The price of bitcoin has not reached the heights of $466 since September 2014. At that point it was still in free fall from the dizzying heights of $1,200 at the peak of the bitcoin frenzy in December 2013. Now the price of bitcoin has finally returned to the level it last reached 18 months ago as the world's most valuable cryptocurrency shows signs of breaking the $500 mark for the first time in two years.
According to CoinDesk's USD Bitcoin Price Index, the cryptocurrency's price peaked at $466.45 on Tuesday, as it continued to sustain a two-week surge. Prior to this recent uptick, bitcoin had seen a month of relatively stable pricing when it fluctuated between $410 and $430 — a very rare occurrence for it.
The reason for the current positive interest is still unclear, but it is probably related to the launch of a piece of code that is set to improve the number of transactions the bitcoin network can handle at one time. Called Segregated Witness, or SegWit, and first proposed in December, the code is seen as an interim measure before a proposed “hard fork” of the bitcoin network, which would see a new blockchain created with larger blocks.
Bitcoin businesses and users are hoping SegWit will alleviate the problems the bitcoin network has been experiencing recently, with waiting times for transactions to be verified reaching over 40 minutes and more than 40,000 transactions waiting to be cleared at one point.
The bitcoin community is currently split between one group (known as Bitcoin Core) who want to retain the current block size and instead change the way signatures are stored on the blockchain and another (known as Bitcoin Classic) who propose the adoption of an alternative blockchain. That blockchain, incompatible with the original, would increase the block size to 2 MB, a move some believe would increase user adoption.
Another reason for the recent uptick in bitcoin price could be the upcoming halving of rewards for miners. Bitcoins are mined by solving increasingly complex mathematical equations. Currently the miners get 25 bitcoins per block, but that number will halve sometime in July to 12.5 bitcoins per block. This is part of the way bitcoin was created by the anonymous Satoshi Nakamoto to make it ever harder to mine bitcoins.
The rise in bitcoin's price could also have something to do with the recent reports that game developer Valve is about to introduce bitcoin as a payment option on its Steam game distribution network, which has 125 million users. The reports suggest Valve will work with bitcoin payment processor BitPay to facilitate the system.