Bitcoin Magazine's Top 6 Technology Trends for 2016

Rage Review : 2016 was a year of rapid development for Bitcoin, digital currency and blockchain technology. The price of Bitcoin reached its highest market value in history, some new digital currencies emerged, and blockchain technology made great progress. Bitcoin Magazine summarized the top six new digital currencies and their basic technologies in the technology field in 2016, and introduced and objectively evaluated these currencies and technologies one by one according to their popularity.

Translation: Flora

2016 was a year of rapid development for Bitcoin, digital currency and blockchain technology. The price of Bitcoin reached its highest market value in history, and some new digital currencies began to appear in the spotlight. Blockchain technology can be said to have reached its peak.

Bitcoin Magazine has been documenting this, of course. Looking back at 2016, we compiled three “top six” lists of the best reads in the categories of technology, business, and news.

Here are the top six tech stories of 2016, ranked by popularity.

No. 6 BIP 151's End-to-End Encryption

Communications between Bitcoin nodes and between nodes and special purpose entity (SPV) users are not currently encrypted by default. Unless precautions are taken, data transmitted over the Bitcoin network can be tracked by Internet service providers, free WiFi providers, and anyone monitoring the Bitcoin network.

But that could soon change. Bitcoin Improvement Proposal (BIP) 151, drafted by Bitcoin Core developer Jonas Schnelli, is designed to standardize encryption between Bitcoin nodes. If the proposal is widely adopted (alternative Bitcoin Bcoin has already adopted it), it would make it harder to censor specific transactions or blocks, while potentially providing Bitcoin users with a greater degree of privacy.

While not everyone agrees that BIP151 is superior to traditional methods like Tor or VPNs, the proposal has received a lot of attention from Bitcoin Magazine readers, ranking sixth on the list.

No. 5: The Lightning Network

Throughout 2016, the topic of discussion in the Bitcoin community has been scalability. Almost everyone is wondering how to best increase the number of transactions on the Bitcoin network, although everyone has a different preferred solution.

As one of the most anticipated proposals, the Lightning Network could just be a game changer. The innovative solution, especially for small payments, should reduce the number of required “on-chain” transactions while recognizing the need for timely confirmations and high privacy.

The Lightning Network and similar compatible projects such as Amiko Pay and Thunder were first proposed in 2015 and have been developed by at least six companies since then. The best-case scenario is that production-grade software will be launched this winter, but this depends largely on the activation of a Segregated Witness soft fork proposed by the Bitcoin Core development team.

Whether the Lightning Network will be as successful as hoped remains to be seen, but it is undoubtedly one of the most popular topics in Bitcoin Magazine, ranking fifth on the list.

4. Multisig

Number four on the list is a little outdated but still excellent, multi-signature transactions.

A multi-signature transaction is a transaction that requires multiple signatures to be valid. Using multi-signatures, several people can share a wallet, and no one person can transfer funds alone. Currently, multi-signature technology has become the basis for more complex schemes, including the Lightning Network.

Technically, although there was no standard for multi-signature technology in its early years, it has been part of the Bitcoin protocol since Satoshi Nakamoto published the Bitcoin code in 2009. In 2012, it became a standard part of the Bitcoin protocol. In the four years since then, multi-signature technology has become more common, and several wallets offer this option by default.

Multi-signature technology is perhaps still the most basic and most used smart contract application, which is why this topic still ranks high in Bitcoin Magazine.

No. 3 Ethereum and Turing Completeness

In many ways, 2016 was the year of Ethereum. The smart contract platform (Ethereum) and its native token (Ether) experienced a boom in the first half of 2016: the price of Ether rose from less than $1 to more than $20. Although it has since fallen to around $8, it is still one of the best performing digital currencies in 2016.

In addition, the Ethereum smart contract platform is considered by some to be not only the future of digital currency, but also the future of computing itself. Despite the limited scope of Bitcoin, Ethereum's Turing completeness allows for innovation in other blockchain software applications.

But Ethereum had a rough time in the second half of 2016. First, the much-publicized, multi-million-dollar funded The DAO platform was hit hard, after which the Ethereum Foundation chose a controversial emergency hard fork to recover the lost funds, resulting in a split in the blockchain. Second, Ethereum continued to come under attack, forcing more hard forks to resolve the issues.

While some believe that this series of hard forks will help to harden Ethereum against future attacks, others have questioned whether Turing completeness is really a desirable feature of a digital currency.

Regardless, Ethereum and its Turing completeness became the focus of attention in 2016, ranking third on the list.

No. 2: Segregated Witness

Segregated Witness was first unveiled in the first two weeks of 2015, and after almost a full year of development and testing, it was officially announced at the end of October this year.

A Segregated Witness soft fork is at the center of Bitcoin Core’s scalability roadmap and offers many benefits. Perhaps the most important of these is that a Segregated Witness soft fork would fix scalability, providing the foundation for the Lightning Network optimizations mentioned above. The proposed protocol updates would also expand Bitcoin’s flexibility through script versioning, and include an effective block size limit increase, among other things.

However, by the last quarter of 2016, it was becoming increasingly clear that the activation of a soft fork was not a given. At least one Bitcoin China mining group was vehemently opposing the activation of a SegWit soft fork. Whether or not SegWit would be adopted would become one of the biggest stories of 2017.

In 2016, a quarantine witness held the second place on the list.

No. 1 Zcash and zkSNARKs

Ethereum wasn’t the only Bitcoin alternative to dominate the headlines in 2016.

Zcash emerged in 2013 as an anonymity layer for Bitcoin and officially became an alternative currency in October this year.

The digital currency, created by Zooko Wilcox-O'Hearn and his team of developers, has generated massive publicity, partly due to its controversial yet much-hyped "trusted setup", partly due to its wild market behavior soon after its launch, and of course partly due to the technology behind it - zkSNARKs.

The “zk” in zkSNARK stands for “zero-knowledge” and the “SNARK” stands for “Succinct

Non-interactive Argument of Knowledge". zkSNARK is a novel cryptographic technology that ensures the validity of transactions while hiding all transaction data. In Zcash, this technology is used to hide transaction addresses and transaction amounts. Zcash has achieved an unprecedented level of anonymity in the field of digital currency.

Bitcoin Magazine participated in the establishment of Zcash and also paid attention to the development of other currencies in the digital currency field. It summarized the top six new currencies and their underlying technologies in 2016.