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Bitcoin is back, baby

The cryptocurrency hit all-time highs near $3,500 per bitcoin on Tuesday.

by Peter A. McKay
Aug 8 2017, 2:14pm

Bitcoin has resumed its record run after shaking off concerns about its technical backbone.

The cryptocurrency hit all-time highs near $3,500 per bitcoin on Tuesday and helped push the global cryptocurrency market to $120 billion in total assets, according to the cryptocurrency site CoinDesk.

Bitcoin has now jumped almost 80 percent from its mid-July lows. At the time, a pending change to the blockchain, or transaction ledger, attached to each bitcoin was causing anxiety among traders. The change, known as the “fork,” happened just last week and split bitcoin into two different cryptocurrencies: bitcoin and bitcoin cash. With two versions, some traders worried that compatibility issues would leave them with useless bitcoins.

But those fears have now largely subsided due to the smooth implementation of a specific plan for a longer blockchain, called Segregated Witness, on track to go into widespread use by the end of this week without a hitch.

The emergence of “SegWit” means the advocates of bitcoins for real commerce have ultimately won the blockchain debate. Still, the vision of real-world transactions in bitcoin — akin to how people use dollars or euros everyday -— has been an elusive goal for the currency so far. Its dizzying run higher has been fueled more by speculators playing the bitcoin market much as they would shares in a hot tech startup.

For now, the speculation only seems to be heating up, especially in key overseas markets like Russia and China.

A few key developments:

  • A decision at the end of May by three Chinese exchanges to allow bitcoin withdrawals helped spur the country’s bitcoin market this summer. The move helped bring off the sidelines people who were curious but hesitant to trade bitcoins out of uncertainty whether they could get out later.
  • Russian Miner Coin, a startup run by an ally of Vladimir Putin, is raising the equivalent of $100 million in bitcoin and its chief rival currency, the ether. Part of the proceeds will go toward developing computer chips to help increase Russia’s global market share of bitcoin mining, the sophisticated computing process by which new cryptocurrency units are issued.