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CRYPTO 2019 IN REVIEW

CRYPTO 2019 IN REVIEW

It has certainly been an eventful year for blockchain and crypto. From continued volatility on Bitcoin’s end, to new projects launching, all the way to multiple governments announcing and amending regulations for the blockchain and crypto industry. We will explore crypto 2019 and review highlights of the year along with significant events that have occurred.

NOTE: Not all events may be mentioned within this article. If you believe a specific event should be mentioned, that is currently not, feel free to email [email protected] for consideration.

Starting at the very first day of 2019, lets jump in!

JANUARY 1ST – Bitcoin is sub $4,000

2019 began with Bitcoin in a slump. The price was fluctuating below $4000, with the industry as a whole looking rather sluggish. However, in retrospect, we can say the year was just getting started with many significant milestones to come, including Bitcoin price levels reaching as high as $13,000!

JANUARY 10TH – Ethereum Classic suffers a 51% attack

Just 10 days into the year it was discovered Ethereum Classic fell victim to a 51% attack. Being one of the top 20 cryptocurrencies, one would think this is not an easy target to successfully launch a 51% attack on. However, according to analysis done by blockchain firms and exchanges, Ethereum Classic’s attack began on January 5th and concluded on January 8th. It is estimated that a total of $1.1 million was lost.

FEBRUARY 8TH – Canada launches probe looking into QuadrigaCX case

The case of QuadrigaCX began after the death of Gerald Cotten, the CEO of the Canadian exchange at the time. After his death, some 115,000 customers were left unable to access their funds, amounting to roughly $195 million. It is reported the CEO died unexpectedly in India, taking with him the private keys needed to access all the funds.

After shutting down in early 2019, the exchange owner Quadriga Fintech Solutions Corp. is now in bankruptcy proceedings in Canada. Recent developments in the case state that the widow of Cotten, Jennifer Robertson, is set to transfer nearly $9 million to EY Canada, the bankruptcy trustee for the crypto exchange. 

FEBRUARY 28TH – Ethereum’s Constantinople/St.Petersburg updates 

Ethereum, one of the largest blockchain networks that was the first to introduce smart contracts, successfully implemented various updates in 2019. Among them include the Constantinople / St. Petersburg update. 

The Constantinople/St. Petersburg upgrade, according to the Ethereum foundation, “has two names is because the original Constantinople network upgrade was postponed and two protocol upgrades will need to occur on the same block number in order to fix issues on various Ethereum test networks, such as Ropsten.”

The Ethereum Improvement Proposals (EIP’s) selected for this upgrade include:

  • EIP 145: Bitwise shifting instructions in EVM
  • EIP 1014: Skinny CREATE2
  • EIP 1052: EXTCODEHASH opcode
  • EIP 1234: Constantinople Difficulty Bomb Delay and Block Reward Adjustment

To read more about specifically what these upgrades do, click here to visit the official Ethereum Blog.

MARCH 12TH – U.S. SEC: Ethereum is not a security 

While there have been countless investigations and prosecutions by the SEC into ICO’s, they have announced that one of the platforms hosting all these ICOs (Ethereum) in it of itself is not a security. This was significant news for U.S. investors as the legislation regarding cryptocurrency is still extremely vague. Furthermore, this provides some clarity for investors as the crypto asset will not be treated as a security therefore existing legislation for securities does not apply to it, including taxes.

MARCH 14TH – Tether criticised over changes to their reserve policy 

Tether, the world’s most popular stablecoin, came under extreme scrutiny after changing their reserve policy to include more and more ambiguous wording. The policy stated before the change that each single USDT was backed by a single US Dollar. Tether revised this and now claim that USDT are backed by reserves “which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties.”

APRIL 4TH – China: considering a ban on cryptocurrency mining

One of the few times China and crypto were mentioned in headlines together was when it was announced China is considering a nationwide ban on cryptocurrency mining. This was huge news as reports indicate that a single province in China, Sichuan, hosts a majority of Bitcoin mining and China as a whole hosts approximately 66% of Bitcoin’s global hash rate.

MAY 8TH – Binance suffers a hack stealing $40M worth of Bitcoin 

Binance, one of the largest crypto companies and arguably the most successful ICO, fell victim to a 7,000 BTC ($40M) hack. According to Binance, hackers used a variety of techniques that included phishing along with viruses to obtain a large amount of user data. 

Crypto exchanges falling victim to hacks are nothing new, however this served as a reminder that even the most successful companies on the forefront of an industry can fall victim to security vulnerabilities, especially in the crypto industry. Binance seemed to handle the entire situation professionally along with providing a high level of transparency, serving as an example for future companies in similar situations. 

Users who fell victim to the hack did not need to worry either as Binance’s Secure Asset Fund for Users, an emergency insurance fund, covered the incident in full resulting in no user funds being affected. 

JUNE 18TH – Facebook announces Libra 

Facebook itself does not need an introduction. On the other hand, the social media giant publicly released plans including a whitepaper outlining the infrastructure for a new global digital cash: Libra.  This was a huge announcement not because of the Libra project itself, but because the fact that mainstream tech is now paying attention to blockchain technology. Furthermore, with Facebooks 2 billion users, Libra could certainly accelerate the adoption and learning of cryptocurrency and blockchain technology. 

JUNE 23RD – Bitcoin climbs above $10,000

In the middle of the year, Bitcoin finally broke $10,000 again. Starting sub $4000 at the beginning of the year, that’s a climb of over 150% – which is not unusual for Bitcoin. However, this proved that the digital currency still had the interest of many worldwide and was / is very much alive.

JULY 3RD – U.S. Congress orders halt on Libra project

Not even a month after Facebook released the whitepaper for Libra, the U.S. Congress ordered the project to halt. In a letter from the Democratic head of the house committee on financial services, congresswoman Maxine Waters, along with the heads of its subcommittees, asked the company to “immediately cease implementation plans” citing “because Facebook is already in the hands of over a quarter of the world’s population, it is imperative that Facebook and its partners immediately cease implementation plans until regulators and Congress have an opportunity to examine these issues and take actions”.

Furthermore, the letter goes on to say “During this moratorium, we intend to hold public hearings on the risks and benefits of cryptocurrency-based activities and explore legislative solutions. Failure to cease implementation before we can do so risks a new Swiss-based financial system that is too big to fail.”

JULY 17TH – 3-day hearing before congress on the Libra project 

On July 17th, Facebook executive David Marcus was brought before Congress and interrogated on matters regarding the Libra project and the role Facebook plans to play. Some of the concerns that were addressed include Facebook’s recent data scandal and the mistrust people have in the tech giant. 

“I think before you move on to Libra, you ought to clean up the messes of the past,” said Representative Madeleine Dean, a Democrat from Pennsylvania, during the hearing. Furthermore, the potential power Facebook could hold became a matter of concern too. “Facebook’s plans raise serious privacy, trading and monetary policy concerns,” said Representative Maxine Waters, the chairwoman of the committee and a Democrat from California. The system will “yield immense economic power that could destabilise government.”

JULY 31ST – Britain’s FCA announces it will not regulate Bitcoin nor Ethereum 

In a document titled PS19/22: Guidance on Cryptoassets, Britains Financial Conduct Authority (FCA) announced that it will not regulate Bitcoin or Ethereum. According to the document, the FCA considered major cryptocurrencies such as Bitcoin (BTC) and Ether (ETH) “exchange tokens”, describing them as crypto assets that are usually “decentralised and primarily used as a means of exchange.” The FCA emphasised that such digital currencies do not fall under their regulatory scope.

However, on the other hand, two other types of digital assets including security tokens and utility tokens do fall under the regulatory authority of the FCA and may be regulated in some sense, according to the FCA. It is also noted in the document that stable coins may fall under the authority’s regulation granted they meet the definition of e-cash, while also mentioning that not every stable coin will meet the criteria. 

AUGUST 7TH – U.S. Congress tax bill to restrict crypto trading from double taxation 

The Virtual Value Tax Fix Act, first introduced July 25th, is a tax bill meant to solve the issue of double taxation on crypto transactions. The bill would end the double taxation on cryptocurrency transactions by amending the 1986 Internal Revenue Code.

“The use of digital assets is already treated as a sale of the asset,” says North Carolina’s Representative Ted Budd, “even though the economic reality of the transaction is a purchase of a simple consumer good”. According to Budd, solving this issue along with developing and protecting the domestic blockchain industry is a matter of national security. Before the introduction of the bill, the code places a 40 percent tax rate on transactions. Budd claims tax concerns and transaction record-keeping act as a deterrent to adoption. 

SEPTEMBER 12TH – Libra announces it’s launch date to be Q2 2020

After releasing the whitepaper, answering questions before the U.S. congress, and receiving criticism from various government officials worldwide, the Libra project is firm about launching Q2 of 2020 according to Bertrand Perez, the head of the nonprofit organisation behind Libra. 

Perez broke the news in an interview with French news magazine Les Echos, saying the token should appear during the second half of 2020. This news broke despite opposition most notably from Bruno Le Maire, France’s economy and finance minister. “I want to be absolutely clear: in these conditions, we cannot authorise the development of Libra on European soil” he said. 

SEPTEMBER 18TH – Overall Bitcoin network reaches 100 quintillion hashes 

For the first time in Bitcoin’s history, the hash rate hit 100 quintillion hashes around September 18th. Hash rate refers to the collective computing power of the entire Bitcoin network. With more computing power, the result is a more secure, profitable Bitcoin network. 

For example: during the second half of 2018, the hash rate spent six months in decline before bouncing back in January. A few months later, the Bitcoin price followed suit, rising from the depths of $3,500 to almost $14,000. 

OCTOBER 4TH – PayPal announces it’s withdrawal from the Libra project 

Paypal, one of 28 corporate backers of the Libra project, announced that it was withdrawing from the Libra Association. “PayPal has made the decision to forgo further participation in the Libra Association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to democratize access to financial services for underserved populations,” PayPal said in a statement. 

This was a significant event as other members of the association, such as Visa and MasterCard, were reportedly reconsidering their involvement in the project. 

OCTOBER 11TH – SEC orders Telegram’s TON to stop 

Telegram, a popular encrypted messaging app with approximately 300 million users, raised more than $1.7 billion in 2018 after an Initial Coin Offering (ICO). This got the attention of the U.S. Securities and Exchange Commission (SEC), who said the fund-raising was illegal in the U.S. since Telegram never registered its offering with the regulator. From U.S. investors alone, Telegram raised north of $425 million. 

According to Co-Director of the SEC’s Division of Enforcement Stephanie Avakian, the action of the SEC “is intended to prevent Telegram from flooding the U.S. markets with digital tokens that we allege were unlawfully sold”.

NOVEMBER 6TH – China scraps plans to ban cryptocurrency mining

Earlier in the year, China’s National Development and Reform Commission (NDRC) proposed banning cryptocurrency mining, citing that it consumed a lot of energy and was “wasteful”. Now the NDRC, a top level-economic planning agency under the State Council of China, published a new catalog replacing the old one of 2011. A notable change in the catalog was the removal of bitcoin or other virtual currency mining activities from the initially proposed category of industries that should be eliminated from China. 

Considering the fact that a majority of Bitcoin’s hashing power comes from China, this was positive news for the cryptocurrency. 

NOVEMBER 15TH – India’s parliament pushes back bill to ban cryptocurrency 

India’s bill banning cryptocurrency, titled “Banning of Cryptocurrency & Regulation of Official Digital Currencies”, was initially meant to be introduced between November 18th and December 13th. The bill would completely ban the use of crypto in India, but also introduce a “digital rupee” issued by the country’s central bank (The Reserve Bank of India). 

While the bill would not apply to blockchain technology entirely, it would certainly pose hurdles for the development and adoption of crypto as a whole in India. The bill ended up being postponed from the winter session of the Indian Parliament, bringing relief to early adopters and enthusiasts in India. 

NOVEMBER 19TH – Arrest of Virgil Griffith after visiting North Korea 

One notable event in crypto that is relatively fresh in our minds was when an Ethereum developer, Virgil Griffith, was arrested for allegedly helping North Korea evade sanctions through the use of blockchain. Although the visit was cited as strictly an educational event focusing on blockchain technology, authorities still claim his visit was for other reasons. 

According to FBI Assistant Director-in-Charge William F. Sweeney, “Mr. Griffith allegedly traveled to North Korea without permission from the federal government, and with knowledge what he was doing was against the law. We cannot allow anyone to evade sanctions, because the consequences of North Korea obtaining funding, technology, and information to further its desire to build nuclear weapons put the world at risk. It’s even more egregious that a U.S. citizen allegedly chose to aid our adversary.”

DECEMBER 7TH – Ethereum’s Istanbul hard fork successful

Earlier in the year, Ethereum’s Constantinople/St. Petersburg upgrade was a success. Now, Ethereum is one step closer to switching from a Proof of Work (PoW) consensus mechanism to a Proof of Stake (PoS) one. The Istanbul hard fork was successfully implemented and included a variety of updates, including Denial-of-service (DDoS) resiliency, interoperability with equihash based proof-of-work cryptocurrencies, and gas costs. In terms of the development of the protocol, 2019 was certainly a productive year for Ethereum.

DECEMBER 9TH – BAKKT launches first U.S. regulated Bitcoin Futures contracts 

After a couple years of work and regulatory delays, Bakkt finally launched their Bitcoin futures product in 2019. This is a major milestone for cryptocurrency. By having regulated Bitcoin futures, this opens the doors for institutional investors to take positions and invest for the first time in Bitcoin. Bakkt’s futures products are important because now brokerage firms, endowment funds, and other institutions can now secure and guarantee that their Bitcoin will be delivered. Instead of being cash-settled, contracts will be physically settled meaning actual Bitcoins will be delivered on the specific date rather than paying / receiving the difference between prices in dollars. The very same Intercontinental Exchange (ICE) clearinghouse that protects and settles contracts traded by global oil giants, now does the same with Bitcoin. For reference, ICE owns and operates the New York Stock Exchange, as well as other futures exchanges and clearing houses in North America, Europe, and Asia. 

DECEMBER 31ST – Bitcoin above $7,000 at year end

After starting out the year sub $4,000, Bitcoin was trading above $7,000 on the last day of the year. While this is no where near its all time high of around $20,000, it is still a significant increase of over 75% in a single year. Throughout all the volatility the cryptocurrency experienced during 2019, it is certainly positive to see it end the year higher than it started.

Whats next?

Considering all the progress the blockchain industry as a whole has made in 2019, it is difficult not to be optimistic about what 2020 holds for the industry. One thing is for certain though: crypto and blockchain finally have the attention of some of the biggest companies and governments worldwide. Soon, blockchain and crypto will have the attention of the people – and it is then where we will see the true power of this technology. 

Did we miss something? Contact [email protected] to suggest any updates or to include any major events we may have missed in crypto 2019. 

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