Bitcoin Soars As Much-Feared Network Split Appears To Be Avoided

Bitcoin and other virtual currencies have rallied this week as growing support for a controversial software update suggests that a long-feared network split might be averted, and the issue settled…at least for now.

“Traders are excited by the prospect of a resolution to the scaling debate, which is why the price has rallied,” Thomas Glucksmann, head of marketing at Hong Kong-based bitcoin exchange Gatecoin, told Bloomberg.

Indeed, bitcoin is up 10% in early trade Tuesday, building on Monday's 20% climb:

And Ethereum is surging...

The reason? Bitcoin miners weren't expected to start signaling for Segwit2x until July 21, but some are already moving to show support in advance of another round of software testing, according to CoinDesk. Support topped 45% of hashing power on Tuesday, including AntPool, BitClub, Bixin, BTC.com and BitFury.

However, many professional bitcoin traders believe more pain lies ahead, especially if support for SegWit2x doesn’t move toward the key threshold of 80% adoption – an accomplishment that would avert a network split – as we draw nearer to the Aug. 1 deadline, according to Bloomberg. The only way for bitcoin to avoid a network split is for SegWit support to reach this threshold by or on Aug. 1.

“Despite the progress with SegWit2x, some warned that bitcoin isn’t out of the woods yet. Many Core members still vehemently oppose the software, which they say hasn’t been properly vetted for bugs. Also, not all miners support SegWit2x, which they say is a flawed compromise that doesn’t solve the root scaling problem.

 

‘This price rally is a bounce, we are very bearish in the near term for a number of reasons,’ said Harry Yeh, managing partner at digital currency dealer Binary Financial, who cites the lack of support from Core developers as one of his biggest worries. ‘Anytime the price rockets up quickly, it will be followed by a strong correction which we are starting to see. We are definitely headed for some turbulent and volatile times in the short term.’”

One trader put it more bluntly: "Shit's getting real, no one is sure what happens after August 1st, so traders are taking profits, squaring positions into the scaling deadline." As Bloomberg explains, the scaling debate began more than two years ago, and has persisted despite several “make or break” deadlines as none of the constantly evolving scaling solutions have garnered a large enough share of support from the mining community to legitimately threaten a network split.

“Bitcoin’s community has been at bitter odds for more than two years about how to solve its scaling problem, which has hampered the cryptocurrency’s growth and allowed rivals like ethereum to steal some of the spotlight. The new software, known as SegWit2x, is seen as a compromise for the two sides of the debate: miners who act as the backbone of the blockchain, and developers known as Core who uphold bitcoin’s bug-free software. While both sides have incentives to reach a consensus, bitcoin’s lack of central authority has made reaching agreement difficult.”

Worries about a network split have even started to rattle national regulators and trade groups. After holding discussions over the possible currency split, the Japan Cryptocurrency Business Association says member exchanges will suspend trading of bitcoin beginning Aug. 1, according to a Bloomberg headline.

A growing number of central banks have warned citizens about the inherent riskiness of investing in unregulated markets like bitcoin and its peers, with the Central Bank of Albania the latest to denounce the cryptocurrency market.

“We appeal to the Albanian public to be mature and responsible in the administration of savings or liquidity they possess. One should orient investments toward financial products and instruments offered by institutions licensed and supervised by the Bank of Albania and the Financial Supervisory Authority.”

Of course, there is an obvious solution here, though it may not be as easy to implement as it sounds: Global regulators could, working with the BIS or some other transnational institution, develop a global regulatory framework, assuaging some of the concerns raised by the SEC in its decisions to reject two proposed bitcoin ETFs. Such a framework might open the door to more officially sanctioned investment products, opening the door to investors who’d like to include bitcoin exposure in their retirement accounts.

Comments

Looney Tue, 07/18/2017 - 09:48 Permalink

  … Much-Feared Network Split Appears To Be Avoided Much-Feared Network Split Appears To Be Postponed. There, fixed it for ya!  ;-) Looney

Unreliable Narrator stitch-rock Tue, 07/18/2017 - 10:12 Permalink

OT, but pass it around.  Elizabeth Beck is one of the main attorneys in the DNC lawsuit (for defrauding donors who supported Bernie).  I don't know what to make of it yet.  The whole interview is weird (watch her eyes and movements - almost like there's someone else there).  She ends up breaking down at about the 9:50 mark.https://www.youtube.com/watch?v=1bmMl2OGVQ0

In reply to by stitch-rock

38BWD22 losses mount Tue, 07/18/2017 - 11:03 Permalink

  providentmetals.com takes Bitcoin for gold and other PMs.  When paying with BTC, they send you to BitPay, who converts BTC to cash for Provident.  That's probably why Provident's BTC price is about 1% higher than check or wire transfer price.A 15 minute delay is probably normal for the conversion, so it's unlikely Provident would suffer any big losses should BTC move down sharply.

In reply to by losses mount

Kafir Goyim 38BWD22 Tue, 07/18/2017 - 12:01 Permalink

JMBullion accepts bitcoin.  They have a credit card price and a cash price for their bullion.  The cash price is lower.  If you pay in bitcoin, you get the cash price.  No markup, bitcoin is as good as cash, but no wire transfer fees.EDIT: Damn, they changed it.  Bitcoin is still cheaper then credit card, but more expensive than cash.https://www.jmbullion.com/2017-1-oz-american-gold-eagle/

In reply to by 38BWD22

stacking12321 Kafir Goyim Tue, 07/18/2017 - 12:19 Permalink

looks like MDB is writing for the central bank of albania now:

“We appeal to the Albanian public to be mature and responsible in the administration of savings or liquidity they possess. One should orient investments toward financial products and instruments offered by institutions licensed and supervised by the Bank of Albania and the Financial Supervisory Authority.”

good job MDB, we knew you'd make it to the big leagues one day!

In reply to by Kafir Goyim

Justin Case losses mount Tue, 07/18/2017 - 11:42 Permalink

For gold, the known commodity with a track record of thousands of years, these types of considerations do not apply. Gold certainly has its own problems, specifically in the manipulation of the spot price. But for precisely that reason, seeing the price collapse to zero or shoot into the tens of thousands of dollars in the blink of an eye seems exceedingly unlikely.So once again, it comes back to the basic philosophy behind the question of "value." Are you interested in the value of gold and bitcoin as measured in US Federal Reserve notes? Are they just another commodity to be used to turnaround a quick buck? If so, then by all means, study the charts, look for the patterns, find your opportunities and enjoy the game.But what if the "value" of gold or bitcoin is not measured in government fiat, but in their own potential as monetary instruments? After all, the US dollar will not outlast the US government (in its current form, at any rate), but gold will and bitcoin might. And if these instruments are not investments but hedges, that changes the meaning of their "value," doesn't it?

In reply to by losses mount

Omni Consumer … Justin Case Tue, 07/18/2017 - 17:58 Permalink

Bitcoin is very interesting as a medium of exchange. Bitcoin is not particularly useful as a potential store of value.Gold has the opposite characteristics. It's pretty great as a store of value; it's frankly unusable today as a medium of exchange in standard 1 oz coin form.In any case, human beings are going to have to evolve past debt-based fiat currency if we want to get anywhere.

In reply to by Justin Case

Justin Case tmosley Tue, 07/18/2017 - 11:47 Permalink

The trouble is that this sort of bitcoin hoarding leaves many questioning the future of the currency. If economic incentives encourage people to hoard their bitcoins rather than spend them, the thinking goes, the currency will never fulfill the extravagant promises laid down by the biggest believers, who say it will streamline monetary transactions, free the world from the financial manipulation of big government and big banks, breakdown the financial walls between nations, and, well, remake the worldwide economy.

In reply to by tmosley

tmosley Justin Case Tue, 07/18/2017 - 12:00 Permalink

Money is supposed to be hoarded.Just because a society has a high savings rate doesn't mean its economy shuts down. Just the opposite. Savings fuels REAL growth. Even if those savings aren't loaned out, the act of squirreling money away increases the purchasing power of the units that remain in circulation, making it easier for those so inclined to carry out capital investment.Those promising growth from increased spending are charlatans of the worst sort.

In reply to by Justin Case

Raffie tmosley Tue, 07/18/2017 - 12:18 Permalink

Can poor people truly hoard wealth? LOL...;)The haters love to compare cryptos to the USD, PM and stawk mockets. Some data can be used to see where cryptos are going, but not a lot because cryptos are decentralized, not leveraged, no ETF's or anything like fore mentioned has. Also the cryptos just showed up on the radar just a couple years ago, but the radar blip is getting bigger and bigger with each day.Cryptos are uncharted waters for sure and another big factor is there is not a lot of each one compared to like how many USD, Yuan and such are in the world.Everything is compared to the USD right now, while it is the reserve currency it is highly inaccurate. How will the cryptos look when the Yuan knocks the USD out of the light?Just feel to many people are not taking into account many factors in the cryptos. How much hard data can we use on BTC when the coin only came into existence in 2009 or Ethereum which was July 2015? Then again maybe its just me.  

In reply to by tmosley

Herd Redirecti… tmosley Tue, 07/18/2017 - 12:23 Permalink

Is that why it is called 'currency', which effectively makes it a flow analogy?I think its a spectrum, there are benefits to some level of 'currency' hoarding, but our society as it is has gone way over the top, with a handful of billionaires (and *ahem* trillionaires) controlling over 50% of the world's wealth.  More than they could spend, or invest, in a lifetime.

In reply to by tmosley

CJgipper Herd Redirecti… Tue, 07/18/2017 - 15:54 Permalink

The real problem is the speed of money in the economy.  That measure has been near zero since 2008 and isn't getting any better.   Simply put - work doesn't pay.  When it pays, who holds how much is irrelevant because you can just go 'make' some money.  When it doesn't pay (relative to the price of everything), then the speed of money through the economy collapses and you have the malaise we're not expereiencing.

In reply to by Herd Redirecti…

2rigged2fail tmosley Tue, 07/18/2017 - 12:41 Permalink

Bitcoin is just one applocation on the new technology of blockchain.   This has the ability to displace FB, Youtube and others.  When people thought in 1992 email was the internet they are making the same mistake with Bitcoin / blockchain.  Then linked documents came together a few years later to show truly what the web was. I hold BTC and gold ifgure better to diversify 

In reply to by tmosley

ejmoosa ejmoosa Tue, 07/18/2017 - 13:48 Permalink

When I first heard about Bitcoin it was touted as being "decentralized".  And now we see that it is not really decentralized, but requires that parties agree on its future(programming) to continue.And just like the Central Banks, we do not elect these parties nor can we eliminate these parties.  They shall decide what is best for the future of Bitcoin without our input.Funny, but I never read that could be an issue with my physical gold and silver.

In reply to by ejmoosa

PTR ejmoosa Tue, 07/18/2017 - 14:29 Permalink

There's plenty of others out there ---> https://coinmarketcap.com/ Personally, I see some of the other coins like Litecoin, Peercoin, Dash and Bytecoin, for example, being used to buy the cup of coffee since the prices are lower and there's a lot more of them out there than 21 million (minus all the BTC that's disappeared on hardware lost over the years.) If the price of bitcoin ever goes to 5 digits, it would server better for large-transaction applications like companies settling contracts and such.

In reply to by ejmoosa

Lewshine 38BWD22 Tue, 07/18/2017 - 12:39 Permalink

Ya know, I find it amazing how so many well informed ZH'ers can sound so frickin naive! Is Bitcoin a stock that can influence the masses to believe the economy is roaring along? Idiots! NO ASSET outside of the financial instruments used to propel the status quo will be allowed to pose a threat to day to day operations of the Central Banks. Let me explain what that means to the ignorant and naive - Precious metals, electronic currencies, Govt.Bonds and most commodities and their PRICE ACTION & DISCOVERIES will be highly collared and controlled (manipulated), in order to protect the more important influence of the Central Bank(s) objective. Here's the trade you friggin tourist - Short Bitcoin on this move! Watch!!

In reply to by 38BWD22