Jan. 3 marks Bitcoin’s 8th anniversary since its introduction in 2009. Over the past 12 months, Bitcoin has reached some significant milestones, including reaching a three-year high price, surpassing 15 mln wallets in circulation and the introduction of many on-chain and off-chain scaling solutions.
On the first day of trading in 2017, Bitcoin reached a $1,000 milestone, surpassing $1,020 for the first time in three years. It is also very close to reaching its all-time high price of $1,160 and many experts, including Vinny Lingham, predict Bitcoin to surpass it in early 2017.
While there exist many reasons that have contributed to Bitcoin’s recent price rally, analysts lay out the three most important factors. The first is the global economic uncertainty, followed by the rising Fed rates and the devaluation of certain currencies and thirdly, the increase in demand in conjunction with a decrease in supply.
Respected analysts, including CNBC’s Brian Kelly, emphasized the economic crisis in India and Venezuela as a major factor behind Bitcoin’s price rally, as an increasing number of people shifted their attention towards alternative solutions outside the realm of traditional finance.
Based on the current trend, Lingham, who successfully predicted Bitcoin’s $1,000 milestone earlier in 2015, stated that Bitcoin will most likely double or triple by the end of this year.
“I do expect a 2-3x price growth overall in 2017 for the USD/BTC pair. This may result in Bitcoin prices in other currencies being up 4-7x, but I think it’s fair to say that USD/BTC pairing is what we should use as the benchmark.”
Bitcoin wallet generation
Blockchain.info is the largest and most popular Bitcoin wallet service provider on the market today. The company reached a milestone of its own earlier this year when it surpassed 11 mln user wallets in circulation.
At the beginning of 2016, the total number of Blockchain wallets was barely at 5.5 mln. Within 12 months, the number of wallets more than doubled, demonstrating a rapid growth in user base for both the company and Bitcoin.
Coinbase, another leading Bitcoin exchange and wallet service provider, stated that it served over 5.2 mln customers, which adds mlns of wallets in circulation on top of Blockchain’s 11 mln wallets. Thus, in consideration of other popular wallet service providers such as Mycelium that have hundreds of thousands of wallets, the total number of Bitcoin wallets surpassed 15 mln.
Chain scaling solutions
2016 was also a year of active Bitcoin development, with the release of innovative on-chain scaling methods like SegWit that are presumed to provide 2.1x increased capacity to the Bitcoin Blockchain.
Other privacy and scaling-focused solutions including TumbleBit and Lightning were introduced, which will provide users with methods of settling anonymous transactions and instantaneous payments.
The Lightning Network, for instance, will enable users to make instant yet cheap transactions for a wide range of applications, such as microtransactions for social media or content sharing platforms.