Bitcoin’s price could be in for a big drop, and that’s because the cryptocurrency is facing a potentially contentious upgrade to its core software in August. If you haven’t heard about the impending deadline for a “user-activated soft fork”, here’s the story:
For close to six years, the Bitcoin community has struggled to arrive at a consensus on how to scale the 1MB block size to meet growing popularity and adoption. A proposed user-activated soft fork (UASF) is an attempt to nudge the Bitcoin network to embrace and activate segregated witness (SegWit) — which some believe to be one of the most promising scaling solutions — by August 1.
In 2012, the network confirmed a daily average of 8,000 transactions. Today, that figure is around 350,000. Transaction overflow has resulted in high fees as users compete every 10 minutes for limited space in the Bitcoin block. The time it takes the network to confirm payments has also grown longer, at times going into hours.
Choosing and implementing a scaling solution for a decentralized platform is difficult. Having no central decision-making body is a good thing, for the most part. It makes Bitcoin less susceptible to censorship or takeover.