What’s up with Crypto?


Looming Crypto ‘Civil War’ Sends Virtual Currencies Crashing, Ethereum Below $200

Tyler Durden
July 10, 2017

Chaos is back in cryptocurrencies with both Ethereum and Bitcoin collapsing in the last few hours as it appears concerns over the so-called ‘Bitcoin civil war’ are coming to a head.

As Bloomberg reports,

Blame the bitcoin civil war. After two years of largely behind-the-scenes bickering, rival factions of computer whizzes who play key roles in bitcoin’s upkeep are poised to adopt two competing software updates at the end of the month. That has raised the possibility that bitcoin will split in two, an unprecedented event that would send shockwaves through the $41 billion market. …

The community has bitterly argued whether the cryptocurrency should evolve to appeal to mainstream corporations and become more attractive to traditional capital, or fortify its position as a libertarian beacon;whether it should act more as an asset like gold, or as a payment system.

The seeds of the debate were planted years ago: To protect from cyber attacks, bitcoin by design caps the amount of information on its network, called the blockchain. That puts a ceiling on how many transactions it can process — the so-called block size limit — just as the currency’s growing popularity is boosting activity. As a result, transaction times and processing fees have soared to record levels this year, curtailing bitcoin’s ability to process payments with the same efficiency as services like Visa Inc.

To address this problem, two main schools of thought emerged.

  • On one side are miners, who deploy costly computers to verify transactions and act as the backbone of the blockchain. They’re proposing a straightforward increase to the block size limit.
  • On the other is Core, a group of developers instrumental in upholding bitcoin’s bug-proof software. They insist that to ease blockchain’s traffic jam, some of its data must be managed outside the main network. They claim that not only would it reduce congestion, but also allow other projects including smart contracts to be built on top of bitcoin.

But moving data off the blockchain effectively diminishes the influence of miners, (and) Core’s proposal, called SegWit, has garnered resistance from miners … .

Still, … miners last month agreed to compromise and support SegWit, in exchange for (doubling) the block size. … About 85 percent of miners have signaled they are willing to run the software once it’s released on July 21, and some of bitcoin’s largest companies have also jumped on board.The unprecedented level of endorsement is partly prompted by anxiety of bitcoin losing its dominant status to ethereum, a newer cryptocurrency whose popularity has soared thanks to its ability to run smart contracts and its more corporate-friendly approach. …

July 21 to July 31: The community monitors how many miners deploy SegWit2x:

If more than 80 percent deploy it consistently, that should signal community-wide adoption of SegWit and the avoidance of a split, at least for now.

But if a majority do not deploy, expect anxiety within the community to grow as the focus shifts to the Aug. 1 deadline.

Aug. 1: UASF is deployed by its supporters, who begin checking if bitcoin transactions are compliant with SegWit.

If a majority of miners still do not … accept SegWit, and if UASF supporters do not back down, then two versions of bitcoin’s blockchain could come into existence: a UASF-backed one where only SegWit transactions are recognized, and another where all trades — SegWit and non-SegWit — are recognized. …

If a split occurs, … expect traders to quickly re-price the value of both, likely leading to massive volatility.

As a reminder, investing legend Michgael Novogratz recently noted, that he’s looking to add more ether if it falls between $200 and $150… and more bitcoin if it falls to $2,000.

See Also:

Meet the New Money

Gateway to Cryptocurrency

The Ideal Cryptocurrency

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About icliks

Biding my time in central ms ... yours too, if ur reading this.
This entry was posted in blockchain, cryptocurrency, ecurrency, Investing, trading and speculation and tagged , , , , , , , , , , . Bookmark the permalink.

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