Over $13 billion USD has been wiped off cryptocurrency market cap as Bitcoin faces a volatile present and an uncertain future.
Seismic eruptions continue in the cryptocurrency market this morning as the global market cap has shrunk by some $13 billion USD in the wake of debate surrounding the future of Bitcoin.
CoinMarketCap reveals that while Bitcoin ironically has been the least affected cryptocurrency – suffering a 9% decline in twenty-four hours – the likes of Ethereum has slid by some 21% while Ripple, Litecoin, and Ethereum Classic have shrunk by 24%, 11%, and 18% respectively at the time of writing.
Commentators have claimed that the volatility seen in the cryptocurrency market is attributable to the ongoing debate between differing proponents of Bitcoin.
The debate arises over the adoption of Segregated Witness (SegWit) – a technology that would enable many features including – perhaps most importantly – an increase of the blockchain size limit from 1MB to 2MB.
By its nature, Bitcoin caps the amount of information on its network to place limits on how many transactions it can process. Given the soaring popularity of the cryptocurrency, transaction times have taken record lengths – meaning that Bitcoin is unable to process payments as quickly as other services.
One faction at play are bitcoin miners who advocate for a simple increase in block size limit. Considering that miners buy costly equipment to verify transactions on the blockchain, this decision would retain their influence on the cryptocurrency.
Another faction identifies itself as Core, who advocate that increasing the size of Bitcoin will have numerous affects – among them, a negative impact on the security of the platform. Core proposes that in an effort to alleviate the congestion that takes place when payments are processed, that some of the blockchain’s data must be managed outside of its network.
The end emphasis of this would mean that, by moving data outside of the blockchain, Bitcoin miners would loose influence over the cryptocurrency – a financial disaster considering the millions some have spent in building server farms.
In a compromise, some miners have agreed to support SegWit should the block size be increased in a new proposal dubbed SegWit2x. According to reports, some 85% of miners have indicated their readiness to adopt the proposal on July 21st.
However, some Core hard-liners have put forward a plan for a User Activated Soft-Fork (UASF); meaning that it would reject transactions not complaint with the original SegWit proposal, wherein two versions of Bitcoin would come into existence.
The uncertainty surrounding Bitcoin at present will likely continue into the weeks to come; SegWit2x will release on July 21st, and between that date and July 31st pundits will evaluate whether more than 80% of Bitcoin miners deploy the software. In the event that occurs, the move would signify a community-wide adoption of SegWit and the avoidance of a fork.
However, should that consensus not be reached, the UASF will be deployed by its supporters, meaning that two versions of the cryptocurrency will exist – one where only SegWit transactions are recognised, and the other where all trades are recognised.
In essence, if a split should occur, Bitcoin will likely exist in both blockchains in parallel – leaving traders to re-evaluate the price of both and causing more volatility in the cryptocurrency market.
Dedicated investors should likely hold onto their wallets in the coming months as panic may set some anxious investors seeking shelter. On the subject, Edward Cunningham of Bitcoin Powpow advocated that “We have all known that July was going to be a bumpy month due to the BTC possible split drama which only adds to the ICO’s dumping for liquidity – let’s hope beginning August the trend changes and heads North. In the meantime, hold as best you can.”
What are your thoughts? What do you feel are the cryptocurrency market’s prospects going forward? Be sure to let us know your opinion in the comments below!