This week provided one of the best examples why cryptocurrency trading is still a wild roller coaster ride unsuitable for the timid. After the price of Bitcoin fell as low as below $1900 on Sunday, it has bounced back to as high as over $2900 in trading earlier today – an over than 50% jump in less than seven days.
The reason for both the crash and the rally is the ferocious debate among the Bitcoin community about implementing a blockchain feature called Segregated Witness (SegWit) which is meant to add more transactions capacity to the system.
When it seemed that a consensus on the way forward was out of reach many feared that users will choose to activate a soft fork on August 1st, essentially breaking the Bitcoin blockchain into two competing splinter cryptocurrencies. This obviously was not good for investors confidence, encouraged short sellers and hurt the price.
Now, that is threat has apparently been averted, positive investors are returning to the market. This consensus was reached as an overwhelming majority of bitcoin miners signaled their support for SegWit activation under BIP 91 (Bitcoin Improvement Proposal 91).
Congratulations bitcoin. Barring any shenanigans, Segwit will be activating soon. I’m going to have to upgrade it from appendix to chapter
— Andreas (@aantonop) July 21, 2017
The bitcoin community is obviously hailing this rare achievement of consensus among the different factions as an important milestone. However, caution is advised as one can never be truly certain how will things turn out with this wild ride.
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