Friday 23 February 2018

Data boost pushes Bitcoin through $4,000 barrier

Bitcoin
Bitcoin

Justina Lee and Yuji Nakamura

Bitcoin soared past $4,000 for the first time on growing optimism faster transaction times will hasten the spread of the cryptocurrency.

The largest digital tender jumped to a peak of $4,216 on Monday, a gain of nearly 18pc since Friday, after a plan to quicken trade execution by moving some data off the main network was activated last week. The solution - SegWit2x - had been so contentious that a new version of the asset called Bitcoin Cash was spun off earlier this month in opposition.

The split grew out of the tension between growing demand for the virtual currency and some of the design features that had fuelled that popularity - the decentralised verification procedures that ensured against hacking and government oversight. While this month's confrontation ended up as little more than a speed bump in bitcoin's more than 300pc rally in 2017, concerns remain around the capacity to increase transaction volumes.

"Up until now a lot of people didn't really believe bitcoin could go any higher until the scaling issue is resolved," said Arthur Hayes, Hong Kong-based founder of bitcoin exchange BitMEX. "With this actually being implemented on protocol, theoretically the amount of transactions that can be processed at a reasonable speed is going to be much higher, so a lot of people are very bullish about bitcoin now."

Because of a cap on the amount of data processed by bitcoin's blockchain, transactions started to slow as its popularity boomed. The community was then divided between the SegWit2x solution backed by a group of developers and another supported by miners that sought a larger increase in the block size. The latter became Bitcoin Cash whose price has retreated, since peaking after its birth. The cryptocurrency's staggering price surge has bolstered related businesses.

Digital currency exchange Coinbase has received a $100m investment. (Bloomberg)

Irish Independent

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