Bitcoin Improvement Proposal 91 (BIP 91) has locked in and the current Bitcoin crisis has resolved.
With this news, the cryptocurrency market quickly began to recover as many people who own the coin once again imagine themselves as a bitcoin millionaire. The price of Bitcoin jumped almost $500, breaking the $2,800 mark to $2,802 before retreating. At the time of this writing, the value sits at $2,692.
Miners Signal SegWit2x Support with BIP 91
The BIP 91 lock means that enough Bitcoin miners have agreed to adopt Segwit2x, but substantial hurdles remain. Before implementation can be said to be successful, several things must happen:
- For the next 336 blocks, nothing will happen to give miners time to organize and prepare.
- After the grace period, BIP 91 will activate at block 476928 and mining pools may begin to reject blocks that do not signal support for SegWit.
- Miners will then upgrade to SegWit over the next 2016 blocks, or about two weeks.
- When more than 50% of miners are running the new upgrade, SegWit will be said to have locked in.
The advantage of distributed networking with no central control also carries some substantial risks.
There are significant concerns that miners who have signaled support will not upgrade in time to lock in, or that some miners will begin to run the new software and then revert to the old. Even many respected and deeply embedded members of the Bitcoin community, like Brian Bishop, believe the risks of non-compliance are substantial, up to and including a complete failure to activate.
These fears are likely unfounded due to the high stakes involved and the large number of failures that would have to happen to derail the upgrade. Despite the healthy track record of past upgrades, the fact remains that major updates of active code is technically complex and logistically imposing.
Because of the high stakes, emotions are running high. The more emotional people become, the less rational they are likely to behave. Despite this fact, most experts and investors agree that SegWit2x implementation will take place with a minimum of complications. This is reflected by the 18% day-to-day price rise.
“Bitcoin Made Me A Millionaire”
Beautyon, editor at Bitcoin Think, feels that since centralization has been avoided and the crisis has been solved, the market cap of Bitcoin will grow at an exponential rate.
Bitcoin has demonstrated the ability – but not yet the reality – of solving its largest and most technically complicated problem to date. Many people can already say “Bitcoin made me a millionaire,” and many more are on the cusp of a similar financial transformation.
The Bitcoin Bubble
When everyone is positive and no one is negative, bubbles often form. In the case of Bitcoin, it is hard to tell where the bubble starts. The size of most markets is relatively stable, but the market for Bitcoin is rapidly expanding into new territory. Resolution of endemic problems, increased trust, and increased exposure all contribute to the expansion of the Bitcoin market.
But the problem is no one knows exactly where the Bitcoin market will level off. Although most people have legitimate business reasons to use Bitcoin, most everyone hears the siren song of “Bitcoin made me a millionaire,” and they all want to say it, too.
As a result, irrational exuberance is bound to take the price of Bitcoin far beyond the price the market can sustain. Since no one can accurately ascertain where that point is, the bubble will grow until, like all bubbles… it pops and causes a catastrophic crash.
The pertinent questions are as follows:
- When will the Bitcoin bubble start to form?
- To what extent will it grow?
- Where will the price point be when the bubble pops?
- How far will it crash when the party eventually comes to an end?
While most everyone agrees on the questions, no one knows the answers to any of these questions. We hope (with some degree of confidence) that the crash will bottom out at a higher valuation than we see today, and the crash will not come for months – if not years.
It is not unreasonable to think the stable price point for Bitcoin is several multiples of its current value. Bitcoin has come an astronomical distance since inception, and the potential for future growth is equally vast.
Thanks to the BIP 91 lock-in, SegWit2x is secured. Issues with transaction malleability, block bloat, and block size have a solution and that solution will soon be implemented.
The future of Bitcoin is bright and it can, and likely will, penetrate much further into traditional currency and payment markets than it heretofore has. Therefore there is no ceiling in sight for the future value of Bitcoin. Cryptocurrencies have been strapped on a rocket and there are no impediments between here and the stars.