How is Bitcoin doing these days? How does bitcoin today compare with Bitcoin of 2017? It seems like a lot has changed. So, here is a quick look I decided to put together.
SegWit
Segregated witness was activated in August 2017. It segregates signature data from transactions into blocks past the 1Mb limit - effectively freeing room in the block for more transactions. It also paved the way for other improvements related to future soft-forks as a way to add new features to Bitcoin without disrupting existing users or requiring everyone to update their software. Let's look at segwit adoption:
Not as good as one would have hoped, but the trend is good. In terms of large (i.e. in value) transactions, Segwit has become the sleight majority. In terms of the number of transactions and block-space used, SegWit is now half of the transactions.
Blocksize
That pesky 1Mb block limit, which can't be removed without a hard fork (and associated risk/split/centralization). How has it changed over the last 5 years?
The solid block around 2018 is when blocks were full - fees were sky-high, and we were witnessing a boom in Bitcoin. The blockchain hit a wall. SegWit was new. That seemed to have resolved, and we can now see that blocksize averages of 1.3Mb are common. The blocksize could still be even higher as not everyone is using SegWit yet.
Fees
What happened to fees over time?
The fee issues leading up to 2018 is clear - but then, it seems to have settled down. It may not stay that low if the demand for transactions goes up, but we are far from the fee issues we had in 2017 and 2018.
Lightning Network
The beta lightning network is still under development, but, it is already very useful. If you are reading this, you've probably enjoyed a few Lightning Network transactions already.
The number of public channels and capacity seems to have reached a plateau. A public capacity of 1000 BTC seems to be the sticky point. Unfortunately (fortunately!), due to the nature of the Lightning Network, we can't see how many transactions are going on. How's that for privacy enhancement? I can say that my lightning node has already conducted almost 130,000 transactions. Yes - that's right 130K! I think I've paid under $1 in routing fees for all of those combined. I also open channels at 1-2 satoshi/byte, so minimal chain fees too.
If we were to have this kind of transaction capacity on the native blockchain, that would take about 52 blocks of space. Also, remember - I am just one of now 12,000 public nodes on the network. I might be among the most active nodes, but I hope that one can see the scaling going on here. At even $0.01 per transaction, that would have cost $1,300 to transact on-chain, likely more.
Keep in mind this is all on a measly 1Mb blockchain.
Summary
I think that Bitcoin is in a pretty good place. There are still things to work on (i.e. keeping fees low), but the future is bright. We are not in a corner, and there are multiple exciting developments in the works. The change that has me most excited is BIPs 340, 341, and 342. These Bitcoin Improvement Proposals add (through soft-fork) Schnorr Signatures, Taproot, and Tapscript. I should do a future post to explain what this gives us in more detail - but I'll say now that it gets me really excited for the future of Bitcoin. I'm talking about privacy, scaling, safety, and powerful smart contracts.
* Note that nowhere in this post did I make any mention of market prices.
Had it the first week of lockdown (mid-march), 4 days and over, so a mild dose, Gave it to a vulnerable partner and she was out of action for 4 weeks. I did feel guilty for that even though it couldn't be helped. Seems like we have forgotten the scenes of the horrible deaths we saw so much of at the start. I still want to do the best i can for those more vulnerable in my life. It's about reassuring others, particularly those who we care about. I always operate this way and have been more than a little amused by the debate surrounding Covid. Scientism and phillosopy, don't help you breathe or kill pain. These positions people take are theoretical. Wait till you can't help a person you care about and have to watch them suffer, you can then enjoy that wonderful feeling of humility washing over you. I wouldn't take the risk element out of our existence though, younger people should take risks but am old enough to know that experience teaches humility very well