A House Divided
Bitcoin may be the most popular, longest standing cryptocurrency, but that doesn't mean its path forward is without potential conflict. In fact, analysts are now predicting that the cryptocurrency is on the brink of a civil war that would put Captain America and Iron Man's to shame.
Like the Marvel story, the Bitcoin rift is an ideological one. On one side of the divide are the bitcoin miners who oversee every transaction made on the Bitcoin blockchain. On the other side are the developers that have maintained Bitcoin's bug-proof software — they're led by a group called Core.
The problem of how to handle increased Bitcoin traffic has caused the rift. The former group wants to increase Bitcoin's block size limit in order to process more transactions. Meanwhile, the latter wants to move data off the main network, which would diminish the influence of miners and essentially make Bitcoin more enterprise-friendly, like its main competitor, Ethereum.
“It’s moderates versus extremists,” Stephen Pair, chief executive officer of bitcoin wallet provider BitPay, told Bloomberg. “It depends on how much a person values the majority of people staying on one chain at least for a little while longer, versus splitting and allowing each [to pursue] their own vision for scaling.”
Of Forks and Roads
What's ironic about this situation is that it's made possible by blockchain's decentralized nature, which is often heralded as one of the technology's most interesting features. The absence of a central Bitcoin authority has made it difficult for a consensus to be reached.
At any rate, a compromise called the SegWit2x update has been developed, and it should be available by July 21. It changes how some of Bitcoin's data will be stored while also doubling the block size limit.
Though support for SegWit2x is reportedly high, no one knows for sure how it will be received until it is actually released. “It’s a high-stakes game of chicken,” Arthur Hayes from Hong Kong-based BitMEX told Bloomberg. “If you’re a trader, there’s a lot of uncertainty as to what happens."
Bitcoin has been enjoying a continuous upward trend in market value for the past several months — at one point, it was even more valuable than gold. We'll have to wait to see if this growth can continue past the next couple of weeks, which will possibly be the most turbulent in Bitcoin's history. As Hayes said, "Once there’s a definitive signal about what will be done, the price could move very quickly.”
Disclosure: Several members of the Futurism team, including the editors of this piece, are personal investors in a number of cryptocurrency markets. Their personal investment perspectives have no impact on editorial content.