NEW YORK/LONDON - Bitcoin hit a record high just shy of $8,000 on Wednesday after a coalition of developers and investors suspended a software upgrade planned for next Thursday that could have split the digital currency in two.
Bitcoin (virtual currency) coins placed on Dollar banknotes are seen in this illustration picture, November 6, 2017. REUTERS/Dado Ruvic/Illustration
In an email on Wednesday, the lead developer of the team planning to carry out the upgrade said “Segwit2x” would be scrapped for now as it could “divide the community.” The email by Mike Belshe, chief executive of blockchain security firm BitGo, was also signed by some of the biggest names in the bitcoin world.
SegWit2x is an agreement among high-profile figures in the bitcoin world aimed at upgrading the bitcoin network’s capacity. It received significant support when it was announced in May but many bitcoin developers had withdrawn support for the upgrade over the last few months, analysts said.
The software upgrade would have attempted to address the bitcoin network’s limitations in processing millions of daily transactions. The network has not kept pace with growth and is unable to process transactions fast enough.
The upgrade would have changed bitcoin’s rules leading to a so-called fork, effectively cloning the existing bitcoin to create another crypto-currency.
Segwit2x was supposed to be the second step in a broad two-step process to enhance transaction capacity. The first step occurred over the summer.
“Indefinitely postponing the fork is a healthy move for crypto assets,” said Guy Zyskind, CEO and co-founder of Enigma, a data-driven, crypto-investment platform.
“The ability of the bitcoin community to self-correct and avoid a contentious fork inspires confidence and shows how the ecosystem is entering a more mature phase,” he added.
Bitcoin surged to a record high of $7,888 on the Luxembourg-based Bitstamp exchange in the 20 minutes that followed the statement. It was last traded up 3 percent on the day at $7,354.10 BTC=BTSP.
“Our goal has always been a smooth upgrade for bitcoin,” BitGo’s Belshe said in his email. “Although we strongly believe in the need for a larger blocksize, there is something we believe is even more important: keeping the community together.”
Charlie Lee, creator of the Litecoin crypto-currency and a leading industry expert, said in a post on Twitter the bitcoin community may need to implement Segwit2x in the future anyway, but it should be done when there is consensus.
Despite Bitcoin being in existence since 2009, India saw very rapid user and adoption rates starting in 2012. India’s first Bitcoin company, BuySellBitco.in (later renamed ZebPay), was started in early 2013. Unocoin and Coinsecure, currently the top two exchanges in India, began operations in 2014. Unocoin is India’s most popular Bitcoin wallet and also owns a gateway that allows merchants to accept Bitcoin from customers.
The Indian government’s views on the status of Bitcoin are still being formalized, with a bias towards its legalisation and regulation:
- In March 2017 a committee including finance ministry officials, IT ministry officials, the National Institution for Transforming India and Reserve Bank of India (RBI) officials met to discuss cryptocurrency legalization.
- In July 2017 the committee’s findings urged the government to stop the use of cryptocurrencies in order to protect the population from frauds and money laundering.
- In August 2017, the Supreme Court of India (SCI) asked the central government to investigate thoroughly all security-related issues concerning Bitcoin.
- In September 2017 a Special Investigations Team (SIT) appointed by the SCI issued a report recommending curbs on Bitcoin trading.
The RBI considers Bitcoin not to be a viable alternative to fiat currency. However, according to various legal experts Bitcoin exists in a regulatory vacuum and is not considered illegal per seaccording to Indian law.
Interest in Bitcoin has skyrocketed in India especially since November 2016, when the country’s demonetisation process was implemented. This saw the phasing out of the country’s larger denomination banknotes of 500 and 1,000 rupees, in an effort to stamp out black market transactions and tax evasion. When the measures went into effect, 90% of the paper money in the economy disappeared. More and more Indians turned to Bitcoin as a way to safely store their savings and protect them from inflation and/or confiscation. The leading Bitcoin exchanges in India have seen increase of 250% in their user bases to date since demonetisation.
Bitcoin Use in India
Bitcoin can be purchased online in India with different wallets, including those provided by Unicorn, Bitxoxo, Zebpay and Coinbase. There are currently an estimated 1 millions users of Bitcoin in India, and the number is increasing by 2,500 daily.
Various online and physical merchants in India have begun accepting Bitcoin, including:
- Sapna Online – An online bookshop
- Fashiondiva – An online clothing and accessories merchant
- Travel smart – An online bus ticket booking portal
- Dharwad International School – An educational institution
- Tecdoc365- A utility software management firm
A total of 2,000 merchants in India are currently accepting Bitcoin, up from 500 in December 2016.
Bitcoin’s Price Trends
The Bitcoin price has been extremely volatile in the last year. After reaching new all-time highs of $5,000 in September 2017, the price corrected to the $3,000 level in the space of weeks before recovering:
The current price is however still up almost 500% over the last 12 months
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