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Bitcoin averts split as miners back new software upgrade

Support for Bitcoin Improvement Proposal 91 reaches nearly 100%

Gertrude Chavez-Dreyfuss | Reuters  |  New York 

Bitcoin

Digital currency averted a split into two currencies after its network supported an upgrade to its that would enhance its ability to process an increasing number of transactions.

Bitcoin’s have signalled their support for the so-called Improvement Proposal (BIP) 91, avoiding a split of into two blockchains. 

The represent a network of computer operators who secure the blockchain or a public ledger of all transactions

BIP 91 is the first step toward a larger effort to upgrade through a called SegWit2x. On Friday, the support for BIP 91 reached nearly 100 per cent, exceeding the required threshold of 80 per cent, according to analysts and market participants.

Some investors have warmed to bitcoin, wooed by its explosive performance and potential to compete with gold and government-issued money as a means to store value. Demand for has grown in eight years to a market capitalisation of more than $40 billion.

But fears about the split dampened demand for in recent weeks. After hitting record high near $3,000, dropped as low $1,830 BTC=BTSP on the Bitstamp platform. On Friday, it traded at $2,647.

The upgrade attempts to address the network’s limitations in processing millions of daily transactions. Bitcoin’s network has not kept pace with its growth and is unable to process all the transactions fast enough.

“BIP 91 unleashes the next wave of innovation because it has been a little bit stagnant of late for bitcoin,” said Rob Viglione, co-founder of ZenCash, a digital coin focused on privacy and security.

Before BIP 91’s endorsement, some investors feared it could split into two independent currencies because core developers of the network and the each wanted different ways to increase bitcoin’s scale.

A compromise between the two groups has been reached through SegWit2x.

now has a clear run to add features that allow for faster transactions with lower costs,” said Charles Hayter, chief executive officer of digital currency analytics firm Cryptocompare.

The upgrade to bitcoin’s network will not occur until autumn, said Viglione, because several things need to happen before the new is activated.

Market participants have complained about the delay in transactions. Analysts say a single transaction costs on average 83 US cents to execute, which means micropayments are not feasible on the network.

The network is also limited to roughly seven transactions per second. 

In comparison, Visa on average handles 2,000 transactions per second.

First Published: Sun, July 23 2017. 00:37 IST
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