Bitcoin backers celebrated as the community embraced a new mechanism to improve usage and allow it to scale, boosting confidence in\u00a0the virtual currency and sending prices back near record highs.<\/p>\n
The community, which had been split on how best to make the cryptocurrency more manageable, rallied behind a code upgrade known as SegWit2x, which aims to increase the network\u2019s transaction capacity. That fueled a rally on Thursday in bitcoin\u2019s price against the dollar, which had plummeted from a peak in June as concerns grew about its future.<\/p>\n
\u201cWe\u2019re thrilled to get past this impasse,\u201d said Andrew Lee, head of bitcoin-shopping startup purse.io, whose team celebrated with beers at their San Francisco office. The development opens \u201cthe doors to much-awaited innovations,\u201d he said.<\/p>\n
Bitcoin enthusiasts\u00a0in New York and San Francisco, to Hong Kong and Tokyo, gathered in bars and offices to hold impromptu parties, while others took to Twitter and social media to cheer the move, as well as the price rally.<\/p>\n
The impasse arose from a limit placed on the size of blocks underpinning the network in bitcoin\u2019s early days, in order to prevent hacker attacks. As the virtual currency grew in popularity over the past nine years, transaction times and processing fees soared, curtailing the community\u2019s ability to process payments with the same efficiency as services like Visa Inc. Miners and developers were locked in a heated debate for years on how best to upgrade the software, culminating in the recent clash.<\/p>\n
More than 93 percent of miners who function as the backbone of the digital tokens network locked in support for BIP91, the first necessary step in implementing SegWit2x, according to Coin Dance, a website tracking adoption. Bitcoin\u2019s miners are independent groups that verify and process bitcoin\u2019s transactions by solving complex computational problems, in order to be rewarded by\u00a0fees and creation of the digital currency.<\/p>\n
SegWit2x is essentially a compromise between two main competing camps. One proposed a direct approach, seeking to increase the block size. The other, a group of developers known collectively as Core, pushed for a long-term solution by moving some data outside of the main network, a scheme called SegWit that had been resisted by miners because it also could diminish their influence. In the end, the miners agreed to adopt SegWit, but also increase the block size to 2 megabytes.<\/p>\n
The upgrade isn\u2019t final. The BIP91\u00a0lock-in has a grace period of about two days, during which miners will prepare to activate the software. It will then take about two weeks for SegWit to be fully adopted. Developers still warn about potential hacker attacks that could disrupt the process.<\/p>\n
Then, three months from now, the community will face another challenge when some of the world\u2019s biggest miners move to adopt the second phase of the proposal, the doubling of the blocksize. Still, many in the community agrees that the hard part is over, with prices seen stabilizing and strengthening.<\/p>\n
\u201cWe do believe it will continue, now that we\u2019ve gotten over this hump,\u201d said\u00a0Ryan Rabaglia, head trader at digital-trading company Octagon Strategy in Hong Kong.<\/p>\n
<\/p>\n