Dispute Could Mean Financial Panic In Bitcoin

Got some bitcoin? An internal dispute over the digital currency could soon mean financial losses, whipsawing prices and delays in processing payments.

It’s also possible that nothing much changes. It all depends on whether the people who maintain bitcoin can agree by July 31 to implement a major software upgrade - one designed to improve capacity on the increasingly clogged network.

Not everyone is on board. In particular, some bitcoin “miners,” who are rewarded for verifying transactions, aren’t supporting the changes. Any split between miners and others who use bitcoin, including a number of startups and a few big companies, could cause a panic in the $39 billion bitcoin marketplace.

So far, bitcoin’s value in U.S. dollars has soared amid the uncertainty. It’s currently at about $2,300, more than triple what it was a year ago. But bitcoin is notoriously volatile; because the price spiked so rapidly, it also fell quickly, and bitcoin has lost about a quarter of its value since its peak in June at above $3,000.

Here’s a look at the current dispute.

WHAT IS BITCOIN, AGAIN?

Bitcoin is a digital currency that’s not tied to any bank or government . Like cash, it lets users spend or receive money anonymously, or mostly so; like other online payment services, it also lets them do so over the internet.