Bitcoin rocketed higher on Wednesday after a group of developers and executives called off plans to update the underlying software behind the digital tokens. It shot to a new high of about $7,850 after the announcement, before giving back some of those gains.
The Bitcoin community has been debating for three years how to update the software to allow for more Bitcoin transactions, because the current code makes the process of using Bitcoin for transactions too onerous -- it’s gotten expensive and time-consuming to pay for things in Bitcoin the more people use the system. But people who use and “mine” Bitcoin (get paid in Bitcoin to record transactions) have split over the right solution, raising the possibility that the Bitcoin network would split into two competing networks after a “hard fork” in the code.
Bitcoin prices have roughly doubled in the past two months amidst an enormous surge in interest. The traditional financial community has started placing its bets -- the Chicago Mercantile Exchange (CME) and Chicago Board of Options Exchange (CBOE) both are hoping to introduce Bitcoin futures by the end of the year. But the software update, known as Segwit2X, had loomed over the Bitcoin community as a kind of existential threat -- and the kind of internal power-struggle that was bound to turn off outsiders.
Delaying decisions on how to increase the “block size” on the Bitcoin network (Bitcoin transactions are recorded in blocks) gives Bitcoin investors a reprieve for now. But in order to make it less onerous to actually use Bitcoin for transactions, this issue will eventually have to be resolved. It’s not clear if that will be easier or harder once Wall Street gets more involved. In the meantime, Bitcoin’s trajectory in the absence of any direct threat appears to be up, up, up.
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http://www.barrons.com/articles/bitcoin-hard-fork-delayedbut-fork-in-the-road-still-looms-1510172969
