quite Bitcoin dominated).
The parent company of the New York Stock Exchange, Intercontinental Exchange (ICE), announced that they’ll be launching Bakkt, a company focused on digital assets, and that Bakkt will be launching a 1-day physically delivered Bitcoin futures product in January 2019. Bakkt also announced that they would be working with major institutional players such as Starbucks, Boston Consulting Group, and Microsoft to help support the industry.
The Cash App, a mobile payment service developed by Square Inc., announced in 2018 that its customers could now buy and sell Bitcoin in the US. The Square CEO, Jack Dorsey, also happens to be the CEO of Twitter and The Cash App has been the #1 downloaded app on iOS and Android devices in 2018 – which is a major development because retail investors will be able to buy bitcoin more easily than ever.
3. Lightning Adoption
The Lightning Network is the preferred layer 2 scaling solution for most Bitcoin Core maximalists. Bitcoin now has almost $2 million in collateral on the network and the network has gone from 0 to 4400 nodes over the course of the last 12 months.
4. Hashrate Increase
The hashrate on the Bitcoin network has increased by almost 60% in 2018, which indicates increased investment in critical infrastructure, resulting in greater security and predictability for the network.
A growing hashrate is a sign of a healthy network, and it makes it increasingly more expensive to execute a 51% attack on the network. This increase in hashrate is likely due to mining behemoths entering the space and bringing more and more devices online to provide network security. We reached all time highs in both hashrate and difficulty in 2018.
5. Code Development
The development of Schnorr Signatures, as well as fixing and disclosing multiple critical bugs successfully, are two major steps in Bitcoin’s development. Schnorr Signatures may not be implemented into Bitcoin Core in the near future (or ever for that matter), but the code development offers a private solution to the Bitcoin scaling problem and is considered a huge step forward in digital ledger privacy technology.
This code development makes private bitcoin transactions increasingly more likely for the future, which is something that the technology may be missing to become a globally accepted medium of exchange. It shows that Bitcoin Core developers are exploring privacy technologies to improve the network, and that they’re not staying complacent with regards to network improvements.
In addition, Bitcoin Core developers successfully patched and disclosed a vulnerable bug that had been present in Bitcoin Core for 2 years, which shows their ethical ability to keep the integrity of the network. They even helped disclose and patch a critical bug for Bitcoin Cash!
6. More Unique Users
Bitcoin adoption is often measured as the number of unique addresses, and that has increased by 50% in 2018.
It should be noted, however, that unique addresses is an imperfect metric to measure adoption since one person can own as many addresses as they want; but it’s still the best, widely accepted statistic to estimate how many newcomers are joining the industry.
Even in a downmarket, we still saw signs of life for adoption: “What is Bitcoin” was one of the top 5 searches on Google in 2018, beating out other popular searches such as “What is Fortnite” and “What is Keto”.
7. Shaking Competition
In 2017 we saw the most contentious fork in Bitcoin history – the Bitcoin Cash fork. When the fork first occurred, it seemed like it could be a possibility that BCH could become the “real bitcoin” by overtaking BTC in price.
BCH’s price has fallen 87.5% relative to BTC in 2018, indicating increased confidence that BTC is the real Bitcoin. To top things off, we even saw “BCash” have a fork of its own; segmenting its community even further.
The BCH/BTC fork also saw some people considered detrimental to the growth of Bitcoin leave the BTC community, such as Roger Ver, Craig Wright, and Calvin Ayre – while people have different opinions, those losses are seen by many participants as net positives for the future growth of the network.
BCH wasn’t the only competition that Bitcoin left in the dust – after the ICO craze of 2017, Bitcoin has seen its market dominance increase 16% over the course of 2018.
8. Lower Fees
The average fee denominated in US dollars has gone from $28 to around 30 cents in 2018, but this also has a lot to do with the falling bitcoin price relative to the US dollar. When denominated in bitcoin, the average fee per transaction has still fallen approximately 97%, which makes participation more user friendly for new entrants.
Are lower fees a good sign for Bitcoin? Maybe. On one hand, fees are critical to keeping the security of the network – they are what incentivize miners to participate aside from block rewards, and fee incentivization will become increasingly important when block rewards eventually go away… After all, there are only two ways to pay for network security: fees or inflation.
On the other hand, fees in 2017 got as high as $50 per transaction and transactions could take several hours to go through, so speed and cost become a major criticism of the network. There is definitely a “sweet spot” for how high network fees should be to optimize user experience and security, and it seems we’ve gotten to a much better level in 2018.
Bitcoin 2018 In Conclusion
These 8 accomplishments in Bitcoin point to a bright 2019 for the coin. In one year, perhaps we’ll look back and reminisce that one of the best “accomplishments” during the great bear market of 2018 for Bitcoin was that the price got low enough for us to accumulate more.
In 2019 we’ll have to look forward to Bakkt’s physically delivered Bitcoin futures product launching; to rumoured approval of a Bitcoin ETF; and to more Lightning Network growth.
Hodl tight, it will probably be another volatile year.
Disclaimer: This author is invested in Bitcoin and Ethereum, which are mentioned in this article.