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article imageBitcoin starts to recover from 'civil war' fears

By James Walker     Jul 20, 2017 in Technology
Bitcoin appears to be recovering as fears that the cryptocurrency could split in a community dispute described as a "civil war" start to lift. The currency is continuing to experience sharp swings as miners switch to using new blockchain software.
The so-called civil war is related to Bitcoin's long-running issue with trading delays. The popularity of the currency has left exchanges unable to cope with the volume of transactions being made. Backlogs leaving users waiting for days have been experienced during the busiest periods this year.
Realising this isn't sustainable if Bitcoin's to become a widespread currency, the community has been searching for a solution. The problem is that there are two ways to resolve the problem and the community is divided over which one is best.
The trading delays are being caused by a limitation in Bitcoin's blockchain technology. The blockchain keeps a history of every transaction made using the currency. It can only have 1MB of data added to it every ten minutes though, causing backlogs to accumulate when there's a busy trading period. This restriction was designed to mitigate the impact of DDoS attacks against Bitcoin in the cryptocurrency's early days.
Some community miners want the 1MB limit to be lifted entirely. This would allow for quicker transaction processing and in turn lower fees. It would also reopen the door to renewed cyberattacks against Bitcoin transactions, a risk other members don't want to take.
Furthermore, there are concerns the limit could be dynamically adjusted, leading to the creation of a kind of central bank. This runs against the decentralised principles of Bitcoin.
An alternative solution being pushed by some miners involves using software to distribute the Bitcoin transaction history separately to the core blockchain. The SegWit2x program allows transactions to be sped up to double their current rate. However, critics believe this adds complexity and won't be sustainable in the long term. Eventually, the doubled rate could prove to be as restrictive as the current 1MB cap.
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At times this year, the dispute has threatened to see Bitcoin split into two. This week, there has been some relief as SegWit2x has started to see use among miners. For the first time, a significant number of users have been mining with the program enabled. On Monday, 55 percent of all mined Bitcoins came from SegWit2x-enabled pools.
The software needs to be adopted by over 80 percent of miners before it can comfortably claim to have the community's backing. Several major mining groups are already switching over though, suggesting a solution is in sight. The switch needs to be complete by August 1, the deadline for implementing the proposed "Bitcoin Improvement Protocol."
This week, Bitcoin has rallied to above $2,400, up from a low of $1,863 over the weekend but still a long way from its $3,000 record high last month. The swings are expected to continue until August 1 but should start to level out if SegWit2x achieves full adoption. The cryptocurrency will also be more appealing to outside investors if transactions can be processed more quickly, potentially creating a healthier market overall.
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