by Liam J Kelly
We close the year after another major dip in bitcoin’s seemingly unbeatable bull run. As the market panicked and newcomers ran for cover near the $10,000 mark, those who joined at the beginning of the year just engaged in a HODL mindset. From this, we gather the beat of the digital currency’s code-written heart and how 2017 favored the bold.
The Forking Conundrum
Between January and April, the pace of events was fast in the Bitcoin scene. The uncertainty that clawed its way all over the pumping digital currency only seemed to help bitcoin across the $1,000 threshold in the first half of February. The boost may have been in part due to the massive adoption of online stores accepting it, particularly in Japan, and later some CEO’s declaring that the currency could be the fastest growing payment system for B2B supply chains. But, as speculators have come to know, market factors had a much different effect on the new asset class.
Nasdaq successfully tested e-voting on the blockchain and bitcoin wallet and debit card provider XAPO, received approval for a banking license in Switzerland. All of it was pointing to trends that would continue throughout the year.
Oh, and China was still spooking the market even in February.
There was a fork too, well, sort of. In a move that nearly shattered bitcoin and entrenched camps within the community in the same way that a certain fork is currently doing, Bitcoin Unlimited (BU) focused on something called “emergent consensus.” The January release allowed miners to call their own block sizes, which, in theory, seems like a fantastic idea.
Run Bitcoin Unlimited. It is a viable, practical solution to destructive transaction congestion.
— Gavin Andresen (@gavinandresen) March 2, 2017
In practice, however, there were more than a few bugs in the implementation. More importantly, it was one of the first proposed scaling solutions and would, looking back, become the flavor of disruption in the months to come:
I'd be quite interested in seeing your long form argument of why Emergent Consensus is safe & why nodes should give up power.
— Jameson Lopp (@lopp) March 2, 2017
Bitcoin Unlimited with heterogeneous block size policies increases selfish mining risk considerably. More research needed! @el33th4xor
— Sergio Demian Lerner (@SDLerner) November 25, 2016
Roger Ver became so wound up about the whole response, he dedicated his own mining pool called Bitcoin.com.
— Roger Ver (@rogerkver) March 7, 2017
After emergent consensus, another scaling option emerged called “extension blocks.” This provided another alternative and even the backing from Stephen Pair from BitPay and Purse CEO Andrew Lee. Moving into the summer, however, the community continued to self-divide and metaphorically set the table for Ver’s hard fork in August.
Amongst all this rattled sub-debates weighing the possibilities of bitcoin even surviving a hard fork in the first place.
Closing out this period, the Winklevoss twins had their ETF proposal denied in March, GitHub registered more than 10,000 projects related to the digital currency, Monero celebrated its third birthday and the first whiffs of the Segwit2X cap the first quarter of 2017.
Wait, Is Ethereum Really Taking Over? And, Yes, SegWit2x is Real
A major rally took place in the cryptocurrency market between April and August. With the divisions of Bitcoin in full-effect and the forums pumping, dumping, yelling and tapping wildly away, Ethereum thought about sneaking in front of the pioneer cryptocurrency. The Flippening, which was predicted to happen in June, meant that Vitalik Buterin’s creation would take over the majority market share.
All the same altcoin suspects appeared in CoinMarket’s top ten and Bitcoin waffled, if only slightly, in its capacity to dominate the market. The Ethereum community even made a Flippening website to prepare for the transition, and all sights were set for a move. A flash crash on GDAX in June, however, ended the tension by slashing ether down to $0.10 from $320, drifting to $130 by July and remained below $400 until later on in the year.
The important news was SegWit2x, which earned the support of some of the most important mining pools. Primarily BIP 91 sought to make transactions cheaper by decreasing what is included in a block (i.e., separating the “witness” signature from the transaction), but for many, this wasn’t substantial enough.
SegWit alone was unable to get even 50% miner support. SegWit2x (SegWit+ 2mb HF) has over 96% support today. Bitcoin is moving forward.
— Erik Voorhees (@ErikVoorhees) July 20, 2017
The division was now a commonplace feature of the Bitcoin community, but unlike your typical business, the differing opinions contributed to a healthy rally in price. BTCManager reported on the phenomenon by including price points in its weekly update:
“On July 17, the price of the cryptocurrency surpassed the $2,000 mark again after bottoming out at around $1,830 in the week prior. In the seven days to follow, BTC-USD rallied to inch closer to the $2,900 mark, only $100 off the digital currency’s all-time high of $2,993.73; the market has settled around $2,760 on July 24.”
Before the dramatic hard fork by Bitcoin Cash, the world surrounding the cryptocurrency also dealt with a handful of issues. For one, the SEC started closing in on the massive profits ICOs were hauling in. The commission announced on July 25, 2017, that many of these tokens being sold by startups are actually securities and as such, must be registered.
In another massive bust, Alexander Vinnik of BTC-E was reported to have stolen nearly 630,000 bitcoin from Mt.Gox. As they stuffed the head of the exchange into Greek police cars, many people with holdings were left without much information.
We are still continue to perform our unscheduled ongoing maintenance. Will keep you updated. Sorry for the inconvenience. #btce
— BTC-E (@btcecom) July 25, 2017
Then, on August 1, 2017, the hard fork killed both Bitcoin and Bitcoin Cash, right?
— Bitcoin Cash (@BITCOlNCASH) July 30, 2017
The actual price of bitcoin the day before the fork was roughly $2,700. A week later, it had jumped to $3,700 with bitcoin cash also enjoying liftoff. But the bifurcation did nothing to settle the political sentiments in the community. Still, off in the distance, November 1, 2017, to be exact, awaited the Segwit2x hard fork.
Noobs and Institutional Money Flood the Market
The anti-fragility of the currency seemed relatively clear by Autumn, and new entrees salivate at the massive gains that have already promised the handful of new millionaires. The market seems indestructible, and even Goldman Sachs looked to get a slice. Jamie Dimon began his commentary shortly after that, but his exact words seem less important in the face of the developer, miner, and HODLer communitarianism.
The SegWit2x upgrade ended up getting called off, effectively setting bitcoin and bitcoin cash into impressive rallies. At this point, newcomers to the sector aren’t sure who the real Bitcoin is and whether the digital currency they hold is “digital gold” or “digital cash.” But at all-time highs of $7,750 and $2,600, does it really matter?
And from this, we arrive at the conclusion of a year that bulletproofed Bitcoin. Two Futures launches set off concern only to find another set of all-time highs on the other end. Divisions between BTC and BCH are even more entrenched as spectators claim the latter effectively conducted insider trading with Coinbase.
Very strange accumulation and pump on Bcash in the hours leading up to the @Coinbase BCH add. If I didn't know better, I'd think that was potential insider trading activity. @GDAX 'ed? #bitcoin #bcash #bch pic.twitter.com/leX8ro0MFf
— Whalepool (@whalepool) December 20, 2017
In 2017 we learned what it means to be an asset class no one has ever seen before. At the end of the year, even newcomers are learning what it means to live in such a volatile market. Buy the dips, HODL the highs, and so it goes, all the way to the moon as the cryptocurrency scene gears up for an exciting 2018.