After 4,400% Surge, Bitcoin’s Fate Hinges on Huge Chinese Miners

China is home to 90% of bitcoin trades and 70% of mining Key meeting this month as network gets closer to max capacity Wu Jihan still remembers the exhilaration he felt after learning about bitcoin in 2011.
A self-described computer geek fresh out of China’s top university, Wu soaked up everything he could about the digital currency’s mysterious founder and its users’ ambitions to transform the global financial system. Within a year, he quit his job at a private equity firm to launch a bitcoin startup. Today, his company is one of the world’s biggest players in bitcoin mining, a computing process that makes transactions with the cryptocurrency possible.
Yet for Wu, and the rest of bitcoin’s online community, feelings of exhilaration have been replaced by apprehension over what could be the biggest hurdle to the cryptocurrency’s growth since its emergence in 2009. Because of a pre-programmed cap on the amount of data bitcoin’s network is allowed to process, the current system for verifying payments needs to boost its capacity, or transaction times will balloon and undermine bitcoin’s 4,475 percent advance over the past five years.
In theory, there’s a simple fix: With some coding tweaks, transactions could continue apace. But the problem is that any change to bitcoin’s architecture will inevitably create losers, and the motley crew of miners, software developers, libertarians and entrepreneurs who comprise the bitcoin universe have yet to form a consensus. After at least five attempts in the past year, enthusiasts will try once again at a conference in Silicon Valley this month. Any solution will almost certainly need the support of attendees from China, now home to 70 percent of the world’s bitcoin mining power and 90 percent of trades.

This post was published at Bloomberg on July 7, 2016 -.