Bitcoin Year In Review 2023

12/31/2023

Botanix Labs

Botanix Labs

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2023 was a big year for Bitcoin as we near the 15th anniversary of the genesis block on January 3, 2024 – And, we’ve come a long way.

For the longest time, Bitcoin remained a simple peer-to-peer blockchain where users could permissionlessly transact and store value in $BTC on a completely transparent distributed ledger.

Fast forward to 2021, the Taproot Upgrade went live. This upgrade completely changed the trajectory of Bitcoin and paved the way for it to become much more.

New protocols and applications are now being built on Bitcoin.

As the sun sets on 2023, a look back shows us yet another chaotic and eventful year, but also new ideas and innovation.

So, let’s dive in and review everything that’s happened with Bitcoin in 2023.

Bitcoin ETF

Bitcoin ETF

One of the bigger pieces of news to come out this year was the registration of a Bitcoin ETF (exchange traded fund) by TradFi giant BlackRock. Although the ETF is still under review, there is optimism around its approval being announced by January 10, 2024, along with several other Bitcoin ETFs.

While Bitcoin and the crypto industry in general were shunned as nothing more than a valueless scam by a vast majority of people, this greenlight from Blackrock has suddenly turned public sentiment.

Many institutions and non-crypto native retail participants once again have their eye on Bitcoin.

The Bitcoin ETF news has brought a lot of attention back to Bitcoin, bringing with it some price speculation and general optimism about its future as a technology, asset class and platform for development.

Undoubtedly, 2023 was a tipping point year for Bitcoin as it had its biggest years in terms of protocols building on top of it.

We have seen a plethora of innovations take place on or around Bitcoin.

One of those innovations, that’s actually been around for several years, is the Lightning Network.

Lightning Network

The Lightning Network was created as a payments-focused layer 2 which uses micropayment channels to help scale the Bitcoin network. It launched in 2018 but after many years of iterating and improving upon the product, it had one of its most active years in 2023.

This year, over 5,400 BTC ($226m) moved through the Lightning Network. This growth was supported by over 70 LN-enabled wallet providers who supported a variety of clients ranging from corporations to inflation-ravaged countries to your average consumer.

While Lightning Network continues to grow, several newer players have emerged and are gaining traction.

Ordinals

Bitcoin

Oh yes, we can’t talk about Bitcoin and 2023 in the same sentence and not mention Ordinals.

Ordinals have been arguably one of the most popular things to happen to Bitcoin in its 15-year history.

Ordinals took advantage of the Taproot Upgrade, which allowed for higher data attachments per transaction on the Bitcoin network. This allowed the inscription of data onto individual satoshis (sats) to turn each on into a unique digital artifact.

At its peak, total transaction count for inscriptions ranged between 300k-315k per day. At times, Ordinals were responsible for 35-50% of the Bitcoin blockspace and was the largest contributor to Bitcoin mining revenue.

Launching at the start of 2023, the monumental growth of Ordinals has been something to behold.

There were two specific use cases around Ordinals that really took off – Bitcoin NFTs and the BRC-20.

The Bitcoin NFT & BRC-20 Bonanza

Taproot Wizards

The first application to really take off with Ordinals was NFTs. And, it makes perfect sense. Since each inscription on a satoshi is a unique digital artifact, they directly correlate to what NFTs are in their purest sense.

Taproot Wizards were the pioneers, setting the state with Ordinals to become the breakout success they were. They created a total of 2,121 NFTs and sold out quickly, sending Bitcoin fees to as high as $200+ for a single transaction.

Soon after, we saw the introduction of BRC-20 tokens. BRC-20 on Bitcoin are fungible tokens, similar to ERC-20 tokens on Ethereum, but only by name. These tokens also leverage the Ordinals protocol, but use JSON data for their inscriptions to allow for a more seamless transfer of tokens.

Towards the end of 2023, BRC-20s took center stage in crypto markets as memecoins rose in popularity once again along with other protocol tokens launching natively on Bitcoin.

During this year's BRC-20 craze, we witnessed single days with over 400k inscription transactions which skyrocketed fees for miners.

As impressive as Ordinals and Bitcoin native tokens are, they face serious issues since they are deployed natively on Bitcoin. Transaction times started to slow and fees surged.

This led to substantial growth and attention to the layer 2 protocols and sidechains on the Bitcoin network.

Bitcoin Layer 2

stacks

While there are several approaches for layer 2 protocols building and gaining traction on Bitcoin, like Rootstock, one of the most popular in 2023 was Stacks.

Stacks aims to bring smart contract functionality to the Bitcoin blockchain. They have their own native virtual machine and programming language through which developers can build DeFi, NFTs, Gaming, and other sorts of applications on top of Bitcoin.

The user base and network activity on Stacks has been ticking upward as the interest in building on Bitcoin continues to grow.

**What’s Next? **

Overall, 2023 was the year Bitcoin took an evolutionary step forward.

Attention towards Bitcoin, especially from people outside of Bitcoin-native circles, is picking up rapidly. Bitcoin is cool again.

This trend is expected to continue and strengthen going into 2024, post-ETF approval, as more governments, institutions, and people buy Bitcoin.

With an appetite for Bitcoin native protocols, the next logical step is bringing programmability and application development to the Bitcoin blockchain. This is what’s next.

The EVM (Ethereum Virtual Machine) is the most popular programming environment for web3 developers, used on multiple blockchains such as Ethereum, Polygon, Avalanche, Binance Smart Chain, Arbitrum, etc. Most web3 developers are familiar with the EVM and it has strong network effects.

After a successful testnet launch in November of 2023, the Botanix Labs team looks forward to a big 2024 as we prepare for the mainnet deployment of the world's first fully decentralized EVM-equivalent layer 2 on Bitcoin.

We believe the next logical step for Bitcoin is for it to have its own flourishing application ecosystem that relies on the security and decentralization of Bitcoin will leverage the functionality and programmability of the EVM.

2023 was a good year and 2024 is on deck to be even better.

Happy New Year!


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