Bitcoin’s price has always been volatile, but its 29 percent down-and-mostly-back-up over the last few days was a doozy even for it. For those trying to follow along, there was no shortage of bitcoin jargon to wade through — forks, bitcoin cash, Segwit2x and transaction blocks among them.
The big picture is this: The turmoil is what happens when a community designed so no one person or group is in charge tries to sort through the vexing technical and commercial problems created by the pioneering digital currency’s success. This may be a minor bump in the road before factions with diverging interests and ideologies come back together. Or it may be a sign that bitcoin’s future is likely to be fractured.
What’s going on?
Like most other pieces of software, the bitcoin network needs periodic upgrades to add new capabilities. Bottlenecks in processing bitcoin transactions have been rising, making the currency uneconomical for some small transactions. But unlike other pieces of software, it requires a consensus of users — specifically, miners, whose computers run its software — to move to a new version. Over the last few months the bitcoin network has already split — or, in industry parlance, forked — twice, into three different versions still running today.