Bitcoin has begun to make up recent losses in value as miners have potentially found a software-based solution that may make it possible to avoid a hard (or soft) fork in the cryptocurrency.
Bitcoin has been suffering form a scaling problem over the last two years, which has slowed down transaction speeds and reportedly acted as an anchor on bitcoin’s growth.
SegWit2x, a new software platform, is emerging as the compromise solution to those scaling problems that may be able to bridge the divide between two camps of bitcoin users. Miners who verify transactions and developers who uphold bitcoin’s bug-free software have been at odds, despite a strong desire to reach consensus for the sake of bitcoin.
That conflict gained more traction as the price of bitcoin spiked to nearly $3K a pop as of June 12th — before beginning a sharp decline that left the value at around 1,758 over the weekend on Coinbase’s exchange. This week has already seen prices around $2,300 following SegWit2x’s formal release over the weekend.
The software has already seen wide adoption — about 55 percent of blocks mined in the last 24 hours were done with SegWit2x, according to coin.dance, which monitors blockchain activity.
Support needs to reach 80 percent and stay there for 48-hours — if it can do that, bitcoin might be able to avoid a split after all.
“Traders are excited by the prospect of a resolution to the scaling debate, which is why the price has rallied,” said Thomas Glucksmann, head of marketing at Hong Kong-based bitcoin exchange Gatecoin.
But this could still fall apart. Developers don’t entirely love the software, which they complain has not been fully vetted for bugs. Miners also have noted some issues with it — Retuers reports it has been called a “flawed compromise that doesn’t solve the root scaling problem.”
“This price rally is a bounce, we are very bearish in the near term for a number of reasons,” said Harry Yeh, managing partner at digital currency dealer Binary Financial, who cites the lack of support from Core developers as one of his biggest worries. “Anytime the price rockets up quickly, it will be followed by a strong correction, which we are starting to see. We are definitely headed for some turbulent and volatile times in the short term.”