2017 – The Year Cryptocurrency Became More Than Bitcoin

British science writer and futurist, nicknamed “Prophet of the Space Age”, Arthur Charles Clarke accurately predicted many hitherto unexampled technological revolutions such as communication satellites, space travels and most notably in 1974, predicted how the Internet would transform banking, commerce and our societies at large.

If anyone was capable of informing us on the future of distributed ledger technology and digital currencies, it's Arthur Clarke. Unfortunately, the eerily clairvoyant futurist passed away in March 2008 and we're left to seek foresight through other avenues, such as interpreting events of the past as harbingers indicative of the future.

Whew! What a year that was for cryptocurrencies? The total market capitalization at the beginning of the year was, what seems now rather measly, 18.3 billion USD. With the dawn of a new year only days away, this figure has risen 3000% to over 600 billion USD.

We've been hearing how this was the year of Bitcoin but that assessment couldn't be further from the truth. Bitcoin's share of the market on the first day of 2017 was 87%. In June, Bitcoin's share fell as low as 37% and as things stand late on December 22, 2017, Bitcoin's share is under 50%.

2017 was the year the word cryptocurrency went from being synonymous with Bitcoin to refer to a much broader array of digital assets, each with their own distinctive characteristics.

How Cryptocurrency Became More Than Bitcoin in 2017

There's plenty to digest and pore over. ICOs, bans, hacks, scaling, the SEC, Jamie Dimon, forks, futures… The only question is where do we even start? From January ofcourse!

January 2017 Month In Review

The first month of the year offered a prelude to what was to come, with China's central bank firing a shot across the bow of bitcoin exchanges. Within a period of 48 hours between January 4 and January 6, bitcoin valuation went from a three-year high of 1,139 USD to 752 USD. The Chinese yuan accounted for most of the volume and the fluctuations were tied in with yuan's devaluation.

This coincided with an announcement by the People's Bank of China(PBoC) to investigate cryptocurrency exchanges over fears of capital flight. the PBoC said that the investigation of bitcoin exchanges, including BTCC, Huobi and OKCoin, aims to reveal possible market manipulation, money laundering, unauthorized financing and other issues.

February 2017 Month In Review

Following the warning from China's central bank, OKCoin and Huobi suspended withdrawals of bitcoin and litecoin for one month to allow their platforms to go through an “upgrade” to combat “money laundering, exchange, pyramid schemes and other illegal activities” in an effort to promote cryptocurrency industry self-discipline.

The IRS reiterated its stance on cryptocurrencies, classifying them as “intangible property.” Investors and traders holding cryptocurrencies as a capital asset were therefore required to report their realized capital gains and losses on each trade similar to a foreign-based brokerage account.

Later in the month, amid fears over unregulated cryptocurrencies weakening the yuan's stranglehold on the economy, it was reported that China had done trial runs of its prototype cryptocurrency backed by the central bank, PBoC. Bitcoin's price rallied to an all-time high of 1200 USD towards the end of the month.

March 2017 Month In Review

On March 3, Bitcoin exceeded the value of a troy ounce of gold, then valued at 1233 USD, for the first time after posting a new all-time high of 1268 USD. Thus arose a new topic of debate which remains popular among bitcoiners, “Is Bitcoin better than Gold?”

Later in the month, the US Securities and Exchange Commission twice denied requests for Bitcoin exchange-traded funds (ETF), citing unregulated nature of bitcoin markets without regulatory oversight as posing major risks for investors.

Meanwhile, Ethereum began making serious inroads in March by reaching a market cap of 2 billion USD when it reached a valuation of 30 USD per Ether. This followed news that an organization called Enterprise Ethereum Alliance was set up to connect large companies to technology vendors in order to work on projects using the blockchain.

April 2017 Month In Review

In a move which left many wondering if it was an April fools' day joke, Japan announced that the country's legislature passed a law, which would go into effect on the 1st of April, to bring bitcoin exchanges under anti-money laundering/know-your-customer rules, while also recognizing bitcoin as a payment instrument. Japan's Financial Services Agency said it was putting in place capital requirements for exchanges as well as cybersecurity and operational stipulations.

The ICO craze of 2017 began in earnest as Ethereum prediction market, Gnosis, raised 12.5 million USD within 10 minutes of the token sale being launched. 7 million USD in the first 30 seconds was funded from 767 addresses, with two addresses account for roughly 5 million USD. With 5% of tokens on offer selling quicker than hot cakes, this put the total valuation of all Gnosis tokens at 300 million USD as Gnosis developers owned the remaining 95% of tokens.

The market capitalization of cryptocurrencies reached a record high of 30 billion USD during the last week of April. While Bitcoin still retained 65% of the market share, Ethereum started gaining some serious traction.

May 2017 Month In Review

In a ransomware attack on May 12, Hackers locked files on 200,000 computers globally using a virus known as ‘WannaCry' and demanded a bitcoin ransom to unlock them. Despite the scale of the attack, the hackers only made off with around 50,000 USD for their troubles.

On May 19, Bitcoin was valued at 2000 USD for the first time. Owing to unprecedented levels of trading and traffic, Coinbase suffered various outages and deposit/withdrawal delays for its users.

At the Bitcoin Scaling Agreement at Consensus 2017, better known as the New York Agreement (abbreviated NYA), 50 companies converged to jointly make a scaling proposal for Bitcoin. The first half of the two-part proposal was to activate Segregated Witness, a soft fork to change the transaction format. The second half was to implement a hard fork to increase the block size from 1 MB to 2 MB within six months as of May 23, 2017. Opponents referred to the proposal, particularly the second half, as a ‘corporate takeover.'

Ethereum-based business management platform, Aragon, conducted the most successful ICO to date, raising 25 million USD in 15 minutes, dwarfing Gnosis' ICO success. Meanwhile, focusing mainstream spotlight on ICOs, venture capitalist and bitcoin aficionado Tim Draper stated in an interview that he intended to participate in the ICO of Tezos as he sought to “lead by example.”

June 2017 Month In Review

The Ethereum ICO craze well and truly began gripping the cryptocurrency market in June, with Civic, an identity verification project, and Status, a Dapp browser and messenger, raising 33 million USD and 100 million USD within hours of launching their token sales.

Jackson Palmer, founder of Dogecoin, was among the first to raise concerns over the blockchain ICO sprawl and imputed the value of Ether(Ethereum's token) to what he called the speculative ICO bubble, “the real reason ether price has been going up something like a hundred dollars per week for the past month is really just greed: greed from developers, greed from investors, greed from everybody in this speculative market.”

On June 6, the overall market capitalization of cryptocurrencies reached 100 billion USD for the first time. On June 11, Bitcoin's valuation crossed 3000 USD for the first time.

Following news that Vitalik Buterin, founder of Ethereum, had met with Russian President, Vladimir Putin during the St. Petersburg International Economic Forum earlier in the month, Ether's valuation soared to 391 USD on June 13.

On June 16, Ethereum posed a serious threat to Bitcoin's market dominance by usurping 32% of market share against Bitcoin's 38%. Bitcoin rallied to end the month with 42% of market share.

Fake news reported on online message board, 4Chan, claiming that Buterin, Ethereum founder, had died in a car crash caused Ether's price to… well… crash 20% in 8 hours on June 25.

On June 27, former operator of defunct Florida-based bitcoin exchange Coin.mx, Anthony Murgio, who had pleaded guilty to operating an unlicensed money transmission business in January, was sentenced to five-and-a-half years in prison.

July 2017 Month In Review

South Korea's largest cryptocurrency exchange, Bithumb, was hacked on July 4. The hack resulted in loss of billions of won from customers accounts with one victim alone claiming a loss of 1.2 billion won. Hackers breached security through leaked personal information of users such as mobile phone and email address.

On July 11, Mark Karpelès, owner of Mt Gox, Tokyo-based bitcoin exchange which went bankrupt in 2014 after claiming it lost 850,000 bitcoins in a hack, pleaded not guilty to charges of embezzlement and data manipulation at a Tokyo District Court.

Operator of Russian bitcoin exchange BTC-e, Alexander Vinnik was arrested in Greece on allegations of laundering 4 billion USD in bitcoins. He was charged to have laundered the funds for people involved in crimes ranging from computer hacking to drug trafficking under the guise of exchange services.

On July 20, a hacker exploited a vulnerability in Ethereum's Parity wallet's multi-sig contract to steal 153,000 Ether from three different multi-sig wallets. In the immediate aftermath, a white hat hackers' group siphoned off 377,000 Ether from every vulnerable multi-sig wallets to avert further loss.

On July 25, US Securities and Exchange Commission(SEC) ruled that some ICO tokens are securities and subject to the federal securities laws and selling them without a license violates federal securities laws. The SEC said it wasn't looking to put a dampener on blockchain-based innovation but was seeking to protect investors from frauds and scams.

As bitcoin trading volumes receded in China following the government's crackdown on exchanges earlier in the year, Japan's trading volume spiked in July to account for more than half of all bitcoin trading volume globally.

August 2017 Month In Review

On August 1, Bitcoin Cash was launched. Bitcoin Cash, a hard fork of Bitcoin, increased the block size from 1 MB to 8 MB. The hard fork was announced by Chinese mining equipment manufacturer Bitmain.

Fearing customer exodus, which was later attributed to carefully constructed astroturfing of social media platforms, Coinbase announced intention to support Bitcoin Cash by January 2018 after initially rejecting support for the new cryptocurrency,

Spurred by growing demand in Japan and South Korea, Bitcoin vaulted to an all-time high, breaching 4000 USD for the first time on August 14. Meanwhile, newly forked clone of Bitcoin, Bitcoin Cash floundered to trade at less than 10% of Bitcoin's valuation.

Neo, dubbed “Chinese Ethereum”, attracted headlines on August 14 after surging 7000% in two weeks to trade at 48 USD.

On August 17, Australia outlined its plans to tighten anti-money laundering laws and regulate digital currencies such as bitcoin in the wake of a financial scandal involving its biggest bank, Commonwealth Bank of Australia. Under the reforms, digital currency exchanges were brought under the remit of Austrac, Australia’s financial crime fighting agency.

On August 25, it was reported that Estonian government was considering an Initial Coin Offering (ICO) for a crypto asset called estcoin. The funds raised from ICO, managed through a Public Private Partnership (PPP), “would enable Estonia to invest in new technologies and innovations for the public sector.”

The US Securities and Exchange Commission(SEC) issued a warning to investors on August 28 about potential internet coin offering (ICO) scams and “pump and dump” schemes by public companies. The SEC suspended trading activities of four OTC-based companies over questions around their ICOs.

September 2017 Month In Review

On September 4, China banned initial coin offerings(ICO). Seven government administrations of China, including central bank People's Bank of China(PBoC), issued a joint statement declaring ICOs to be unauthorized illegal fund raising activity and ordered all ICOs to be halted immediately.

Four days later, reports emerged that China was planning to shut down cryptocurrency exchanges for good. The reports were proven to be veracious a week later, as Beijing ordered exchanges to stop trading in bitcoin amid fears increasing number of consumers in market could spark wider financial problems. This resulted in Bitcoin's valuation dramatically shedding more than 30%.

On September 12, JP Morgan CEO, Jamie Dimon famously derided Bitcoin as a fraud, “It is worse than tulip bulbs. Don’t ask me to short it. It could be at $20,000 before this happens, but it will eventually blow up. If you were in Venezuela or Ecuador or North Korea or a bunch of parts like that, or if you were a drug dealer, a murderer, stuff like that, you are better off doing it in bitcoin.”

The same day, UK's Financial Conduct Authority warned investors across the country against taking part in ICOs, stating that “anyone investing in ICOs should be prepared to lose all their money as most of the schemes floated were potentially outright frauds.”

Taking after China's lead on ICOs, South Korea banned ICOs on September 29. The South Korean Financial Supervisory Service (FSS) decided to ban initial coin offerings during the September 29 meeting of its cryptocurrency task force in Seoul, stating that it was “worried about adverse effects such as increased risk of fraud.”

On September 26, US Securities and Exchange Commission(SEC) announced new enforcement initiatives to combat cyber-based investment threats and protect retail investors including a dedicated ‘Cyber Unit.' The task force's remit would include policing ICOs and other distributed ledger technology(DLT) investment schemes.

October 2017 Month In Review

On the first day of the month, US Securities and Exchange Commission(SEC) charged a businessman and two companies with defrauding investors in a pair of initial coin offerings (ICOs), namely REcoin and DRC, purportedly backed by investments in real estate and diamonds.

It is reported on the Wall Street Journal on October 2 that banking giant Goldman Sachs is considering a new trading operation involving Bitcoin. “In response to client interest in digital currencies, we are exploring how best to serve them in the space,” a Goldman Sachs representative said in a statement.

Later in the week, Russian President Vladimir Putin, speaking at a public meeting in Moscow, warned Russian investors of “significant risks related fraud and money laundering using cryptocurrencies.” Both the President and Russia's central bank, Bank of Russia, evinced support to efforts to block access to external websites that offer cryptocurrency brokering services in the country.

Coinbase announced on October 12 that instant bitcoin, ethereum and litecoin purchases were possible on its platform using a US bank account with a maximum buy limit of upto 25,000 USD.

On October 12, Bitcoin's valuation crossed 5000 USD for the first time. Roughly a week later on October 20, Bitcoin's market capitalization breached the 100 billion USD mark after leaping 65% in less than a month.

Bitcoin Gold, a hard fork of the bitcoin blockchain was activated on October 25. Bitcoin Gold took a “snapshot” of the bitcoin blockchain so it could be recreated and reconfigured with new rules. Bitcoin Gold's value proposition was to decentralize mining again, by allowing users to mine with their CPU/GPU.

On October 30, Japanese financial regulator, the Financial Services Agency (FSA) issued a statement warning investors of the risks associated with initial coin offerings (ICOs), “You should have a deal at your own risk only after understanding enough the risks … and the content of an ICO project if you buy a token.”

On October 31, CME announced its plans to launch bitcoin futures by the end of the year, pending regulatory review. “Given increasing client interest in the evolving cryptocurrency markets, we have decided to introduce a bitcoin futures contract,” Terry Duffy, CME Group chairman and CEO, said in a statement.

November 2017 Month In Review

The US Securities and Exchange Commission(SEC) issued a warning on November 1 about celebrity-endorsed initial coin offerings (ICOs). The SEC said that celebrities who endorse token sales may run afoul of “anti-touting” laws if they don't correctly state what compensation, if any, they may have received. It also warned investors not to base their decisions solely on the endorsement of a celebrity.

The second half of the New York Agreement, SegWit2X was cancelled on November 8 after failing to gain sufficient backing in the bitcoin community. The announcement from BitGo's Mike Belshe noted, “Although we strongly believe in the need for a larger blocksize, there is something we believe is even more important: keeping the community together.

Unfortunately, it is clear that we have not built sufficient consensus for a clean blocksize upgrade at this time. Continuing on the current path could divide the community and be a setback to Bitcoin’s growth.”

Following the cancellation of SegWit2X, on November 12, Bitcoin Cash briefly surpassed Ethereum to become the cryptocurrency with the second largest market capitalization after it reached an all-time high of 2500 USD.

One of the most successful ICOs of the year, raising 232 million USD, Tezos proposed a new digital economy, self-amending cryptographic ledger. On November 16, a second class-action lawsuit was filed against Tezos, following one in late October, alleging Tezos founders Arthur and Kathleen Breitman deceptively sold unregistered securities in violation of both federal and state law in their ICO in July.

As fears grew over Bitfinex's solvency and its nexus with Tether, information leaked in the Paradise Papers revealed the top brass at Bitfinex, Phil Potter and Giancarlo Devasini as the founders of Tether back in 2014. The rate of issuance of Tether and its trading volume remains an ongoing concern.

On November 28, Bitcoin smashed through the 10000 USD barrier, surging all the way to 11000 USD within the next 24 hours, sparking widespread fears of “a bubble to end all bubbles.”

On the same day, IOTA announced its Data Marketplace, an IoT testnet phase in collaboration with Microsoft, Fujitsu, Samsung and tewnty other companies. Within days of the announcement, IOTA surged 800% to boast the fourth higher market capitalization among cryptocurrencies.

On November 30, the Commodities and Futures Trading Commission announced that it would allow CME Group Inc and CBOE Global Markets Inc to list Bitcoin futures contracts. CME, the world’s largest derivatives exchange, said it would list its bitcoin futures contract on Dec. 18, while Cboe expressed an intent to launch its contract “in the very near future.”

December 2017 Month In Review

On December 3, Venezuelan President Nicolás Maduro announced that he will be introducing a digital currency called the “petro” in a bid to dodge strict US sanctions during his annual televised Christmas message. The currency would be backed by Venezuela’s oil, gold, and mineral reserves.

The US Securities and Exchange Commission(SEC) obtained an emergency court order to freeze the assets of PlexCorps founders, Dominic Lacroix and Sabrina Paradis-Royer, charging them with defrauding investors with an initial coin offering (ICO) for PlexCoin. PlexCoin ICO was halted per court order.

Gaming platform Steam, owned by Valve Corporation, announced on December 6 that it would no longer support Bitcoin owing to manic volatility in the market and skyrocketing transaction fees, factors which made bitcoin untenable as a payment option for Valve.

Nearly 4700 bitcoins were stolen from Slovenian bitcoin mining marketplace NiceHash on December 7 in “a highly professional attack with sophisticated social engineering.”

On December 13, the cryptocurrency market capitalization reached 500 billion USD for the first time following the launch of Cboe's futures contracts on December 11. The CME futures contracts were launched on December 18.

A Long Island woman, Zoobia Shahnaz, who worked as a New York hospital technician, was arrested for laundering bitcoins in support of the Islamic State and bank fraud. Prosecutors said that after traveling to Jordan to work with the Syrian American Medical Society, Shahnaz returned to the United States and applied for six credit cards, which she used to buy bitcoin and other cryptocurrencies.

On December 18, South Korean exchange Youbit was hacked for the second time in eight months and forced to file for bankruptcy after hackers stole 17% of its cryptocurrency assets. The Wall Street Journal reported that investigators believed the Youbit attack bore the hallmarks of a North Korean hack.

Coinbase added Bitcoin Cash as the fourth cryptocurrency to its portfolio on December 19 and then disabled trading only four minutes later on its exchange, GDAX, after Bitcoin Cash valuation hit 8500 USD, fuelling allegations of insider trading.

On December 20, New York Stock Exchange’s stocks and options exchange, NYSE Arca, submitted an application with the SEC to list a pair of Bitcoin exchange-traded funds(ETF), ProShares Bitcoin ETF and the ProShares Short Bitcoin ETF, based on one of the recently introduced bitcoin futures contracts.

What Bitcoin, Blockchain & Crypto Taught Us In 2017?

At the beginning of 2016, the overall market capitalization of cryptocurrencies was no more than 15 billion USD. In the year 2017, ICOs alone accounted for 4 billion USD in funds raised. We quickly found out the SEC didn't take a shine to the shiny new crowdfunding schemes. Governments are groping around at best, trying to figure out how to police a space which has no material existence or borders.

Contention within the Bitcoin community and hard forks reaffirmed a studied opinion most blockchain experts have held all along. Blockchains do not scale. Does that mean DAG(IOTA/Byteball) is the future? We don't know yet but we may get a lot closer to finding that out in 2018.

What 2017 really showed is that cryptocurrency is a lot more than Bitcoin. Bitcoin is the pioneer in the space and will always remain as significant in the field of distributed ledger technology as all great pioneers – Edison's Phonograph, Tesla's Alternating Current, The Wright brothers' ‘flying machine'…

Satoshi's Bitcoin will forever retain its indelible legacy as the first practical application of distributed ledger technology (DLT). However, history, which taught us about pioneers, also teaches us that pioneers are muses to a revolution, as Hippocrene, the fabled fountain on Mount Helicon.

Oftentimes, pioneers are not themselves the ultimate product of a revolution. Bitcoin has inspired the DLT revolution but an energy-efficient, scalable model could end up being the finished product ripe for global adoption. We may even get a hint as to which coin that may eventually be in 2018. Who is your bet on?