Bitcoin`s price has been quite volatile recently, jumping from around $4,500 to $3,500 and then back to $4,200. This may be attributed to the Bitcoin
Bitcoin`s price has been quite volatile recently, jumping from around $4,500 to $3,500 and then back to $4,200. This may be attributed to the Bitcoin fork and the newly created Bitcoin Cash.
The power struggle in the Bitcoin community has reportedly erased billlions of dollars off Bitcoin, and it`s about to get worse, as Mashable (mashable.com) reported last week. But why is it happening?
Bitcoin Cash was created on August 1 and is the third largest cryptocurrency with a market cap of more $11 billion, and a price that has recently tripled from around $300 to $900 before falling to around $660.
Both Bitcoin (BTC) and Bitcoin Cash (BCH) protocols use the so-called difficulty adjustment. The latter ensures that miners mine an optimal number of bitcoins in a given amount of time.
“When there’s too much mining power, difficulty goes up to make sure new bitcoins don’t flood the market too fast.”, reads an excerpt from Mashable`s article.
“But when the mining power is lacking, difficulty goes down, and it went down sharply for Bitcoin Cash. Suddenly, a computer that could mine one BCH (Bitcoin Cash) per day could mine several times as many, making a lot more profit. And since Bitcoin and Bitcoin Cash are very similar, it’s easy for miners to jump ship—and a lot of them did.”, as the publication added.
The Bitcoin Struggle continues
There is a new proposal SegWit2x suggesting that Bitcoin should once again fork (split into two). However, it was rejected by Bitcoin`s core development team, as Mashable wrote in their report.
“Ideally (at least for SegWit2x proponents) after the fork, pretty much everyone should switch to the new version of Bitcoin, leaving the old one to die. But there’s always a possibility that some group will decide to upgrade the legacy chain in a different way and push that version as the “true” Bitcoin. If such a plan gains traction, miners will have three different “Bitcoins” to choose from, and that could cause chaos.”, as Mashable commented in their report.
In other words, Bitcoin`s politics remains quite chaotic, especially in light of the recent split within the community. It is to be seen whether the Bitcoin power struggle will threaten Bitcoin holders` finances.