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Bitcoin soared past $4,000 for the first time on growing optimism faster transaction times will hasten the spread of the cryptocurrency.<\/p>\n
The largest digital tender jumped to a peak of $4,125.17 on Monday, a gain of 15 percent since Friday, after a plan to quicken trade execution by moving some data off the main network was activated last week. The solution – termed SegWit2x – had been so contentious that a new version of the asset called Bitcoin Cash was spun off earlier this month in opposition.<\/p>\n
The split grew out of the tension between growing demand for the virtual currency and some of the design features that had fueled that popularity – the decentralized verification procedures that ensured against hacking and government oversight. While this month\u2019s confrontation ended up as little more than a speed bump in bitcoin\u2019s more than 300% rally in 2017, concerns remain around the capacity to increase transaction volumes.<\/p>\n
\u201cUp until now a lot of people didn\u2019t really believe bitcoin could go any higher until the scaling issue is resolved,\u201d said Arthur Hayes, Hong Kong-based founder of bitcoin exchange BitMEX.<\/p>\n
\u201cWith this actually being implemented on protocol, theoretically the amount of transactions that can be processed at a reasonable speed is going to be much higher, so a lot of people are very bullish about bitcoin now.\u201d<\/p>\n
Because of a cap on the amount of data processed by bitcoin\u2019s blockchain, transactions started to slow as its popularity boomed.<\/p>\n
The community was then divided between the SegWit2x solution backed by a group of developers and another supported by miners that sought a larger increase in the block size. The latter then became Bitcoin Cash.<\/p>\n
Bitcoin Cash, whose price has retreated since peaking right after its birth, has neither disrupted its progenitor\u2019s operations nor undercut its appeal.<\/p>\n
While SegWit2x has garnered enough support for activation, challenges remain. Its next stage involves doubling the block size to 2 megabytes some time in November, a possibility that\u2019s still mired in debate.<\/p>\n
Reduced support could thwart this step, with some arguing that Bitcoin Cash – with a block size of 8 megabytes – has obviated the need for another \u201chard fork\u201d to upgrade the bitcoin again, Hayes said.<\/p>\n
The cryptocurrency\u2019s staggering price surge has bolstered related businesses. Digital currency exchange Coinbase announced Thursday it\u2019s received a $100 million investment.<\/p>\n
The supply of bitcoin is capped at 21 million, compared with 16.5 million that had been mined as of Saturday, according to blockchain.info.<\/p>\n
\u201cPeople are starting to price in the consumer demand from Coinbase\u2019s $100 million fund-raising round,\u201d said Justin Short, London-based founder of trading platform Nous.<\/p>\n
\u201cThat\u2019s a lot of advertising budget. Every $1 million of marketing brings new demand, which increases the price as the supply is limited by design.\u201d<\/p>\n