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Is the blockchain straining?
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Is the blockchain straining?

The gyrations of Bitcoin's price are becoming extreme. After leaping to $7,354 earlier in the week before falling back to $6,700, it then boomeranged again to $7,900 on 8th November before again dropping precipitously by $800. Today it stands at a relatively becalmed $6,878. Swings like this of up to 10% make even the bravest rider of the roller-coaster queasy, and could be a sign that volatility is about to break downwards in a big way. On the other hand, stock-markets worldwide are dreading a 10% correction that Bitcoin now takes in its stride. With the price of the cryptocurrency apparently testing and bouncing off the upper limit, it might actually be a case of profit-taking, buying the dip and bidding back up the price - a very nice living while it lasts. And while liquidity is certainly not a problem in Bitcoinland, it’s the nightmare of super-inflated equities markets. The recent suspension of the so-called “Hard Fork” 2-megabyte upgrade has only added to the yoyoing price. Bitcoin is a community that relies on consensus, especially from its early and senior members, and that’s increasingly lacking as the stakes (in every sense) grow larger. Hence the abandonment of the fork, designed to speed up transaction times but perhaps feared as a security issue or even a quasi-devaluation by some. But it led directly to a new high price based purely on sentiment, rather than analysis of long-term prospects. The blockchain’s best applications and value will always lie in the ways it can eliminate the middleman - but without a hard fork, Bitcoin itself is turning into the middleman. Its success is the problem with the current 1MB size, because as the Bitcoin user base doubles annually, transactions must fight to get into a block, resulting in delays and higher fees, which have risen to $1 from 5 cents over the past 12 months, hurting micro-transactions. In the meantime, workarounds such as Litecoin may prove lucrative.

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