The Breakdown - The Top 10 Things That Happened in Bitcoin 2022

Episode Date: December 24, 2022

This episode is sponsored by Nexo.io, Circle and Kraken.   On this year’s final “Long Reads Sunday,” NLW reads “The 10 Biggest Developments in Bitcoin in 2022” by Cory Klippsten, Tomer Strolight and Sam Callahan.  - Nexo is a security-first platform where you can buy, exchange and borrow against your crypto. The company ensures the safety of your funds and keeps innovating with products like the Nexo Wallet - a non-custodial smart wallet that allows you to create your Web3 identity. Get early access at nexo.io/wallet. - Circle, the sole issuer of the trusted and reliable stablecoin USDC, is our sponsor for today’s show. USDC is a fast, cost-effective solution for global payments at internet speeds. Learn how businesses are taking advantage of these opportunities at Circle’s USDC Hub for Businesses. - Kraken, the secure, trusted digital asset exchange, is our sponsor for today's show. Kraken makes it easy to instantly buy 185+ cryptocurrencies with fast, flexible funding options. Your account is covered by regular Proof of Reserves audits, industry-leading security and award-winning Client Engagement, available 24/7. Sign up and trade today at kraken.com/breakdown. - “The Breakdown” is written, produced by and features Nathaniel Whittemore aka NLW, with editing by Rob Mitchell and research by Scott Hill. Jared Schwartz is our executive producer and our holiday theme music is "Spike The Eggnog" by Two Dudes. Music behind our sponsors today is “Back To The End” by Strength To Last. Image credit: Andriy Onufriyenko/Getty Images, modified by CoinDesk. Join the discussion at discord.gg/VrKRrfKCz8.

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by nexo.io, circle, and crackin, and produced and distributed by CoinDesk. What's going on, guys? It is Saturday, December 24th. We are in the breakdowns end-of-year extravaganza. but today we're doing something a little bit different, a long reads Saturday. So you may remember a few weeks ago, there was a big dustup on crypto Twitter around whether CoinDesk needed more Bitcoiners and Bitcoin related things on its list of the most influential people of 2022. I in fact did a whole episode about it, talking about my list, and also sharing the people

that other members of the community thought would be good honorees. Well, right at the top of of that list were Corey Clipson and Swan Bitcoin. And being good spirits that they are, Corey, Tomor, and Sam from Swan Bitcoin actually recently contributed a piece to CoinDest called the 10 biggest developments in Bitcoin in 2022. It's a look not just at the individuals, but at the projects and events that define the year. And since tomorrow is Christmas and the show is off, I thought this would be a fun last Longreed Sunday slash Saturday for the year and a great way to honor everything that happened in Bitcoin this year. So again, this is the 10 biggest developments in Bitcoin in 2022 by Corey Clipson, Thomas Strohlight, and Sam Callahan of Swan Bitcoin.

Price crashes and crypto collapses dominated headlines in 2022, but it was a year of significant progress for Bitcoin. In 2022, we saw how Bitcoin as a protocol allows for widespread innovation that fills whatever needs developers and entrepreneurs identify without any need for changes to that protocol. We've highlighted 10 important developments below. Number one, another year of 100% uptime. The greatest achievement in Bitcoin this year was, once again, Bitcoin itself. Bitcoin continued to operate flawlessly, with one block coming roughly every 10 minutes, and its coin issuance precisely adhering to what was set out in Satoshi Nakamoto's white paper in 2008. There were no emergency restarts, no hard forks, no chain splits, and no protocol level hacks or bugs. Yet again,

delivered 100% uptime and was available to anyone in the world all year in the face of everything 2022 through at it. Billions of dollars worth of Bitcoin were transferred every single day on its blockchain. Bitcoin did all this without any foundation supporting it, without any direct employees, without any leaders or venture capitalists. As such, ongoing developments that rely on Bitcoin's reliability and predictability were able to proceed with uninterrupted focus for yet another year and with the confidence that they'll be able to do so for the foreseeable future. It is worth noting that none of the remaining items on this list require any changes to Bitcoin's base layer consensus rules.

Number two, growth of the Lightning Network. While Bitcoin's base layer remains rock steady, its most significant scaling protocol, the Lightning Network experienced massive growth in development in 2022. Lightning Network allows for instant cheap payments off-chain, eliminating the need to wait for a block to confirm transactions. It is entirely decentralized and permissionless and improves Bitcoin's scalability, while still leveraging the security and settlement assurances of Bitcoin's base layer. The network's publicly visible liquidity capacity rose from 158 Bitcoin to more than 4,771 Bitcoin in 2022. The number of

lightning channels rose by 80% from 37,298, to 67,339. The number of publicly visible lightning network nodes increased by 88% from 8,295 to 15,636 nodes, though the rate of growth slowed in the second half. All told, the growth of the Lightning Network was astounding this year, driven by numerous wallets that were launched, better tools for users that were built, and more educational resources that were produced. Instant cheap payments, typically under one U.S. cent, became widespread in 2022, as Bitcoiners look to exchange value peer-to-peer over the Lightning Network. Number three, El Salvador, where no nation has gone before. In 2022, El Salvador experienced the greatest country re-ran in history under President Naibu Kellei's policy of economic liberty and Bitcoin.

Buckele appeared on the cover of Bitcoin's Year End Edition, which showed the president looking like the founding father of hyper-bitconization, the first mover and the leader who dared to embrace Bitcoin only in the economic liberty it offered to his people. In the column, Buckele called for all bitcoiners around the world to recognize that El Salvador's fight against the global elites is their fight too. El Salvador's embrace of the Bitcoin currency made clear to all that it understands exactly what revolutionary money actually is, despite the flood from mainstream media. While U.S. regulators and policy elites got taken in by the likes of Sam Bankman-Fried, Bitcoin led to boom times in El Salvador. Tourism numbers have skyrocketed. GDP is growing,

and the country keeps stacking sats. October saw the creation by El Salvador of the world's first Bitcoin embassy in Lugano. This Chamber of Commerce will be headed by Salvador and Bitcoin and investor turned Bitcoin diplomat and honorary consul Jose Lopez. November saw the creation of the Bitcoin office within the office of the El Salvadoran president. The office was created to meet the growing demand for access and information from investors worldwide. The Bitcoin office further establishes the El Salvador template for more nations to copy on the road to hyper-bitcoinization. El Salvador closed out the year in the most Bitcoin way of all, with President Buckele announcing that El Salvador would start buying one Bitcoin every single day. In an ecosystem where innovation

is the norm, it's the basics that are in the spotlight. Nexo is a company that has never put the safety of clients' funds in question. With over 50 global licenses, $775 million in insurance, and a real-time audit of custodial assets. Nexo sets an example for security standards in the industry. Apart from keeping their 5 million clients safe, Nexo has kept building. They've just announced their non-custodial smart wallet. Visit nexo.io.

That's nexo.io and sign up today. This episode is brought to you by Circle, the sole issuer of USDC, and a leader in crypto that's held to a higher standard. USDA is a fast, safe, and efficient way to send money around the globe. USDC is always redeemable one-to-one for U.S. dollars and has over $45 billion in circulation as of October 13, 2022. Plus, Circle posts weekly reserve reports and monthly attestations of reserve capital, letting users know that USDA is safe, transparent, and compliant with regulations.

Just go to circle.com backslash transparency to see why USDA is a trusted staple coin. As one of the largest, longest-lasting, and most secure exchanges, Cracken sets the example for transparency and trust while delivering on their mission to empower people with new ways to connect and transact. Millions of people around the world count on the Cracken mobile app as the easiest, safest, and most flexible way to start building their crypto portfolio. Cracken's industry-leading security keeps your funds and information safe, and their award-winning client engagement teams are available for support 24-7. Download the Cracken app on Google Play or the Apple App Store, or visit Cracken.com slash breakdown to join. Number four, Machin Kura, transacting with Bitcoin over text in Africa. This new service was coded in a few weeks by African developer, Katha Tzanoko, who noticed a problem. Most Africans have basic phones but don't have access to a reliable internet connection. So he created a solution. Machin Kura enables people in Africa to receive and spend Bitcoin via text messages without needing an internet connection. In a report from Caribou, 94% of financial transactions in Africa are made through text messages, and only 6% of these transactions are made via mobile app. This new service allows individuals throughout Africa to use Bitcoin for the first time

on technology that is already at their disposal. Projects like Machincura will help push Bitcoin adoption in regions that need digital sound money the most. Number 5. Tarot. Assets on the Lightning Network This year, Lightning Labs introduced a protocol proposal to Bitcoin and the Lightning Network that aims to allow for the minting, sending, and receiving of assets on the networks. TerraO utilizes Bitcoin's latest protocol upgrade, Taproot, to enable the issuance of theoretically any kind of asset on the Bitcoin blockchain while still using the immutable verification of Bitcoin's proof-of-work consensus mechanism. Terro could allow for all kinds of assets like stablecoins, stocks, and bonds to be issued on top of the Bitcoin Protocol, opening the door for more

use cases and more functionality on the network. Number six, impervious.ai, the first P-to-P Lightning native browser. Impervius Technologies launched the first web browser built on top of Bitcoin's second-layer scaling system, the Lightning Network. It is a peer-to-peer web browser that offers a full suite of tools for communication, data transfers, and lightning payments without any middlemen. This comes in the form of secure peer-to-peer messaging, p-to-p video calls, p-to-p workspace, decentralized identity management, decentralized data storage, and direct user monetization of their data. All of these tools are fully encrypted, and they remove centralized intermediaries that collect and sell the user's data. By utilizing the

decentralized nature of the Bitcoin and Lightning networks, impervious technologies has given us a hint of what the internet will look like in the future. Number seven, FeddyMints. collaborative custody. Fettie Mint is the new method to custody Bitcoin by forming collaborative custody communities to help secure each other's Bitcoin and protect privacy. This form of custody takes advantage of the inherent fact that humans trust those closest to them the most. It leverages technologies like federations and Chommy and e-cash mince to cryptographically maintain privacy between the individuals of a group, while also allowing them to share custody of the entire group's Bitcoin. This custody solution offers the possibility to scale Bitcoin, improve privacy, lower on-chain

fees, and can get more individuals to take self-custody of their Bitcoin around the world. Number 8. Value for Value. Value for Value is a new approach to content publishing, where the creator receives value after the customer enjoys the content, once again through the Lightning Network. Over 10,000 content creators have already implemented Value for Value on their podcasts, and solutions such as Lightning addresses and Bolt 12 invoices are making this possible for all other types of content promising continued rapid growth in 2023. Number nine, PlebNet Lightning. community tools to make lightning more functional. An informal telegram group of ordinary people interested in running their own lightning nodes

formed and is about to cross 5,800 members. Not only do participants provide support to each other on best practices, but community members have developed and released numerous open source applications to make some of the most advanced capabilities of lightning network easily accessible to anyone. SD Lightning Terminal is a browser-based interface for managing channel liquidity on self-hosted lightning nodes, performing submarine swaps via the Lightning Loop Service, classifying channels in integrated Loop D, Pool D, and Faraday D. Demon. Balance of Satoshi's makes it easy to balance channels making it easy to issue lightning

transactions that balance channels inbound and outbound liquidity. LNDG and Lightning Jet offer similar capabilities with more advanced features for monitoring nodes and maximizing efficiency. Number 10. Gridless computing with Bitcoin mining. All over the world, people live with very little, very expensive, or no, electricity. Bitcoin mining is changing all this. One example, shared by Twitter founder Jack Dorsey, was powering a rural Kenyan village while securing the Bitcoin network with excess hydro power, all while low, lowering rates to 2,000 people or 500 families by approximately $10 a month to only $4. Far from being an isolated example of further $2 million in financing led by Stillmark VC and Block

was secured in December to use Bitcoin mining to increase energy access across Africa while further distributing and securing the Bitcoin network. All right, guys, back to NLW here. One of the themes that you will see throughout the rest of these episodes is that there are a lot of these stories that need more airtime. Gridless comes up a number of. times, including in my conversation with Elise Colleen, who's the GP at Stillmark, as well as in my conversation with Alex Gladstein, who's the chief strategy officer at the Human Rights Foundation.

But as you can see from this list, it's not just grid list. There are tons and tons of these interesting lightning-driven Bitcoin-powered projects all over the world that are experimenting with new ways to transfer value in a Bitcoin-driven economy. I'm really excited to spend more time in 2023, focusing on telling the stories of some of these projects, even really, really nascent ones, and I'm excited to have you guys along on that journey with me. For now, I want to say thanks again to my sponsors next to dotio, circle and crackin for supporting the show. And thanks to you guys for listening. Until tomorrow, well, not tomorrow because it's Christmas and Merry Christmas.

Until Monday, I guess, be safe and take care of each other. Peace.