Bitcoin has been on a roll throughout the first quarter of 2017. Things have been going so well that the failed ETF by the Winklevoss Twins only slowed Bitcoin price down for a few hours, after months of speculation. However, a major storm is brewing that may fracture Bitcoin permanently in 2017.
Backlogs of Bitcoin transactions have taken off in 2017, increases in the mempool number and size are growing, and the costs of running a Bitcoin transaction are the highest they’ve ever been. Many investors, led by “Bitcoin Jesus” Roger Ver, are fed up with these issues and are not seeing the network operating as intended, according to Ver. (A debate between Ver and Tone Vays, an advocate of SegWit implementation, on this protocol issue can be seen here.)
This malcontent is not just via Roger Ver. It appears to go much deeper than that as the largest mining pool by volume, Antpool, has decided to fully support Bitcoin Unlimited. They control about 15% of the market.
“We will switch our entire pool to Bitcoin Unlimited,” Wu Jihan, founder of the world’s largest mining organization, Antpool. “We can’t tell how the hard fork will play out. We will only know by the time we get there.”
Segregated Witness, the panacea that is designed to make the Bitcoin blockchain an estimated 70% more efficient, so more transactions can be processed per block, is not anywhere near being adopted. SegWit needs 95% miner adoption rate and it has remained at only 25-27% since the first week of December. It might be time to admit that SegWit is not coming directly to Bitcoin any time soon, if ever.
Meanwhile, the mining blocks that are signaling for Bitcoin Unlimited (BU) support is proving to be much closer to reaching critical mass. Just within the last five weeks, 35% of the network has shown support for Bitcoin Unlimited, and Roger Ver said to Bloomberg that BU is about halfway to the level it needs to force BU to activate in the network. He says a 60-70% adoption rate would do the trick.
In opposition is Peter Todd, developer closely affiliated with Bitcoin Core, who sees the demand for large-scale blocks an issue that, if exercised, would leave Bitcoin open for more centralization by larger miners, plus attacks by governments and large banks. He says to make the system more efficient and grow it slowly. Tone Vays has said the blocks are not going out full, at closer to 800-850 MB, so why scale the block size if the blocks aren’t being mined at full capacity?
Given the divergent interests, and the growing value of the network, and the rising costs of transactions and the growing size of the mempool, something does have to give. Last year, many meetings were held regarding “Scaling Bitcoin,” however no real agreements or plan seems to have been forged between the top miners and the leading investors and developers.
The matter of "reaching consensus," on any major Bitcoin scaling issue, seems to be getting further and further away from feasibility, and this is looking like a fork is becoming a foregone conclusion. It might be wise to diversify your digital currency portfolio, given the gains all currencies are making. Putting all your eggs in the Bitcoin basket may not be the best move, in the short term. Hopefully, cooler heads will prevail.
Hi! I am a robot. I just upvoted you! I found similar content that readers might be interested in:
https://bitconnect.co/bitcoin-news/478/bitcoin-hard-fork-fears-grow-will-btc-turn-into-eth-or-etc/
Also DASH could be the next Bitcoin. I agree about diversifying the eggs into several baskets. One of mine is DASH. It's difficult to play the following months, because nobody can predict what's going on with the scalability problem.
The short answer is yes, they will eventually split, and Bitcoin will lose it's value, good news for altcoins.