A Bitcoin Civil War Has Been Avoided, at Least Temporarily
More than 80 percent of bitcoin miners have expressed support for BIP91, a protocol update that represents a compromise between what miners and developers want for the future of the cryptocurrency. If fully adopted, it could help Bitcoin avoid the “civil war” that many have been predicting.
This Way or That Way?
Like a season premiere of the popular HBO series Game of Thrones, the finance world is eyeing July 31 with both anticipation and slight trepidation.
An ongoing disagreement between miners and developers over the future of Bitcoin’s blockchain has had many Bitcoin analysts, investors, and enthusiasts fearing a potential split in the cryptocurrency at the end of this month. However, as a moderate solution seems more likely to be accepted, fears of a network hard fork are beginning to die down.
As previously reported, the Bitcoin crisis is the result of a clash of ideas for the future of the popular cryptocurrency and its blockchain’s transactional capacity. Miners wanted to increase Bitcoin’s block limit, while developers proposed moving data off the main blockchain network.
The more moderate solution, which was activated on July 22, is Bitcoin Improvement Proposal (BIP) 91. This protocol update prevents a hard fork from occurring by providing a compromise between what miners and developers want. Last week, more than 80 percent of bitcoin miners expressed support for BIP91, passing the threshold required for implementation.
This is definitely good news, but the potential for chaos hasn’t been entirely avoided. It’s only July 25, so five days remain before the required July 31 lock in. More than 51 percent of miners must begin using the BIP91 protocol by then for it to be fully adopted.
For now, though, it seems less and less likely that a hard fork is coming between July 31 and August 2. As if anticipating future smooth sailing, bitcoin’s value has risen to $2,729 as of this writing. That’s a $570 increase over last week’s value.
Still, some are quick to point out that this current period of peace could be temporary.
“Segwit2X locked-in on July 21st with +90% miner support so many people could now be tempted to assume that the scaling debate is over and Bitcoin is now good to scale to the masses,” Juan Manini-Rios, CEO of SHA256 Trading, wrote in a Medium post. “Unfortunately, that is not the case at all and a Bitcoin fork is still almost certain.”
For AQR Capital Management former managing director Aaron Brown, a currency split may not be that bad for Bitcoin. “It is the rule, not the exception, that currencies evaporate due to hyperinflation, government default or expropriation, or a losing a war,” he told MIT Tech Review. “People do not use them because they have faith in their long-term survival, but because they can facilitate transactions today.”
Disclosure: Several members of the Futurism team, including the editors of this piece, are personal investors in a number of cryptocurrency markets. Their personal investment perspectives have no impact on editorial content.