Prices of Bitcoin (BTCUSD) surged this week, recuperating from a nosedive early this week due to fears over a potential split between the computer operators that maintain Bitcoin’s network.
Prices rose over 18 percent on Thursday, up at $2,681.19. On Saturday, one bitcoin traded at $2,813, which is an increase of lost 40 percent for the week, Coinbase data reports.
On June 11, Bitcoin reached its all-time-high of $3,000. However, the cryptocurrency fell back below $2,000 amidst fears and skepticism that it is merely a bubble waiting to pop anytime.
Investors have also been worried about the Bitcoin split, stifling the demand in the previous weeks when it slumped to as low as $1,830 after just hitting a $3,000 high.
On Friday, the digital currency just averted a split into currencies after its miners, or the network of computer operators who secure the blockchain or a record of all bitcoin transactions, supported a software upgrade that will increase its capability of processing transactions. The split could have resulted to multiple versions of the currency.
Bitcoin’s miners backed the Bitcoin Improvement Proposal (BIP) 91, avoiding the split of the currency into blockchains. BIP 91 is the first step toward bigger upgrade efforts through a software called Segregated Witness or SegWit2x. On Friday, the number of miners supporting the BIP 91 nearly reached 100 percent, going beyond the required threshold of 80 percent, Fortune reports.
According to MarketWatch, it was a debate that led to a split between the miners who wanted to maximize bitcoin’s value and increase the block size and the developers who were worried that the upgrade in block size would increase operating costs for miners.
Bitcoin’s software, which was released in 2009, has been in tip-top shape. However, bitcoin now has a growing community and the software may need to be upgraded to accommodate the increasing demand.
Since the software is decentralized, upgrade decisions should be done in the most democratic way possible—that is a vote from the developers who maintain bitcoin and the miners, who are people and organizations who power Bitcoin’s network through a large network of powerful computers. If the miners decide against the upgrade, then it will not happen, and worse, Bitcoin would be split into two Cryptocurrencies.
The problem lies on the block size of Bitcoin’s blockchain. Currently, a block can only handle a few transactions. However, given the limitations of block size, miners will only have to choose the best fee among the increasing number of transactions and the rest will have to wait. According to a Mashable report, it is for this reason that Bitcoin transactions are slow and expensive.
But the solution of increasing the block size was not received well by several developers and miners due to a number of different reasons. Now, a compromise has been reached in the form of BIP 91, and the majority of miners are supporting it. This means that miners will begin using the first part of the upgrade in about two or three days, then adopt the SegWit software in a matter of two weeks.
“BIP 91 unleashes the next wave of innovation because it has been a little stagnant of late for bitcoin,” Rob Viglione, co-founder of ZenCash, said in a report by Fortune.
“Bitcoin now has a clear run to add features that allow for faster transactions with lower costs,” Charles Hayter, CEO of digital currency analytics company Cryptocompare, said in the same report.
Some investors have been won over by Bitcoin’s explosive performance and its power to compete against gold and government-issued money as a way of storing value. The demand for the digital currency has grown tremendously since it was founded eight years ago to a market capitalization of over $40 billion.
The planned upgrade is reported to take place in autumn.