Bitcoin is looking increasingly likely to splinter off again in November, creating a third version of the world’s largest cryptocurrency as miners and developers pursue separate visions to scale its rapidly growing marketplace.
Major industry players, including the bitcoin investor Roger Ver known as “Bitcoin Jesus" for proselytizing on behalf of the digital currency, say consensus between opposing camps looked increasingly unlikely. That opinion was echoed by some of the biggest mining pool operators and also programmers -- known as “Core" developers -- who were instrumental to developing the infrastructure of the original bitcoin network.
Bitcoin’s popularity has led to congestion in trade, with transaction times and processing fees at one point soaring to records. Debate over how to deal with the problem has divided the trading community, with some proposing boosting the number of transactions in each block that has to be verified by miners, and others advocating for moving some information off the main network.
One faction of the community is pushing for a network upgrade in November, which could lead to a split if no consensus is made.
When the split occurred around the beginning of August -- with Bitcoin Cash diverging from legacy bitcoin -- the digital currency initially slumped 6.8 per cent in a two-day slide as investors appeared to discount the value of the new coin. But prices subsequently rallied, surging to a record $4,880.85 by Sept. 1 before China announced a crackdown on cryptocurrency exchanges and initial coin offerings that sent prices plunging 20 per cent.
While an early adopter of bitcoin, Ver has also attracted controversy for his embrace of Bitcoin Cash, which some developers criticize for giving too much power to miners.
If another tear occurs in November, it would create a third version of the cryptocurrency and potentially further scatter capital and resources as three offshoots of bitcoin emerge.
SegWit2x refers to a compromise proposal developed to deal with the surge in transactions. In August, miners agreed to implement the first phase of the proposal, or SegWit. They were expected to increase the blocksize to two megabytes around November in a second phase.
“Many developers, users, miners, and businesses have already stated they do not agree with the pointless 2x fork, so we’ll likely end up with three chains," said Samson Mow, chief strategy officer at Blockstream, which has close associations with Core developers. “Long-term, only the main bitcoin chain which has the support of users and developers can survive."
Then there’s Bitcoin Cash, which was split off so miners could boost the block size of transactions. It’s more useful as it can be moved more quickly and cheaply than other cryptocurrencies, Ver argued. Some bitcoin exchanges and wallets have said they will support the new coin, while others are uncertain whether Bitcoin Cash will have lasting market value.
Already, key players are warning investors to brace for more turmoil. Core developers including Peter Todd say the fork this time could be much more tumultuous, and could incur more user confusion of what version can be dubbed the actual “bitcoin."
“In a sense, a split is 100-per cent guaranteed," said Todd, a key coding contributor to bitcoin. “The split is likely to be more disruptive."