Bitcoin soars to record peak after plan for upgrade which would split the currency is shelved
Bitcoin hit a record high just shy of US$8,000 on Wednesday after a coalition of developers and investors suspended a software upgrade planned for next week that could have split the digital currency in two.
In an email on Wednesday, the lead developer of the team planning to carry out the upgrade said “Segwit2x” would be scrapped for now as it could “divide the community.” The email by Mike Belshe, chief executive of blockchain security firm BitGo, was also signed by some of the biggest names in the bitcoin world.
SegWit2x is an agreement among high-profile figures in the bitcoin world aimed at upgrading the bitcoin network’s capacity. It received significant support when it was announced in May but many bitcoin developers had withdrawn support for the upgrade over the last few months, analysts said.
The software upgrade would have attempted to address the bitcoin network’s limitations in processing millions of daily transactions. The network has not kept pace with growth and is unable to process transactions fast enough.
The upgrade would have changed bitcoin’s rules leading to a so-called fork, effectively cloning the existing bitcoin to create another cryptocurrency.
Segwit2x was supposed to be the second step in a broad two-step process to enhance transaction capacity. The first step occurred over the summer.
“Indefinitely postponing the fork is a healthy move for crypto assets,” said Guy Zyskind, CEO and co-founder of Enigma, a data-driven, crypto-investment platform.
“The ability of the bitcoin community to self-correct and avoid a contentious fork inspires confidence and shows how the ecosystem is entering a more mature phase,” he added.
Bitcoin surged to a record high of US$7,888 on the Luxembourg-based Bitstamp exchange in the 20 minutes that followed the statement. It was last traded up 3 per cent on the day at US$7,354.10.
“Our goal has always been a smooth upgrade for bitcoin,” BitGo’s Belshe said in his email. “Although we strongly believe in the need for a larger blocksize, there is something we believe is even more important: keeping the community together.”
Charlie Lee, creator of the Litecoin cryptocurrency and a leading industry expert, said in a post on Twitter the bitcoin community may need to implement Segwit2x in the future anyway, but it should be done when there is consensus.