Bitcoin
has crashed by more than a fifth after plans to alter the underlying
technology were abandoned, leading some to embrace a
rival cryptocurrency.
The price of one bitcoin dropped from a high of over $7,800 (£6,000) last Wednesday to just over $5,500 on Sunday morning, a drop of 29pc in four days. By Monday morning it had recovered slightly to trade at $6,400, 21pc down from last week's peak.
The fall comes after proposals to upgrade the bitcoin
network in an attempt to increase the speed of transactions were shelved
last week amid floundering support.
The so-called "SegWit2x" proposals, supported by leading online exchanges, were designed to make bitcoin more efficient. But growing opposition to the plans led them to be abandoned over fears they risked sparking a "civil war" in the community.
The price of one bitcoin dropped from a high of over $7,800 (£6,000) last Wednesday to just over $5,500 on Sunday morning, a drop of 29pc in four days. By Monday morning it had recovered slightly to trade at $6,400, 21pc down from last week's peak.
The violent swings are likely to embolden critics of the virtual currency, who view it as inherently unstable and say it is in the late stages of a financial bubble.
The so-called "SegWit2x" proposals, supported by leading online exchanges, were designed to make bitcoin more efficient. But growing opposition to the plans led them to be abandoned over fears they risked sparking a "civil war" in the community.
Bitcoin is
notoriously volatile and its price is largely dependent on the faith of
its owners, so maintaining peace among its divided online community is
seen as imperative. However the decision not to go ahead has created its
own rift, with many now flocking to "Bitcoin Cash", an alternative cryptocurrency split off from bitcoin itself earlier this year.
Bitcoin
Cash was created in August when bitcoin went through a "hard fork",
creating two competing currencies - bitcoin and Bitcoin Cash. The
latter's key difference is that its network allows for larger "blocks",
which makes it faster and more efficient - a similar change that the
now-postponed SegWit2X proposals would have created.
Its price almost trebled from $700 to over $1,900 on Sunday morning, before falling back to around $1,150.
Its price almost trebled from $700 to over $1,900 on Sunday morning, before falling back to around $1,150.
Bitcoin
has experienced sharp falls before and its price has continued to rise
in the long run. It fell by more than a third between mid-June and
mid-July and also fell heavily in early September. Even with the drop
over the weekend, its price is still up more than 500pc from the start
of the year.
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