As Bitcoin Faces Constitutional Crisis, the Exchange Value Tumbles

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As Bitcoin Faces Constitutional Crisis, the Exchange Value Tumbles
As Bitcoin Faces Constitutional Crisis, the Exchange Value Tumbles
As Bitcoin Faces Constitutional Crisis, the Exchange Value Tumbles

Looks like, the Bitcoin community is unable to reach to any conclusion unanimously on the decision to increase the block size. Currently, the Bitcoin network is running out of spare capacity; however, rather than reaching to any conclusion, the community has been divided into two camps; one that agrees with the expansion and the other disagree.

In the short period of six years it is perhaps for the first time that such a constitutional crisis has appeared in front of the Bitcoin community and if the two sides fail to reach a consensus, the Bitcoin network could slowly grind to a halt as the number of transactions exceeds the network’s capacity to process them.

Nonetheless, if there is no timely solution to fix this problem, it could split the Bitcoin network in two and permanently damage public trust in the network. A major issue is that who to trust for deciding to bestow the authority to make technical changes to the Bitcoin network’s foundations because it is going to be a big decision.

Changing the Block Limit is Un-Bitcoin Like

Those who oppose the idea to expand the block size claim that this will lead to centralization of the Bitcoin system. For instance, right now, Bitcoin transactions are processed in a parallel fashion by thousands of computers distributed around the internet. However, if it is done, a group will be able to manipulate it for the benefit.

Interestingly, as the volume of transactions has gone up, the number of computers participating in this transaction-processing task has gone down. It is feared that boosting the network’s capacity will make it more expensive to participate in the process, further reducing the number of computers that participate.

This in effect could make the system less reliable or more vulnerable to attempts by governments or others to seize control of the network.

Bitcoin Prices Fall by more Than 15%

The outcome of the debate and disagreement on Bitcoin’s price has been that it fell 15% in a period of just 30 minutes following a ‘flash crash’ on exchange Bitfinex yesterday night. Some exchanges are selling it as lower as $215. In the same period, the Bitfinex price sunk 29% to $179.35 that sent shock wave among the stakeholders.

Since, Bitfinex is the most liquid exchange in the world appalled many as it experienced the ‘flash crash’ following a large sell order said to be worth 10,000 BTC ($2.3m). The company tweeted that the selling that occurred during the dump were legitimate sell orders and positions being margin called. Lenders were not affected.

To contact the reporter of this story: Deepak Tiwari at deepak@forexminute.com