Bitcoin’s Long-Running Civil War End On The Sight

Bitcoins’ Long-Running Civil War End On The Sight

Cryptocurrencies tell no tales any more, they are real and they are here to stay. It has not been always like that, though, just a year ago, only a few specialist and market underdogs knew about these digital coins, and actually even less used them to make transactions or buy products, because cryptocurrencies are, after all, money. These first pioneers just wanted to gather as many Bitcoins as they could as they knew it was a product thought to be implemented in the near future. They foresaw what was about to happen, the cryptocurrencies boom.

Dissidents in the blockchain system

This growth doesn’t come alone, though, as problems start to emerge among the Bitcoin miners and keepers. The actual amount of Bitcoins transactions are way more than the miners can handle, make their work slower and more difficult. This decentralised money, based on a blockchain system, lacks a central bank who decides rates of change and how to organize the currency in the market. That means, then, there are no rules or guidelines to follow except the ones set by the users and creators themselves. Miners, who ‘dig’ Bitcoins are on their own and they cannot dig out more coins due to the system algorithm itself which just lets a certain amount of blocks to be digged at a time.

Aiming to tackle some of these issues, another company came to play, BitMEX, a bitcoin derivates venue settled in Hong Kong. This company goal is to try to help miners and, for that, relieve the workload miners are facing. But miners don’t follow -and neither want to follow- the advices BitMEX tries to implement. This has started a light civil war between two different points of view concerning how Bitcoins should be managed and ruled.

To address this problem, two main schools of thought emerged. On one side are miners, who deploy costly computers to verify transactions and act as the backbone of the blockchain. They’re proposing a straightforward increase to the block size limit. On the other is Core or SegWit2x, a group of developers instrumental in upholding bitcoin’s bug-proof software. They insist that to ease blockchain’s traffic jam, some of its data must be managed outside the main network. They claim that not only would it reduce congestion, but also allow other projects including smart contracts to be built on top of bitcoin.Miners, in this case, act as a closed union. Most of them who are based in China, have spent millions in expensive server farms and they see Bitcoins as their own. So it is not a surprise that they don’t take Core’s offer positively. Besides, Bitcoins were thought to be a free and anonymous cryptocurrency, so the more the capitalist companies step into the Bitcoins production, the more controlled and ruled it will eventually be.

Chinese Bitcoin Farm

Chinese Bitcoin Farm

Bitcoins’ solution

But the Bitcoins need a way out. The levels of transaction times and processing fees have soared to record levels this year, curtailing bitcoin’s ability to process payments with the same efficiency as services like Visa Inc. It is even losing gasp with rival cryptocurrency Ethereum, a newer cryptocurrency whose popularity has soared thanks to its ability to run smart contracts and its more corporate-friendly approach.

That is why last month, after a two years period of uncertainty and crossfire, miners gave up some of theirs aspirations, and joined SegWit2x proposal and declared that about 85 percent of miners declared they are willing to run the software once it’s released on July 2017, and some of bitcoin’s largest companies have also jumped on board. This means a short-mid term solution for jammed transactions until they figure out what to do with the limit-cap amount of bitcoins.

As that, it is time to check the exchange market to see how Bitcoins have grown in the last year. Although there are more cryptocurrencies like Litecoin or Ethereum, Bitcoins is taking the lead, by far. This digital money was exchanged 1 XBT at 377 GBP the first of August 2016. And in just one year, its exchange rate has grown more than six times now reaching 2,066 GBT per Bitcoin.

Growth of bitcoin in 1 year

There is no actual or past currency with these growth levels in the world, and this has never been seen before. But Bitcoins need to react quick before it starts losing the grip. This volatile currency needs faster answer to complex problems.

Thought leadership series on the collaborative economy, sharing economy and blockchain, powered by Humaniq.

Launched in 2016, Humaniq aims to provide mobile finance to the 2 billion unbanked population through its mobile app for good, that uses biometric authentication to replace traditional methods of ID and security. Humaniq’s open source stack and API will be available for startups and other businesses to build services on its core technology, making it easy to adapt their service and plug it into Humaniq’s network to reach a huge, untapped audience.