Brace for Impact! Bitcoin Could CRASH on Aug 1, Warns Experts
What’s behind all the problems?
The internal dispute that has affected the cryptocurrency could affect the value of the coin and cause delay in transactions using the currency. This all depends on the experts who are responsible for maintaining the currency can settle for a balanced agreement before July 31st deadline in order to update the system software and improve network security and capacity.
Nevertheless, it is also possible that nothing could be affected, but with the recent drop in value, it seems unlikely. The software upgrade will affect miners who usually profit from verifying transactions of Bitcoin, and are not willing to take the change in the system. Miners are very important part of the Bitcoin system and split between them and companies could result in a big panic in the virtual currency marketplace.
Bitcoins are created by computer farms that “mine” them and verify other users transactions in the system by solving complex mathematical puzzles. Miners receive Bitcoin in exchange. It’s also possible to exchange Bitcoin for other currencies. But as the currency begins to gain widespread adoptions, payments are beginning to get more complex and so much delay during transactions has been common in recent times, this made a group of highly trained software engineers develops a system that basically re-engineered Bitcoin’s universal ledger, a file called the blockchain.
What then would happen on Aug 1?
Supporters of the new system said they’ve run out of patience and have set a deadline for the upgrade. At 8 p.m. Eastern time on July 31, they’re threatening to stop recognizing transactions confirmed by miners who haven’t adopted the upgrade. This meanwhile would create a great deal of uncertainty in the digital currency economy as nobody can know if their payment is really going through the right channel or not.
That would create enormous uncertainty in the Bitcoin economy, as no one could really know if the Bitcoin they’d just paid (or received) was actually moving through the system the way it’s supposed to. It could also bring rise to two different or incompatible versions of Bitcoin in the system.
That’s one reason the community-supported website Bitcoin.org warned users Wednesday not to accept any bitcoin up to two days prior to the deadline and to wait for confirmation the situation had been resolved before trading again.
“It’s an awful situation,” David Harding, who posted the warning for Bitcoin.org, said in an email.
With the recent problems, the currency is having governments and financial institutions are beginning to play the careful card on the currency. Recently: Albanian Central Bank Issues Bitcoin Warning, Appeals To Public to Be Mature.
What’s behind this fight?
Money, of course. Some companies that pool miners together believe the new system could result in lower transaction fees, cutting into their profits. At the same time, the reformers foresee new business opportunities in a faster, more reliable form of bitcoin.
Samson Mow, chief strategy officer at blockchain developer Blockstream, said the looming showdown has been propelled by bitcoin users frustrated at having a “simple bug fix” blocked by miners out for profit.
“People are fed up,” he said. “The users are taking back their voice.”