Bitcoin broke through $Five, 000—but there are major risks ahead
Bitcoin is on an amazing bull run. The cryptocurrency lightly surpassed $Five,000 vanaf coin and is presently trading at about $Five,500—and many are wondering why.
The cryptocurrency’s main issues toevluchthaven’t bot resolved. Despite the latest upgrade, it’s still too slow to be a dependable payment toneelpodium, and the people running the showcase remain sharply divided overheen how Bitcoin should stir forward.
Furthermore, latest news that China is shutting down ICOs and crypto exchanges (and threats from many other jurisdictions to do something similar) waterput a loterijlot of downward pressure on Bitcoin’s price.
And yet, the price of Bitcoin almost doubled since it shortly went below $Trio,000 on Sept. 14.
Here’s what’s happening.
Bitcoin is about to fork—split into two different cryptocurrencies—two more times te the near future.
The very first fork, Bitcoin Gold, is an effort by a group of developers unhappy with the way Bitcoin is heading. When Bitcoin wasgoed launched, anyone could mine coins on their huis rekentuig. But right now, Bitcoin’s network is powered mostly by powerful Chinese miners who employ special hardware called ASICs (application-specific integrated circuits) to mine fresh bitcoins.
Bitcoin Gold seeks to remedy this by employing a fresh proof-of-work mining algorithm, which will enable people to mine bitcoin gold coins on their huis computers again.
This is an interesting idea, but the price is likely rising due to another reason spil well. When Bitcoin last forked into two on Aug. 1, a fresh coin wasgoed created, Bitcoin Metselspecie. And since that coin collective its blockchain with Bitcoin, everyone who wielded Bitcoin at that time automatically became the proprietor of Bitcoin Specie. Somewhat remarkably, Bitcoin Contant took off and instantaneously became a coin with a multi-billion-dollar valuation. If you possessed, say, 1 bitcoin at the time of fork, you received a few hundred dollars worth of Bitcoin Contant for free.
One month until #bgold uittocht fork.
Right now, it looks like everyone is buying Bitcoin so they can get their “free” Bitcoin Gold at the time of the next fork, which is scheduled for Oct. 25.
Free money? Not so swift.
But this is where it gets complicated.
Bitcoin Gold developers have stated they might pre-mine a certain amount of Bitcoin Gold to fund their efforts, which would essentially mean free money for them and is generally frowned upon by the community.
Also, when Bitcoin Metselspecie wasgoed created, it had a certain degree of support from some large miners, which is why it did so well. And after it became clear that Bitcoin Gold wasgoed here to stay, originally reluctant exchanges embarked supporting it and providing Bitcoin owners the BCH coins they rightfully possessed. Bitcoin Gold doesn’t have that kleuter of support, and it’s entirely possible that it just fizzles and dies right after inception.
On top of all that, another other fork that’s just around the corner (more on that straks) could be very tumultuous for Bitcoin.
So why, despite all that, is the price of Bitcoin rising so sharply? Wij’ve asked a few experts, and the overeenstemming seems to boil down to one word: whirr.
“The Bitcoin gold project is (. ) a mercurial attempt and accruing hashpower with marketing,” said Charles Hayter, the CEO of CryptoCompare. “After bitcoin contant’s survival on uitgang, it seems spil if taking bitcoin’s name is the fresh modus operandi for launching a fresh crypto te attempting to gleam some of its reputation onto the fresh creation.”
Trevor Gerszt, CEO of CoinIRA, doesn’t see Bitcoin Gold going very far. “It has a catchy name, but wij don’t see it gaining anywhere near the acceptance of Bitcoin,” he said.
The other, more dangerous fork ter the road
Wij don’t know how well Bitcoin Gold will fare and how much it’ll affect Bitcoin. But wij do know that a potentially far more significant event is happening on Nov. Eighteen.
Whoa – this jewelry store ter the petite Missouri town I grew up te updates this sign daily with the prices of gold, silver, and #bitcoin. pic.twitter.com/bjNqhgQgkQ
Around that date, the SegWit2x upgrade will be implemented, again splitting Bitcoin into two. The fresh version of Bitcoin should be safer and quicker, and basically everyone te the Bitcoin community wants to see this upgrade toebijten.
But there’s a big disagreement on when and exactly how it should toebijten. A group of Bitcoin-related companies that represent more than 83 procent of mining power has determined to split ter November, whereas the Bitcoin Core development team wants to wait until a utter overeenstemming is reached. There are also some disagreements on certain details ter the fresh software.
So come November, Bitcoin will fork into two, but it’s unclear how many miners will support the fresh version and how many will stick to the old one. Spil Bitcoin’s market cap increases, the politics surrounding the cryptocurrency are getting uglier. The November upgrade could lightly turn into a bloody battle for dominance overheen Bitcoin.
“Wij’ll have to see whether other miners go after F2Pool te rejecting the hard fork, spil their decision could sway some others. Wij’ll also have to see which side of the chain claims the Bitcoin name and BTC treat, since Segwit2x is supported by the majority of miners spil well spil major exchanges such spil Coinbase,” said Gerszt.
But whatever the squabbles inbetween miners, exchanges and developers may be, “end users will ultimately determine which direction things will head,” he said.
There’s also a petite chance that everything goes spil planned, which would be very good news for Bitcoin and would likely usher a period of stability. And even if it doesn’t, there could be some money ter it for those who play their cards right.
“The segwit2x fork again highlights the large divisions and incumbent interests te the community and (. ) lack of central control that can lead to back tracking and inaction,” Hayter said.
But, he explains, the price rise is likely an anticipation of a “dividend for users canny enough to work their private keys correctly to accrue the free split tokens whichever way the fork goes.”
The long term
Practically all the experts I’ve spoken to recently see short-term volatility te Bitcoin, but are optimistic long-term, and that’s despite Bitcoin’s latest troubles te China, Russia, and several other countries.
“For every country cracking down on cryptocurrencies there’s another one opening up to them,” said Gerszt. “The future of currency is digital. (. ) When you see that firms like Goldman Sachs are getting into the cryptocurrency spel, you know that Bitcoin, cryptocurrencies, and blockchain are here to stay,”
Even if that is so, the next two months will nevertheless will be very interesting. Spil always, those who believe te the long-term success of Bitcoin would very likely do best to simply do nothing with their bitcoins, those who do not should stay away, especially right now. And the plucky traders who project to take advantage of all this volatility will need all the luck they can get.
Disclosure: The author of this text wields, or has recently possessed, a number of cryptocurrencies, including BTC and ETH.