It’s not a huge stretch to say 2017 was the most significant year in Bitcoin and digital currencies so far. We saw Bitcoin blow past some of the wilder predictions of years past to scrape the $20,000 USD mark. “Altcoins” were suddenly worth thousands of dollars each themselves, and a new phenomenon called the initial coin offering (ICO) threatened to turn crypto into a new dotcom bubble. Bitcoin’s warring camps in the scaling debate officially split into two rival currencies, both of which have significant differences to pre-2017 Bitcoin. Oh, and China banned Bitcoin — for real this time. Sort of. Read on for a rundown of the main events in Bitcoin and cryptocurrency’s crazy ride.
Forks: Soft, Hard, Failed and Golden
Bitcoin itself underwent a series of transformative events in 2017, many of which involved a blockchain “fork” of some kind. By the end of the year, it was clear the community had passed many points of no return and would never again be the same — for better or worse.
In May, a consortium of bitcoin-using businesses produced the “New York Agreement” in a meeting at the Consensus conference. The NYA mapped out a scaling path consisting first of a soft-fork to implement segregated witness (SegWit) transactions, before a hard-fork a few months later to double the block size to 2 MB.
While intended as a “compromise” between the big- and small- block camps, the NYA did not include representatives from the Bitcoin Core development team, and associated firm Blockstream. These two groups supported SegWit, but opposed a block size hard fork without further testing — a position which would become important later on.
Fearing the plan would collapse without even activating the SegWit soft fork, a social media campaign called “UASF” (user-activated soft fork) sprang up. It wasn’t necessary though, as the original NYA soft fork plan succeeded with majority miner support and SegWit finally became a reality on the Bitcoin blockchain.
Bitcoin Cash Is Born
That was only the beginning of the real drama, though. The “big blocker” camp who opposed SegWit preserved the original transaction format, activated the Bitcoin ABC protocol in place of Bitcoin Core, and increased block sizes to 8 MB, birthing Bitcoin Cash.
While Bitcoin Cash (BCH) did not gain majority support, it gained enough mining and economic power to survive and even thrive. Its ongoing existence, name, user base and market cap gains remain both contentious and confusing. At press time BCH is $2,917 USD — which would have been impressive even for BTC in August, when the forks occurred.
Even those events were not the last dramas in Bitcoin’s year. Remember the “2x” part of SegWit2x? Well, another “grassroots” social media campaign called “NO2X” quickly appeared to oppose that too, led by the same people who had pushed UASF. The 2x fork, when it finally came in November, was a dud — it gained close to no miner support and did not (to some speculators’ disappointment) create another new Bitcoin-based currency.
Initial Fork Offerings: Coming in 2018
The coda to all this may be a lesser-known “hard fork” in November that created “Bitcoin Gold” (BTG), a version of bitcoin designed to put mining power back into the hands of amateur GPU rig builders. Though not activated by a significant group within the Bitcoin community, and despite a shaky start, BTG survived and prospered.
It also has a current market cap of around $300 USD, creating enough value to prick up many ears and potentially creating a new phenomenon for 2018: the Initial Fork Offering (IFO). Hard forks of popular coins may replace newly-created tokens and ICOs as a fundraising and attention-getting technique.
Those Price Hikes Though
This one speaks for itself really. After a three-year slump, bitcoin hit $1,000 USD again in January 2017. It seemed high at the time. From there it went to $2,000 in May, $3,000 and $4,000 in August, $5K and $6K in October — and despite a few hiccups, just kept going.
Actual photo of a bitcoin exchange bank account
When it hit $10,000 in December news outlets stopped reporting each $1K milestone, and it went all the way to the high $19,000s before suffering the traditional BTC crash just in time for Christmas. It currently sits around $14,000, which to be honest would have been jaw-dropping in any other month in 2017… including parts of December.
These gains naturally attracted the attention of the price-obsessed mainstream media and general public, who understand little else about cryptocurrency. Suddenly Bitcoin was on all the news and financial shows again, it appeared in sitcoms and late-night gags.
Mainstream derivatives trading platforms like CME, Cboe and TD Ameritrade slapped together Bitcoin Futures packages as fast as they could. Even Goldman Sachs is rushing to join in. In less than a year, bitcoin went from being the butt of mainstream jokes to serious asset, and every bitcoiner’s friend suddenly decided they were interested again. This part of the story is far from over.
Altcoins Are Now Serious Business Too
Putting to shame even BTC’s gains, however, were the so-called “altcoins” — for many the real stars of 2017. Their market caps and unit prices hit such highs that the term “altcoin” itself may no longer do them justice — digital assets are now serious business. In the wake of Bitcoin’s chain splits and holy wars, many are even positioning themselves as credible daily money alternatives.
Ethereum’s market cap hit a $1 billion USD in January, the first non-bitcoin digital asset to reach this mark. ETH went from under $10 in January to $820 in December, making many holders instant millionaires and former holders sob.
Dash, Monero, and Litecoin all soared to several hundred USD per token, with Dash becoming the first non-bitcoin digital asset to reach a token price over $1,000. Lesser-known old timers like Ripple XRP, NEM, Stellar and NXT also brought exponential returns.
Of note, nearly all these assets came into being years after bitcoin; some even after bitcoin became widely known. Many of their now-millionaire holders weren’t even “early adopters” of BTC, suggesting the crypto craze is still just kicking off.
The ICO Craze
Associated with the bitcoin/altcoin boom is the ICO. Though the concept and name existed before 2017, they were known variously as token sales, crowdfunders and appcoins — and their sale often associated with novelty, celebrity and scam.
Pushed along by blockchain business promoters such as William Mougayar, ICOs and token sales became the hot new way to fund a business. It was a way startups could sell “shares” that weren’t actually shares and possibly even no function. It was an IPO without compliance or reporting requirements — founders didn’t even need to provide real names, let alone submit to background checks. And you could raise money from anyone, anywhere, in any amount. Sounds wonderful… right?
For many, the ICO has indeed been a wonderful thing. ICOs raised over $1.3 billion USD in 2017, with success stories including Civic’s Filecoin ($257 million raised), Brave BAT ($35 million), Block.one ($185 million) and EOS ($176 million).
Blessing or Curse?
Then there was Bancor ($156 million) and Tezos ($232 million). While the numbers are impressive, their ICO and PR successes may double as curses. Both projects are still going concerns, but have faced delays and criticisms that threatened to undermine the initial goodwill. In particular, Tezos suffered a crippling legal dispute between its founders and governing Foundation, both of which are demanding control of the funds.
Tezos co-founders Arthur & Kathleen Breitman
As well as bestowing instant riches on their founders and developers, ICOs have also brought their own kind of pressure even without legal regulation. Like ordinary families who win the lottery, they’ve found sudden wealth creates headaches that wouldn’t have existed otherwise.
ICOs may also become a glut, a saturated market in which there are so many new entrants that it’s impossible for any to gain a lucrative amount of attention. We’ve also seen ICOs that raised just five or six figure amounts, and some that appear to be outright scams.
ICOs have also threatened at times to bring down the Ethereum network, as buyers rush to buy and trade hot new tokens. Ethereum has, as a result, experienced congestion similar to Bitcoin. Like its crypto cousin, Ethereum boomed before developers were able to implement a workable scaling solution — though both continue to hobble along.
China Finally Brings Down the Banhammer
There were initial rumblings of a Chinese crackdown in September when Shanghai local authorities suddenly shut down an ICO investment convention in full swing. However sources said it probably didn’t signal any broader action.
As it seems to go in crypto, though, things changed quickly after that. Within days of the Shanghai incident, the People’s Bank of China (PBOC) ordered all ICO activity to cease immediately — and in addition, even completed ICOs had to return all money to Chinese investors. The drastic move crashed all digital assets and set bitcoin back to the low $4,000s.
But it didn’t even stop there. The PBOC escalated matters further by releasing news through media channels that major online cryptocurrency trading platforms would be shut down, and over the next couple of months they suspended operations. Some moved all or part of their business to other countries, like Korea, Singapore, or the U.K.
Perhaps the most significant part of this story is the effect it didn’t have on BTC and digital asset prices. They may have slumped in the immediate wake of each new development, but by the end of September had rebounded and continued to soar ever-higher until December. China finally brought down the banhammer on cryptocurrency trading after years of threats, only to have it bounce off and fly away.
In October, BTCC CEO Bobby Lee said at a conference that the People’s Bank had deliberately tried to crash the bitcoin price over the years, with strategically timed and ambiguous announcements. That tactic may not longer work, which changes the game.
Bonus Significant Event: Bitsonline Launches
Bitsonline began publishing in March 2017 under that name, although its writers had been warming up in the months previous. Our editorial team previously developed and managed the news site at Bitcoin.com, before “hard forking” from that project at the start of 2017. Among us are former full-time editors/writers at CoinDesk, Bitcoinist, Inside Bitcoins, and others.
Was it just good timing to launch this site in 2017, or did we anticipate something others didn’t? Hmmm.