An Eventful Year for Bitcoin
Calling a year in Bitcoin ‘eventful’ is practically a yearly tradition. The space is moving so fast that each year is filled with news and developments… despite the headlines, this tends to go against the notion that Bitcoin is ‘dead’. Bitcoin is very much alive, and boy is it kicking, too. 2022 was a great year for Bitcoin. It solidified another year of 100% uptime with no bugs, no crashes, no hacks, no double-spends and no problems.
The Elephant in The Room
Bitcoin’s price absolutely tanked in 2022. It was an entire year of lower lows and new selling pressure flooding the market. Now, every cycle Bitcoin drops roughly 80% from its all-time high before gearing up for another bull run, and this year saw Bitcoin at 77% less the price of its all-time high. Lots of people are convinced that it’s “dead for real this time”, regardless of its history of doing exactly this and surviving just fine. It’s quite comical, after a while, to see public opinion be determined by the most recent price action so consistently. If you can’t tell, we aren’t worried. The beginning of this article said 2022 was a great year for Bitcoin, and predictable price action hasn’t changed that. So far as we are concerned, Bitcoin’s price is simply sticking to the script its followed since 2009, and its technology has improved by leaps and bounds this year. Here are some of the highlights:
A Year of Lightning
Lightning has been somewhat of the star of the show this year, with growth and success that has exceeded the expectations of both critics and supporters. Lightning channels have grown in numbers from 37,298 to 67,339 channels. The number of Lightning nodes rose from 8,295 to 15,636. The liquidity of the network rose from 1,058 Bitcoins to more than 4,771, and that’s just the publicly visible liquidity. Of course, not all liquidity is visible as it’s possible to create lightning channels without public disclosure. Places such as El Salvador, Gibraltar and the Isle of Man have all experienced successful implementations of the Lightning network for real-world payments and commerce. Even still, the Lightning network is proving to be far from reaching its full potential, as highlighted by Lightning Labs’ latest project: Taro.
Taro: the Taproot Asset Representation Overlay
Taro enables digital assets such as tokens and NFTs to be issued on Bitcoin’s chain, traded on the lightning network and—therefore—secured by Bitcoin mining. The way it makes this possible involves some marvellous cryptography that, due to taproot’s introduction of Schnorr signatures, allows us to combine the hashes of multiple bitcoin unlock scripts in a Merkelized-Alternative-Script-Tree (MAST) structure, similar to a Merkle tree of which the root hash is a simple Betch32m Bitcoin address. This makes it possible to store an immense number of unlocking scripts (think: smart contract conditions) in a single bitcoin transaction, including arbitrary data while remaining indistinguishable from any other Betch32m taproot transaction. This is an immense development on many fronts… privacy, flexibility, functionality and more.
Taro is perhaps the most substantial implementation of Taproot’s functionality to date. It’s a protocol that utilised taproot MASTs to enable both fungible and non-fungible assets to be issued on Bitcoin and enables those fungible assets to be transferred over the Lightning network. It does this all while only requiring the sender and receiver to be aware of the asset’s existence… now whether there is another use case for alternative assets is yet to be determined, but the fact it’s possible on Bitcoin is a win on the technological front.
This year also saw lots of development for the global south, and Africa saw some exciting innovations regarding Bitcoin adoption and usability. FediMints, Machankura bitcoin texts and energy infrastructure took centre-stage in Africa this year.
FediMint—another technological upgrade of Bitcoin—has built another layer on top of Bitcoin allowing a new middle ground of “2nd party” custody, as opposed to the previous options of self-custody and 3rd party custody. FediMints also enhance the privacy of Bitcoin transactions and make owning Bitcoin safer and easier, especially for the global south.
As many people in the global south have access to mobile phones but don’t have access to smartphones, the Machankura Bitcoin texts solution has made it possible for anyone with a mobile phone to send and receive Bitcoin over the lightning network directly to their phone number, further expanding the potential for adoption of Bitcoin where it’s needed most: the Global South.
Gridless Compute successfully made use of wasted energy in Africa this year by using Bitcoin’s mining network, and the energy-to-money convertibility it enables, to mine Bitcoin using the excess energy produced by small hydro farms in rural areas. This goes to show that Bitcoin truly does work as an incentive to create and utilise clean energy infrastructure.
This year has been monumental for Bitcoin (what year isn’t?!). Despite dropping prices, the Bitcoin community is still alive and kicking, with loads of huge Bitcoin events and conferences taking place all around the globe, and Bitcoin development only ramping up. Here’s to a monumental 2023!