I'm sure you'd agree that if you held onto Bitcoin for 2018, you had a bumpy ride. Even the 'strongest hands', myself included, gave the declining price the side-eye a couple times during the year. But we all know that price is only one aspect, albeit the most visible one, of Bitcoin.
Many other VERY GOOD things happened to Bitcoin in 2018 and we are going to take a look at some of those today, on the 10th anniversary of Satoshi creating the first block, known as the Genesis block. Here are 5 signs of health and growth in Bitcoin despite the 80% drop in price we faced this year.
Layer 2 & Network Improvements
When people talk about Layer 2 solutions/products/etc., what they mean is that the Bitcoin network is Layer 1, yet Layer 2 will bring products and services that make using Bitcoin easier for more people. You can think of Layer 2 as methods to increase usage and adoption. Layer 2 solutions are attempts to help scale blockchain networks.
One of the most promising of Layer 2 solutions is the Lightning Network. The Lightning Network is a payment channel for Bitcoin (and a couple other coins) to process transactions faster off the Bitcoin blockchain. Off-chain transactions can process faster. Bitcoinist reports that a record 500 BTC has moved across Lightning's payment channels.
The Mempool is Shallow
Since February of 2018, the number of transactions sitting in the Mempool declined tremendously and has held steady.
Why is this good?
Transactions sit in the Mempool and wait to get included in a Bitcoin block, which is released every 10 minutes. When many transactions sit in the Mempool, confirmation times get longer, the network clogs, transactions take longer to complete. Enter the arguments about how Bitcoin is not a good medium of exchange since transferring value across the network takes so long. When transactions don't sit long in the Mempool then confirmation times are faster and more efficient.
Check out this chart courtesy of Blockchain.com (See Data, Charts).
Bitcoin's mining difficulty shows how the network and its miners are adjusting to the network over time. Think of it this way, if more miners join the network with more computing power, then mining has to be made more difficult to keep that same computing power to find the block every 10 minutes instead of creating a block more quickly.
All the 2018 adjustments were upward, meaning the difficulty for miners to solve the mathematical problems and find the block was made tougher. Until later in the year when the most recent adjustments made mining easier.
While there are conflicting opinions on this, many people were shaking their heads at the price drops and miners turning off their machines during 2018, yet the mining difficulty continued to increase. These decreases may represent a return to more normal levels of difficulty to bring more miners back into the network.
Increased Academic Interest
Google Scholar Articles saw a big increase this year. Credit to Jameson Lopp (@lopp on Twitter), who is a Bitcoin Core developer and has some of the best educational tools on Bitcoin out there today. We saw a 40% increase from a little over 10,000 articles in 2017 to 14,400 in 2018. More academic scholarship is good.
Here is Lopp's great article on Medium about Bitcoin by the Numbers that helped inspire this post.
Funding to Build Blockchain Infrastructure
Again, thanks to Lopp and Coindesk, Industry VC Funding hit an all-time high of $3.1 billion this year. These investors are obviously looking at the future and not a 2018 price decline to determine if Bitcoin and Blockchain are worthy of investment. The Coindesk link has the stats and here's the summary below.
Professional investor confidence in Bitcoin and blockchain is a good sign going forward. This along with the growth of the Lightning Network, state of the Mempool, the increase in mining difficulty and the increase in serious academic interest are all bullish signs for Bitcoin for the future.