Bitcoin Gold Fork at 491,407 And Signal More Chain Split Tokens(CST)
BTC.TOP mined the 491,407 block on Bitcoin network at around 9.20AM 24th October, which is also where Bitcoin Gold (BTG) split from the mainnet. Ironically, BTC.TOP is operated by Jiang Zhuoer, supporter of big blocks. Many exchanges are holding a “pending for appraisal” position towards Bitcoin Gold due to some unresolved issues. With Bitcoin Cash, Bitcoin Gold and the upcoming Segwit2x, some exchanges like Bitfinex and Huobi have seen the emergence of a new category of digital assets: Coin Split Tokens (CST).
One day before the BTG fork, Jiang Zhuoer released an op-ed with an alarming title, claiming BTG an ICO scam: “Bitcoin Gold — just another ICO scam with 200,000 coins pre-mined” The Chinese thread on 8btc forum has attracted ~9k views and 94 replies so far.
Jiang’s viewpoints are challenged by Maya, an active blockchain developer in the community, saying that “1% premine is fairly low ratio among altcoins”.
Bitcoin Gold was initiated by Lightening Asic, or Jack Liao. The fork was first revealed in late September 2017 while the community was still in the middle of debating for the upcoming Segwit2x fork in November. The fork happened earlier than prediction due to increase of hashrate. The new player came unexpected and was somehow considered an imitator and challenger of Bitcoin Cash as Jack Liao is known as Core supporter. The purpose of BTG is to avoid centralization in Bitcoin mining. By adopting equihash algorithm, Bitcoin Gold is hoping to decentralize the dominant position of “few mining giants”, aka Bitmain.
The justification was refuted by Jiang:
“BTG claims that by replacing the conventional ASICs with GPUs for mining BTG, it allows mining to be decentralized because it gives ordinary users a chance to mine. However, how can you argue that GPUs are not mining machines and they cannot be concentrated in mining farms?”
The head-to-head dispute would not surprise the Chinese community as the two parties’ position for different interest group is not a secret. Pre-mine is usually linked with unfair distribution. What confuses the community is the uncertain number of BTG premine.
OKex released a statement regarding distribution of BTG, saying the premine is 100k.
“If we believe that the block generation of BTG network is not sustainable, or if there is a serious security risk (such as the lack of replay protection, bugs in protocol, etc.), then we will not distribute BTG nor to list BTG trading. “
Furthermore, OKEX points out two major issues of BTG:
“BTG does not yet have code based on full consensus, nor does it has a replay attack protection mechanism. The code hasn’t been fully tested and audited. The identity of developer is unknown.”
“Meanwhile, codebase of BTG contains 8,000 premined blocks (100,000 BTG). Developer may sell its premined BTG in open market. “
The lack of replay protection is confirmed by the 250 BTG bounty on deploying two-way replay protection code on github, which was posted on 21 Oct, 4 days before the fork.
“The solution must feature:
two-way SIGHASH_FORK_ID replay protection
clean and readable code
Given that BTG is trading at 184 USD on Bitfinex at press time, the 46k USD bounty seems tempting.
Why is replay protection so valuable?
“Replay protection prevents a transaction on the Bitcoin Gold chain from being re-transmitted on the Bitcoin chain and vice versa. As Bitcoin Gold is a fork of Bitcoin, the transaction format, the signatures, etc. are the same. A transaction on one chain could be copied to the other chain and will be valid, possibly leading to unintended loss of coins.” –Trezor
So far attitudes of exchanges could be summarized as “pending for further appraisal”. With more forks on the horizon, a new category of assets may emerge. Bitfinex refers it as “Chain Split Tokens (CSTs)”. Huobi Pro is of the same opinion. Instead of releasing a specific statement regarding BTG, Huobi Pro is generalizing a common practice for future forks.
“As various types of forks can be expected in the future, it will be a common practice for exchanges to handle chain split assets. ”
If more CSTs are emerging in the future, maybe the best strategy for holders is to embrace the change rather than fighting it.