Brace for Impact! Bitcoin could CRASH on Aug 1, warns experts
Basically, it’s between the miners and the Bitcoin core team. Both want different things.
Experts who are responsible for the popular crypto-currency, Bitcoin are having a dispute on how the currency should operate and handle transactions with a new software update that is to be released next Friday. Bitcoin, which was originally launched in 2009 and is the world’s most valuable crypto-currency only exists on a computer and could all be destroyed in any large emp attack. The virtual currency has no regulatory body controlling it and currently has a market capitalization of more than $38billion (£29billion).
Bitcoin is a cryptocurrency and a digital payment system that’s not tied to any bank or government. It was invented by an unknown programmer, or a group of programmers, under the name Satoshi Nakamoto. Just like normal currency we use in our daily lives, Bitcoin can allow users to send and receive money anonymously.Preview (opens in a new window)
2015 and 2016 marked a great year for the anonymous currency as it became the world’s best-performing currency. Numerous investors who predicted the exponential rise of the currency years before were able to pocket millions of dollars. Early this year (2017), Bitcoin has continued it rise in value with a 150% value jump to reach $3,000 in June, meanwhile as the virtual currency is known to be is notoriously volatile, , it also fell quickly and has had a big drop of around 20% in the last 4 weeks ($2,300) since it peaked in June.
What’s behind all the problems?
The internal dispute that has affected the cryptocurrency could affect the value of the coin and cause delay in transactions using the currency. This all depends on the experts who are responsible for maintaining the currency can settle for a balanced agreement before July 31st deadline in order to update the system software and improve network security and capacity.
Nevertheless, it is also possible that nothing could be affected, but with the recent drop in value, it seems unlikely. The software upgrade will affect miners who usually profit from verifying transactions of Bitcoin, and are not willing to take the change in the system. Miners are very important part of the Bitcoin system and split between them and companies could result in a big panic in the virtual currency marketplace.
Bitcoins are created by computer farms that “mine” them and verify other users transactions in the system by solving complex mathematical puzzles. Miners receive Bitcoin in exchange. It’s also possible to exchange Bitcoin for other currencies. But as the currency begins to gain widespread adoptions, payments are beginning to get more complex and so much delay during transactions has been common in recent times, this made a group of highly trained software engineers develops a system that basically re-engineered Bitcoin’s universal ledger, a file called the blockchain.
This new method has gained praise within the tech communities with notably Microsoft, the bitcoin exchange Coinbase and some other bitcoin proponents supporting the idea.But this bitcoin software update doesn’t have unanimous support.
What then would happen on Aug 1?
Supporters of the new system said they’ve run out of patience and have set a deadline for the upgrade. At 8 p.m. Eastern time on July 31, they’re threatening to stop recognizing transactions confirmed by miners who haven’t adopted the upgrade. This meanwhile would create a great deal of uncertainty in the digital currency economy as nobody can know if their payment is really going through the right channel or not.
That would create enormous uncertainty in the Bitcoin economy, as no one could really know if the Bitcoin they’d just paid (or received) was actually moving through the system the way it’s supposed to. It could also bring rise to two different or incompatible versions of Bitcoin in the system.
The uncertainty of not knowing what version of the coin you have or what might happen if they spent it or accepted Bitcoin as payment. For example receiving the wrong version of Bitcoin can result in it disappearing in the long run.
That’s one reason the community-supported website Bitcoin.org warned users Wednesday not to accept any bitcoin up to two days prior to the deadline and to wait for confirmation the situation had been resolved before trading again.
“It’s an awful situation,” David Harding, who posted the warning for Bitcoin.org, said in an email.
With the recent problems, the currency is having governments and financial institutions are beginning to play the careful card on the currency. Recently: Albanian Central Bank Issues Bitcoin Warning, Appeals To Public to Be Mature.
What’s behind this fight?
Money, of course. Some companies that pool miners together believe the new system could result in lower transaction fees, cutting into their profits. At the same time, the reformers foresee new business opportunities in a faster, more reliable form of bitcoin.
Samson Mow, chief strategy officer at blockchain developer Blockstream, said the looming showdown has been propelled by bitcoin users frustrated at having a “simple bug fix” blocked by miners out for profit.
“People are fed up,” he said. “The users are taking back their voice.”
Originally published at Smart Geek.