Bitcoin, digital currency and blockchain technology experienced another explosive year in 2016. While bitcoin breached the all-time high in USD market cap, several new digital currencies claimed a place in the spotlights as well, while the blockchain buzz arguably peaked it all.
Of course, Bitcoin Magazine kept up with all of it. Looking back on 2016, we compiled three top 6 lists, with our best-read topics in technology, business and news.
These were 2016’s six top stories in technology, by popularity.
6: BIP 151’s End-to-End Encryption
Communication between Bitcoin nodes — and between nodes and SPV clients — is currently not encrypted by default. Unless precautions are taken, data transmitted over the Bitcoin network can be tracked by internet service providers, open-WiFi providers and anyone monitoring the Bitcoin network.
But that may soon change. Bitcoin Improvement Proposal (BIP) 151, drafted by Bitcoin Core developer Jonas Schnelli, is designed to make encryption between Bitcoin nodes the standard. If widely adopted (and alternative Bitcoin implementation bcoin already did adopt the solution), this should make it harder to censor specific transactions or blocks, while potentially offering increased privacy to Bitcoin users.
Although not everyone believes BIP 151 is preferable over conventional methods such as Tor or VPNs, the proposal garnered a lot of interest among Bitcoin Magazine readers, securing a sixth place on our list for 2016.
5: The Lightning Network
Throughout most of 2016, the central topic of debate within the Bitcoin community was, undoubtedly, scaling. The question of how best to increase transaction throughput on the Bitcoin network was on nearly everyone’s mind, while preferred solutions vary.
As one of the most promising proposals, the lightning network could just be a game changer. The innovative solution — which is especially suited for micropayments — should minimize the amount of “on-chain” transactions required, while also realizing instant confirmations and increased privacy.
The lightning network and similar, compatible projects like Amiko Pay and Thunder were first proposed in 2015, and are by now developed by at least six companies. In a best-case scenario, production-ready software could be launched this winter — though much depends on activation of the Segregated Witness soft fork as proposed by the Bitcoin Core development team.
Whether the lightning network will be as successful as many hope remains to be seen, but it was definitely one of the most popular topics on Bitcoin Magazine, placing fifth on this year’s list.
Number four on our list is an oldie but a goodie: multisignature, or multisig, transactions.
Multisig transactions are transactions that require multiple signatures to be valid. Using multisig, several people can for example share a single wallet and be sure no single person runs off with the funds. More recently, multisig has become the basis for more complex solutions, such as the lightning network.
Technically, multisig has been part of the Bitcoin protocol ever since Satoshi Nakamoto launched the code in 2009, though it was nonstandard during the first years. It became a standard part of the Bitcoin protocol in 2012. Over the four years since, multisig has become fairly common, with several wallets offering the option by default.
Multisig is probably still the most basic, but also the most used, smart contract application to date, which could explain why Bitcoin Magazine’s article on the topic is still among the most popular pieces on the website.
3: Ethereum and Turing Completeness
In many ways, 2016 was the year of Ethereum. The smart contract platform itself (Ethereum) and its native token (ether/ETH) experienced a boom throughout the first half of the year: ETH increased from less than $1 to over $20. And while the exchange rate has since dropped to around $8, it’s still one of the best-performing digital currencies of 2016.
The Ethereum smart contract platform, moreover, has been heralded by some as the future not only of digital currency but perhaps even of computing itself. While Bitcoin is somewhat limited in scope, Ethereum’s Turing completeness allows for the creation of any blockchain-based software application.
But Ethereum has also been through a rough second half of 2016. First, the high-profile multimillion-dollar investment platform “The DAO” was compromised, after which the Ethereum Foundation opted for a controversial emergency hard fork to restore lost funds — causing a split in the blockchain. Later, Ethereum was subject to a series of attacks, which had to be solved with more hard forks.
While some see this series of hard forks to be a useful process to make Ethereum more robust against future attacks, others question whether Turing completeness is really a desirable feature for a digital currency, after all.
Either way, Ethereum and its Turing completeness were the focus of much attention throughout 2016, securing a third place on our list.
2: Segregated Witness
A centerpiece of Bitcoin Core’s scalability road map, the proposed soft fork could offer several benefits. Perhaps most important, Segregated Witness would fix malleability, in effect laying the groundwork for optimized versions of the aforementioned lightning network. The proposed protocol upgrade would also extend Bitcoin’s flexibility through script versioning; it includes an effective block-size limit increase and more.
However, throughout the last quarter of 2016, it became clear that activation of the soft fork is not a given. At least one mining pool — China-based ViaBTC — actively opposes activation of the Segregated Witness soft fork. Whether or not the proposal will be adopted could well turn out to be one of the most important stories of 2017 …
For 2016, SegWit has secured second place on our list.
1: Zcash and zkSNARKs
Ethereum was not the only Bitcoin alternative to steal headlines in 2016.
Started off as an anonymity layer for Bitcoin back in 2013, Zcash launched as an altcoin in October.
The digital currency that is being developed by Zooko Wilcox-O’Hearn and his team immediately generated massive hype. Partly due to its controversial but heavily publicized “trusted setup,” partly due to its crazy market action shortly after launch and, of course, also partly due to its underlying technology: zkSNARKs.
A zkSNARK — the “zk” stands for zero-knowledge and the “SNARK” for Succinct Non-interactive Argument of Knowledge — is a novel cryptographic technique that guarantees the validity of transactions while revealing almost no data about these transactions at all. In Zcash, this is utilized to hide which addresses are transacting and how much money is sent. Zcash achieves a level of anonymity not seen before in any digital currency.
Bitcoin Magazine was as engaged in the Zcash launch process as the rest of the digital-currency world, securing the brand-new currency and its underlying tech the top spot in our top 6 tech trends of 2016.