Last weekend, the price of Bitcoin, Ethereum, and other cryptocurrencies plummeted to historic lows before beginning to recover on Monday. The remainder of the week has been much more normal for the crypto space, with prices maintaining relative stability, so it seems a crisis has been averted.
Bitcoin in particular may have had something important to do with the major panic that occurred last weekend. Exchanges and individual investors all around the world are gearing up for August 1st, when a proposal that may split the cryptocurrency into two different factions could take effect.
In a report on the upcoming split and the so-called "Bitcoin War," Futurism suggests that this week's gains in the industry have been an "optimistic sign that the potential network hard fork may be avoided."
Increased Traffic and Need for Scaling Fuel Tension
The "Bitcoin War" consists of the prolonged and highly tense debates between different factions of the Bitcoin user base, many of whom disagree about how the network should be modified in order to continue to expand along with the increased demand for transactions in the blockchain realm. (See also: The Three Major Bitcoin Protocols Explained.)
Bitcoin has suffered as a result of not being able to accommodate all of the transactions that have been requested as the currency has grown more popular, leading to high transaction wait times and fees. Generally, miners want to increase the block-size limit of the coin, while developers have largely suggested that moving data away from the main blockchain network could help solve the problem.
The specific issue in question is called the Bitcoin Improvement Protocol (BIP) 91. If implemented, this would make the two competing updates and protocols, SegWit2x and BIP 148, compatible with one another, allowing for SegWit2x to adopt more easily, and preventing a split caused by BIP 148.
Recovery Signals Potential for Compromise
The implementation of BIP 91 would diminish the power that miners hold within the Bitcoin space, as it would remove data from the blockchain network. But the authors at Futurism believe that the two competing factions may be warming to a possible compromise that might involve the new protocol. They cite as evidence the fact that Bitcoin prices have recovered throughout the week, following what many assumed would be the longest and most difficult slump in the cryptocurrency's performance to date.
While BIP is still several days away from a final decision, it will only require 80% miner support, unlike BIP 148, which would have required 95% of miners to be on board in order to be implemented. As support for BIP 91 grows, the anticipated Bitcoin split (which would have taken place on or around August 1) could be averted for good.