Bitcoin News Capsule: Ten Developments in 2016
In the fast moving world of cryptocurrencies, Bitcoin still dominates headlines. In this post, a quick round-up of events in the Bitcoin universe in the first quarter of 2016.From the blockchain, markets, blocksize debates and node divisions, Bitcoin businesses, regulation and the competition we have tried to cover notable events across all.
One: Bitcoin Ruled the Cryptocurrency Markets and Competition
2016 started well for cryptocurrency market with the total market cap reaching nearly $8 billion. Bitcoin ruled finishing with $6.4 billion market cap and 80% market share. Prices remained steady at $400 levels throughout the quarter starting at $433 on January 1 and ending at $417.
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| Source: Coin Dance |
The first quarter also saw the emergence of Ethereum. Ethereum is growing in market cap and Ethereum dapps attract a lot of attention. Ethereum, as we saw in the article comparing the two, is the most serious competitor to Bitcoin but it is not a Bitcoin killer.
Banks, FinTech and BigTech consortia continued a slew of announcements of successful tests on blockchain technology, partnerships and more, using Ripple and Ethereum. The only reason this is included here is the fact that of headlines include the word Bitcoin blockchain technology, such as this one from Wall Street Journal.
Maybe the Bitcoin tide is needed to float all blockchain boats.
Maybe the Bitcoin tide is needed to float all blockchain boats.
Two: Business as usual at the Bitcoin blockchain
The blockchain height grew to by 10,000 blocks to over 400,000, minting 25 new coins per blocks.
Bitcoins in circulation also grew by 400,000 with a total of 15.4 million BTC at the end of the quarter. Average block sizes have started reaching the 1 MB limits. The blockchain size is now approaching 70 GB.
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| Source: Satoshi.info |
Three: Blocksize Forks - Nodes divided between Core, Classic, XT and Unlimited
The blocksize limitation debate has fragmented the Bitcoin developer community, businesses and miners with different parties implementing their vision for an immediate and long term fix in a different fork.
At end of Q1 2016, nodes are running four different versions Core followed by Classic which between them, account for 94% nodes, followed by Bitcoin XT and Bitcoin Unlimited, at 3%.
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| Source: Coin Dance |
Will Core or Classic attain the supermajority for consensus? The answer may be evident next year.
Four: Bitcoin Classic Released 2MB hard fork
At least one code release came through with support for 2MB blocksizes. Bitcoin Classic, supported by former released a 2MB hard fork in February 2016. Classic is supported by former core/XT developer Gavin Andresen, businesses Coinbase, Circle, Bitstamp and Genesis mining.
Five: Bitcoin Roundtable Consensus
Also in February 2016, the Bitcoin Roundtable Consensus was announced, following a meeting in Hong Kong which was organized by BTC China COO Sam Mow and attended by Bitcoin Core developers and leading miners such as BitFury.
The agreement in effect rules out any immediate changes, but laid out the proposed roadmap for Bitcoin Core releases. The agreement supports a gradual increase in blocksize, retaining the 1 MB limit at present, with SegWit option to handle block limits, a proposal to release to release code to support 4MB blocks in June 2016 and a hard fork based on majority consensus occurring twelve months further down the line in July 2017.
The agreement in effect rules out any immediate changes, but laid out the proposed roadmap for Bitcoin Core releases. The agreement supports a gradual increase in blocksize, retaining the 1 MB limit at present, with SegWit option to handle block limits, a proposal to release to release code to support 4MB blocks in June 2016 and a hard fork based on majority consensus occurring twelve months further down the line in July 2017.
Six: More on Block Size: Satoshi Roundtable and Other Recommendations
The annual Satoshi Roundtable, a private invite event/retreat attending leading names in Bitcoin and cryptocoin industry followed at the end of February. The major slant of the event was towards having a concrete solution for blocksize, such as adopting Classic Release which is now available and having a fallback alternative to Bitcoin Core.
Blocksize and Core roadmap versus Classic was the dominant focus of some of the posts from Gavin Andresen and Brian Armstrong who were among the attendees. The Satoshi Roundtable also ended with members signing a pledge in support of respectful dialogue (on Bitcoin).
Other recommendations for block size kept coming through the quarter. BitPay, have proposed a release that uses dynamic scalability. Academia also joined the debate. The Initiative for CryptoCurrencies and Contracts (IC3) at the Jacobs Technion-Cornell Institute, Cornwell , released a study that recommends a 4MB block size.
Seven: Bitcoin in danger of Centralization?
Blockstream, the blockchain solutions startup founded by Bitcoin Core developers, has been at the centre of many debates, primarily around proposed changes (or not) to Bitcoin Core which effectively keeps block size and scalability to be handled via side chains aka Liquid.
Coinbase CEO Brian Armstrong, remained vocal about his concerns cum opposition to the Core roadmap. Xapo, the Fort Knox of Bitcoin has also moved away from Core and Blockstream.
BTCC and Blockstream (naturally) are those who defend the Core roadmap as the necessary for evolution of Bitcoin as a long term scalable settlements platform.
Will business interests centralize and/or cannibalize Bitcoin for good? Time will tell.
Eight: Funding Bitcoin Development
MIT's Digital Currency Initiative announced that it was setting up a $900,000 Bitcoin Developer Fund raised from contributions from industry and individuals to support development of the Bitcoin protocol.
Bitcoin developers Gavin Andresen, Wladimir van der Laan, and Cory Fields are former Bitcoin core developers who were offered positions with the Digital Currency Initiative after the Bitcoin Foundation ran out of funds in April 2015. Although these developers are associated with the Classic version, the Foundation funds will be used to pay salaries and other expenses to support development on the Bitcoin protocol than any specific position or project.
Nine: Startup Woes - Two More Exchanges Meltdown
CoinTrader the second largest Canadian Bitcoin exchange and its parent company joined the list of exchanges that shut down overnight, without warning and blaming a hack. More bad news were in store for clients Cryptsy, which suspended trading in January. A Florida court has taken control over the exchange's assets and placed it in receivership.
Ten: Bitcoin and Lawmakers
In good news, Australia is planning to end double taxation treatment for Bitcoin, while New Hampshire in USA rejected a proposal to accept tax payments in Bitcoin.
In the USA, six after Circle became the first company to receive BitLicense from New York Department of Financial Services, it remains the only one. Other Bitcoin businesses that have applied for BitLicense are still awaiting approval.
In the USA, six after Circle became the first company to receive BitLicense from New York Department of Financial Services, it remains the only one. Other Bitcoin businesses that have applied for BitLicense are still awaiting approval.
Summary of Bitcoin in Q1 2016
By Bitcoin standards, Q1 2016 has ended on a fairly mild note. The block size debate has momentarily receded from headlines although nodes are running as many as four different versions of Bitcoin. No pricing bubbles burst and anyone hoping for some negativity to dent the $400 price to bargain levels, was left disappointed. Two exchanges went belly up, a few more governments accepted Bitcoin, and, thanks to the blockchain hype, there is more love going around for Bitcoin.
The second quarter is bound to see some serious action as block rewards drop from 25 to 12.5 bitcoins around June.
The second quarter is bound to see some serious action as block rewards drop from 25 to 12.5 bitcoins around June.
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