Time to sum up: what happened to Bitcoin in 2018?
2017 was marked by “HODL” – investors tried to keep their savings, and many managed to make a decent profit on the background of the Bitcoin cryptocurrency market rally at the end of last year.
2018, which is coming to an end, was in many ways a disappointment for investors, especially in the second half of November, when the price of cryptocurrency was steadily falling.
Despite this, the industry continued to grow. What innovations did Bitcoin manage to have?
Softfork Segregated Witness has become one of the biggest changes in Bitcoin today. It is a technology that allows Bitcoin senders to transfer cryptographic signatures from ordinary blocks to a separate structure.
The system improves the Bitcoin protocol in several dimensions and helps to increase the “flexibility” of transactions.
Lightning Network technology, which was waited for many a year, officially made a debut in 2018. For the first time, users were offered to try out the “second layer” Bitcoin network for fast and cheap transactions.
Lightning payments are already accepted for payment for real goods and services. In March of this year, Bitrefill became one of the first services that implemented Lightning.
“Lightning allowed people to do a lot of cool things with Bitcoin, and this opens up new potential. Something we didn’t even think about before,” said Elizabeth Stark, head of Lightning Labs. “Every day we wake up, and someone has already created something new.”
Fighting for confidentiality
Two of the most promising privacy solutions (TumbleBit and ZeroLink) were on the verge of being released earlier this year.
TumbleBit is a protocol for mixing coins. It uses a mixer to create off-network payment channels between several participants in a mixing session.
Mixing ends with participants receiving each other’s coins, destroying the transaction trail for everyone. The tricky cryptographic techniques ensure that even a mixer cannot relate users with their transactions.
ZeroLink allows multiple users to mix their coins in large transactions that send coins from all the mixing session participants to all the other participants.
The ZeroLink mechanism is accepted as a standard by other wallets.
In addition to TumbleBit and ZeroLink, other privacy solutions were launched this year, and more technologies are under development.
Sidechains are the technologies which mass implementation was waited for many a year. They are alternative blockchains with Bitcoin-pegged coins.
In fact, sidechains will offer all the technical advantages of altcoins, while saving the Bitcoin limit of 21 million coins.
Liquid’s goal is to offer a payment instrument that helps move assets between exchanges and other service providers. With it, traders can quickly and confidentially transfer money and use the arbitrage opportunities.
Another “federated” Bitcoin sidechain is RSK, with a Bitcoin-pegged R-BTC token.
Like Liquid, RSK coins are supported by a group of well-known companies. But, unlike Liquid, the RSK sidechain makes “combined mining” possible. It is a process that allows miners to receive transaction fees by adding their own hashing capacity to the sidechain.
In September, a test version of Drivechain was released. The model of this sidechain is not “federated” but is fully protected by Bitcoin miners.
Using their existing hashing capacity, the miners act as sidechain controllers and confirm transactions in it.
Schnorr signatures scheme is considered by many cryptographers to be the best solution in this area. Its mathematical properties provide a high level of correctness, it does not suffer from malleability and is relatively quickly verified.
So for some time, Schnorr signatures have been in the wishlist of many technical specialists of the Bitcoin community.