|BITCOIN WOBBLES AS TRADERS TURN TO OTHER CURRENCIES|
Aruba, March 28, 2017 - It's been a volatile period for bitcoin investors, as holders of the cryptocurrency prepare for a potential 'fork' in the blockchain.
From Friday morning until Monday afternoon, bitcoin was trading under the $1,000 level, and even fell beneath $900 on Saturday. This is significant as, barring the weekend of March 18 and 19, bitcoin has traded above $1,000 since early February and hit a fresh all-time high of around $1,325 on March 10.
Bitcoin is currently back above the $1,000 handle, but is well off these recent highs, wiping billions off of its market cap value.
There are several causes for the recent volatility: Chinese regulators cracked down on bitcoin exchanges, while U.S. authorities rejected a proposal for a bitcoin-backed exchange-traded fund (ETF). The current concern is over the future of the bitcoin technology.
Bitcoin faces a scaling issue, where the number of bitcoin transactions that can happen on the blockchain at any one time is limited. This is creating a backlog of transactions that are needed to be processed and slowing down the system.
A group called Bitcoin Unlimited advocates for increasing the size of the blocks on the blockchain in order to process more transactions, but this has split the community. To increase the block size would involve splitting the blockchain, causing a fork and creating two major blockchains. This would effectively create two different coins and it's not clear which would become dominant.
As a result, investors are hedging their bets or selling out of bitcoin, waiting to see whether or not the fork will happen, and if so, which blockchain will be favored by the market.