For a brief period early yesterday morning, bitcoin was trading over the $9,000 mark. This is the first moment bitcoin has struck such territory in over two months.
A Bitcoin Soft Fork Is Coming
Now, however, the world’s number one cryptocurrency by market cap is trading for a measly $8,600. While this isn’t necessarily bad – especially when considering where the currency has traded before – it does mark a $400 drop for the digital asset in approximately 24 hours, and many are wondering if it’s suddenly losing its momentum.
According to one source, this is just a temporary setback, and bitcoin is slated to exceed all expectations later this year. However, it’s not for the reasons everyone is likely thinking. At first glance, it appears that the halving scheduled for this May is likely to cause bitcoin to reach unprecedented levels, but the halving is splitting several crypto analysts down the middle, with some saying it will do wonders for the coin, and others saying it will do nothing.
However, one event happening even later is the bitcoin soft fork set to take place during the second half of 2020. A soft fork usually invokes a change in a specific cryptocurrency or asset without serious alterations to every node. The fork is designed to improve both bitcoin’s scalability and privacy.
Lucas Nuzzi – an analyst from Digital Assets Research – announced on Twitter that the soft fork is likely to occur sometime between October and December this year. He explains:
Bitcoin will soft fork this year. It will be one of the most innovative additions to [bitcoin’s layer one] thus far. These are powerful foundational technologies that will bring novel smart contracts to bitcoin’s base layer. 2020 will be good.
Other analysts expect even more to happen thanks to the soft fork. Jimmy Song – a bitcoin fellow at Blockchain Capital – believes that the fork will enable cheaper transactions via the bitcoin blockchain and enable the Lightning Network, which is said to improve bitcoin by allowing many of its smaller transactions to occur off-chain.
There will no longer be any penalties in terms of fees for multi-sig and that should lead the industry forward using best practices… We expect that this will create more interest in Lightning in general as the bleeding edge of bitcoin will be a little less bloody. Finally, we expect Taproot to be incorporated by more wallets and more interesting features built for those who are securing their bitcoin.
What Other Changes?
Aside from Taproot – which Song mentions – the soft fork is also expected to incorporate Schnorr signatures and Tapscript language.
Other developments happening around bitcoin later this year include the new Bakkt application that will allow users to purchase goods and services with the world’s leading digital currency. Some of the globe’s biggest retailers – i.e. Starbucks – have already jumped onboard.