At this time last year, the sky was falling around Bitcoin Nation. The market correction after the collapse of Mt. Gox still had not reached rock-bottom yet, and everyone was wondering if this was the end of Bitcoin. The mainstream media was having a field day, and market confidence were at an all-time low. What a difference a year makes! Bitcoin’s USD value is up over 35% from one year ago, and everyone is looking forward to a price spike after the Bitcoin production halving coming this July.
Read the full story below.
There seem to be plenty of blue skies ahead for Bitcoin. So let’s take one final look back at 2015, which proved to be a comeback year for “The Honey Badger of Money.”
The month of January was all about the price, and things couldn’t have started off any worse in 2015. Prices falling from over $315 USD to under $180 USD in the first two weeks. Investors were checking the price charts daily, hoping for a turnaround. It was not a Happy New Year in 2015, as the second largest Bitcoin exchange, Bitstamp was hacked to the tune of almost 19k Bitcoins, or over $5 million in USD. And the mainstream press was quick to point out that Bitcoin was the world’s worst-performing currency in 2014, which is ironic that they admitted it was a currency to begin with, only to point out it had a terrible year.
However, it’s not where you start, it’s where you finish, and things started to turn around in January. After the price bottomed-out on the 15th, the price did spike back to over $270 USD before seeking it’s level over $200 USD by month’s end. While it was nothing to be stoked about, at least, the price floor had been reached, and the Bitcoin community knew where it stood. Prices would never reach that level again in 2015.
February was the culmination of the trial of Silk Road’s Ross Ulbricht, who was found guilty on all charges in New York. The defense claimed that Ulbricbht was not running Silk Road, but the prosecution stated that the authorities traced around $13 million in bitcoin back to Ulbricht's computer. Ulbricbht’s team said Ross passed it on to another operator but was lured back in as a fall guy, and alluded to Mt. Gox CEO Mark Karpeles being the true mastermind. If that was the case, he was foolish enough to destroy Mt. Gox, but smart enough to take over an even bigger operation, outsmarting Ulbricbht to take the fall.
Either way, Ulbricht lost in the end, and would receive sentencing in May. The trial and the odyssey that was Silk Road led to Alex Winter’s Deep Web to be released later in the year, chronicling the case.
In March it was revealed that a previously unknown startup, 21 Inc., had raised a record $116 million in venture capital, setting a record within the Bitcoin industry. The brainchild of CEOs Balaji Srinivasan and Matthew Pauker, this amount, passed Coinbase’s $105 million total.
They report that they will use the money raise public awareness and adoption of Bitcoin’s related technologies, and later introduce the 21 Computer. The $399 bite-sized computer can mine Bitcoin, work as a stand-alone computer, or can work compatibly with Mac, Windows, and Linux machines.
London takes steps to become a global hub for Bitcoin business, taking the baton from the British government, who announced that the U.K. would be a Bitcoin-friendly jurisdiction, and regulate it accordingly. Bitcoin startups begin to migrate towards Britain for its new, favorable atmosphere towards digital currency.
Bitcoin payment processing leader BitPay releases information about their success in processing a record amount of Bitcoin transactions in 2014, up almost 50% over 2013. This is even with the dramatic drop in USD value during this period. The number of transactions rose more than 100%.
May brought a blast of fresh blood from out of the blue that no one was expecting. NASDAQ, the world’s second-largest stock exchange corporation, announced that it would begin using Bitcoin’s blockchain technology. They would partner with New York’s Chain Inc. to integrate it with their Nasdaq Private Market department. This was a major vote of confidence, and led to an avalanche of interest from major financial corporations worldwide, from Santander to Barclays, to JP Morgan. Nasdaq would invest $30 Million into Chain Inc. with Visa, Capital One, and others.
Ross Ulbricht also received his sentence of life in prison. He was convicted on all charges, including Aiding and Abetting Distribution of Drugs (life sentence),
Continuing Criminal Enterprise (life sentence), Computer Hacking Conspiracy, Fraud with Identification Documents, Money Laundering Conspiracy. Plus,
“Forfeiture in the amount of US $183,961,921.00 is Ordered.”
The summer was hot with news about the melting economy in Greece. After months of rhetoric and bluster, the newly-elected government cannot stop the collapse, and the banks shut down, forcing customers to find economic alternatives, like Bitcoin. CNN reported that major exchanges like Bitcurex, LakeBTC and Bitstamp saw as much as a 79% spike in demand from Greece. Vaulter claims over 120% increase in demand from Greece. Bitcoin sees a 30% swell in prices through June, peaking July 12th.
Fortune magazine takes the contrarian view, looking for ways the “Grexit” is not the cause of the price spike.
The block size debate is the issue at hand in to start Q3, as bitcoin corporations stand on one size and the bitcoin mining community stands on the other. Bitcoin corporations back the BIP 101 of Gavin Andresen, creating a new hard cap block size limit of 8 MB form the current 1 MB in 2016, then doubling every two years. This has the support of Circle, Coinbase, Xapo, BitPay and others, who even signed a pact to that effect.
Jeff Garzik proposed BIP 1o0 (and BIP 102 as an alternative), to make a more gradual block size raise to 2 MB. This gains more traction, especially with Chinese mining community, who cannot handle a massive 8 MB rise at one time. Nothing is decided or etched in stone, but many test balloons are flown to gauge public interest. The issues will be revisiting in 2016.
There is no such thing as “Black Wednesday”, but August featured a 14% price drop as Bitfinex suffers a “flash crash” on the 19th. The overall market price drops to around $220, but at Bitfinex, prices dropped to a year-low matching USD price of $179. Prices return to normal on the 20th.
Altcoin Litecoin undergoes its four-year halving on the 25th, taking production from 50 coins per block down to 25. After a furious buying frenzy in July leading up to the halving drives prices up to yearly highs, prices drop through August and the rest of 2015. Is this a precursor for Bitcoin’s halving in the July of 2016?
Beleaguered Mt. Gox CEO Mark Karpeles was officially charged with embezzlement relating to his management of the Mt. God exchange. This is not directly linked to the 850k lost Bitcoins, but to just $2 million USD worth of losses. He stands accused of transferring money from the main account of the exchange to his other accounts for his personal use.
BitPay endures a novel hack of $1.8 Million USD worth of Bitcoins , and they are taken almost directly from CEO Stephen Pair, with his unknowing cooperation. An employee’s company account was hacked, and the hacker used the credentials to contact Pair directly for authorization of BTC transfers to the hacker’s account.
Photo courtesy of The Economist - Jon Berkeley
The Economist, one of North America’s oldest and most trusted financial publications, writes a fairly glowing article about Bitcoin and its revolutionary blockchain technology one day running the world. Titled “The trust machine - The technology behind bitcoin could transform how the economy works”, over 1 million mainstream subscribers are brought up to speed on Bitcoin’s capabilities for the Halloween issue.
For his crimes in the Silk Road case, DEA agent Carl Force is found guilty of stealing over $700k in Bitcoin, extortion, money laundering and obstruction of justice charges. He is sentenced to six years in prison.
Bitcoin price becomes the story of the month again, as Q4 is very kind to BTC. Prices soar to over $450 USD, and the Western markets wonder why. Many blame this bubble on the infamous MMM Global ponzi scam lead by Russian Sergey Mavrodi, working through the Chinese market. BTC prices bear this out, as prices spiked for a week starting November 2nd and returning to normal on November 9th. Bitcoin prices return to the $400 USD to stay in December.
The end of the year brings another false Satoshi Nakamoto, in Craig Steven Wright, who, if nothing else, hustled Wired magazine writers into thinking he was the one. Wright’s claim to fame seemed to be Skyping into the Bitcoin Investor’s Conference, unannounced, in Las Vegas and intimating he was, in fact, the digital currency’s creator. He was later raided by Australian authorities at both his home and business address.
Finally, Tunisia was the first country ever to put their national currency onto blockchain technology, thanks to the company Monetas. The goal is to get more of the country’s 10 million people into the economic system and claim them from the “unbanked” population. Almost 40% are without banking relationships.
So what lies in store for Bitcoin in 2016? Besides the halving in July, there should be plenty of announcements of more businesses working with blockchain technology, more fruits from the over $1 Billion in venture capital invested in 2015, and plenty of new apps, startups, and price fluctuations. Stay tuned to DCE Brief for 2016’s latest news and developments in all things digital currency.