Bitcoin has had a turbulent few weeks. The prolonged debate between different factions of miners and developers resulted in the adoption of Bitcoin improvement proposal BIP 91 in late July. Now, Segregated Witness, known as BIP 141, is expected to lock in this week. Although Segregated Witness has been all but finalized since July 20, considering that BIP 91 required all miners to adopt the SegWit protocol or have their blocks rejected, the market has nonetheless reacted favorably. In fact, in the past few days, according to a report by Coin Telegraph, Bitcoin surged to its highest price point of all time, shattering its previous records, achieved earlier in the year.
Up to $3,430
Bitcoin reached a high of $3,430 per coin on Bitstamp and several other exchanges late in the weekend and early this week. The upward trend began on Saturday night, as the currency shattered its previous record and climbed past the $3,000 mark. This price point was seen as a major barrier for the digital currency, which had previously climbed that high before sitting in the $2,000s area for several weeks.
Could the price surge be due to growing realization across the market that the civil war which has plagued Bitcoin's proponents might be over? If the scheduled block size increase occurs in the coming weeks, the battle over how to continue to grow and scale Bitcoin is likely over. By locking in and activating SegWit, Bitcoin developers have ensured that the transaction throughput can increase across the entirety of the network. When the block size is later doubled in November, this will only mean further upward scaling for Bitcoin.
Other Benefits of SegWit
SegWit not only impacts the current transaction throughput rate and the scaling issue. It also closes up a loophole in Bitcoin network code which favored some miners over others and helps to clear the path for the Lightning Network, a new layer on top of the existing Bitcoin framework which would be optional for Bitcoin users. Lightning would allow transactions to occur off-chain, with the Bitcoin blockchain used only as a settlement service. This could significantly speed up transactions and aid in the development of privacy protections for Bitoinc users. In fact, Lightning Network may be able to process 100,000 transactions per second, according to some estimates.
With all of these significant developments in process or on the horizon, Bitcoin's price surge makes sense. As soon as BIP 91's adoption became imminent, the currency saw its price rise by nearly 50% over a matter of days. Now that the currency has continued to push higher, there may be signs of even further optimism about the future of Bitcoin.