Bitcoin price pump slows

It seems that after the rapid increase in Bitcoin price in the past two weeks, the price seems to be slowing, hovering between $880 and $900 USD as of Christmas day. The price rise has surprised many and it took the community by surprise. The price increase has been partially fuelled by speculation, but also by increased adoption, such as Bitwage coming to India, which has enabled Bitcoin wages to be paid in India. The price charts from Coindesk below show the hovering price from the rapid increase:

Coindesk price

Coindesk price

During this spike, the network has not been choking on the transactions despite the 1MB block size limit, some blocks were not even full as of the early hours of Christmas day, London time:

Kano CKPool will always fill the blocks to the maximum for transactions, so the network has not been running at full capacity despite the price increase. Antpool routinely do not fill the blocks and sometimes refuse to include transactions in them as much as they can due to propagation times and mining on these pools should be avoided as it contributes to transaction delay and fee hikes.

Despite this, if adoption is to increase and high prices for Bitcoin be retained, it is essential that the scaling issue is fixed. Out of many proposed fixes, Segregated Witness offers the most benefit and allows older nodes to continue to be used, unlike the other hard fork solutions and it introduces another layer of payment channels on top of Bitcoin, which are needed to help Bitcoin scale, if Bitcoin is to approach the transaction volume of Visa and Mastercard.

The 1MB blocks currently allow for 7 transactions a second, and any small band-aid increase is not recommended without a long-term solution, which the Bitcoin Core developers offer. Despite the high prices, transaction volume has not increased by much but it is true that the increased adoption and recognition coupled with lower supply since the halving have contributed to this. It will be interesting to see how the price holds in the next weeks, as we can only speculate, but it is looking like 2017 will be a positive year for Bitcoin and Cryptocurrency.

 

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