As the crypto community celebrates Bitcoin Pizza Day, it is a good occasion to take a closer look at the current state of Bitcoin. The evolution from a 9-page white paper sent to an obscure cypherpunks’ maillist to a global currency has touched various aspects of Bitcoin: its code, mining equipment, network security, and of course the adoption.

Bitcoin Updates and Developments

Bitcoin protocol is written in a very limited language called script, which reduces the margin of error and makes the code robust. However, as any code, it needs updating, and Bitcoin Core developers have been constantly working on the protocol’s security and performance. These updates have also cleared the road for new developments on Bitcoin, which played an important role in its adoption.

Lightning Network, the layer-2 scalability solution, is among the most important developments on Bitcoin, enabled by the SegWit update of 2017. Lightning Network is widely used for microtransactions today, its capacity now exceeding 5,000 BTC ($135 million).

This year was marked by an impressive emergence of Ordinals, a protocol allowing for each individual satoshi (1/100,000,000 of BTC) to be identified and transacted with extra data attached, through a process known as an inscription. Enabled by the Taproot upgrade of 2021, the Ordinals protocol was released in January 2023, soon taking the Bitcoin community by storm.  

First, people began creating Bitcoin NFTs, attaching to the satoshis strings of data pointing to an image or a program. In April, the fungible Ordinals known as the BRC-20 standard emerged. Somewhat akin to Ethereum tokens, the BRC-20 standard incited the creation of numerous memecoins and opened the way for tokenization on Bitcoin. The Ordinals have become so popular, that since the beginning of May, transactions with Ordinals inscriptions are representing over 50% of the overall Bitcoin traffic.

Bitcoin mining and hashrate Source:Dune.com

From a handful of enthusiasts mining BTC on their personal computers, Bitcoin mining has evolved into a full-fledged industry, which uses electricity and highly specialized ASIC equipment to secure the network. It has also fostered a big number of innovations, which made it possible to mine BTC by capturing flared gas (a byproduct of oil production), or to use the machines’ heat waste to warm greenhouses or production sites, all in an effort to increase ecological efficiency.

The ecologic concerns of Bitcoin’s electricity use are being slowly allayed, notably thanks to better communication. As per Bitcoin Mining Council’s latest report (Q4 2022), Bitcoin mining’s sustainable electricity mix has marginally improved to 58.9%, and remains one of the most sustainable industries globally.

The rise in the number of miners and their increasingly efficient hardware led to the surge in mining difficulty, and consequently – the hashrate, or the number of hashes all the network miners produce in a second to try and find a hash that will allow them to mine a new block. The hashrate is also a measure of the network’s security, and it has recently reached an all-time high of 364,000,000 TeraHash/second.

Source: Blockchain.com

Bitcoin adoption has been steadily increasing, although counting the exact number of Bitcoin owners can hardly ever be possible. As per Glassnode, the number of addresses holding BTC recently reached an all-time high of nearly 47 million, but this number includes the addresses of exchanges, which hold assets of millions of users. Different sources suggest that the real number may be somewhere between 100 and 300 million.

Source Glassnode

Most Bitcoin owners use it as a store of value, but the “HODL” narrative is being pushed out by “Spend and Replace”, intended to boost BTC circulation as a means of exchange.

For Laszlo Hanyecz, buying his two pizzas was painstaking: he had to post a message on BitcoinTalk forum, find a person willing to pay him the pizzas, and then trustingly send this person the bitcoins.

Things are much more convenient now. Not only buying and selling Bitcoin was made easy by the exchanges, but a big number of commerce are also now accepting BTC directly, helped by BTC payment solutions. Coinmap now counts over 32,000 merchants accepting Bitcoin all over the world.

Written by D.Center