As the first exchange to address SegWit2x, Bitfinex explained how it would deal with the upcoming hard fork; legacy Bitcoin will keep the ticker symbol BTC while the SegWit2x coin will get the symbol B2X. At the same time, Bitfinex launched the trading futures for the two bitcoins which might be a product of the fork.
With SegWit2x a relevant group of Bitcoin companies plans to activate a 2MB hard fork at block 494,784. The companies agreed to pull through this fork in New York, which is why the agreement is known as the New York Agreement (NYA).
The goal of the NYA was to overcome the stagnation in Bitcoin and to reunite the community. For this, the companies agreed to combine SegWit – demanded by “small blockers” – with a small increase in the base block size – demanded by “big blockers.” After SegWit was successfully activated on August 1, the second part is scheduled to happen after around 5500 blocks, which comes to about 38 days.
Other than SegWit the increase of the block size limit requires a hard fork. Even if the NYA was able to get around 95 percent of the hash rate on board – which should enable a clean hard fork – there remains the threat of Bitcoin splitting in two chains. Since many on the team of Core developers have taken a position against SegWit2x, most expect such a chain split to happen.
Most exchanges and Bitcoin companies are not happy with the situation. The hard fork will require them to make a tough decision; which coin is the real coin? It’s hard to say right now.
Bitfinex, one of the major Bitcoin exchanges, made the first step to answering this question.
BT1 and BT2: Chain-Split-Token
In March 2017, Bitfinex launched the first Chain Split Token to enable traders to speculate on the success or failure of the potential fork of Bitcoin Unlimited. The fork did not happen, but Bitfinex has developed an instrument, which the exchange deploys again to let its customers bet on the outcome of the SegWit2x fork.
The token manager enables customers to split existing bitcoins in BT1 and BT2. BT1 represents the “incumbent” Bitcoin with SegWit and a base block size of 1MB, while BT2 constitutes the “new” Bitcoin with SegWit and a base block size of 2MB. If the fork happens at block 494,784 – which it likely will – and this event results in two incompatible chains, the token will be transformed in the corresponding Bitcoin.
In case there will be no SegWit2x blockchain, the BT2 token will lose any value. In the opposite case that the legacy blockchain ceases to exist, the value of the BT1 token will go to zero. In the unlikely case that only one blockchain will exist which is incompatible to both chains, Bitfinex will decide on its own with which chain the new bitcoin is more compatible.
Three days after the launch of the new trading pairs one BT1 token is valued with 0.76 bitcoin, and one BT2 token with 0.24 bitcoin. The market seems to favor the incumbent blockchain. However, Bitfinex fuelled this trend with a far-reaching decision.
B2X: A new Ticker Symbol for SegWit2x
Shortly after the launch of the Chain Split Token, Bitfinex announced as the first major exchange how they plan to deal with the hard fork.
The exchange pointed out that it takes no position for or against a hard fork. However, it assumes that there will be no clear winner, which is why exchanges and traders need to be prepared for the existence of two parallel Bitcoin.
Bitfinex feels obliged to maintain the trading 24/7. The exchange can’t afford to halt trading and wait until it is clear which chain is the winner of the fork. So it will list the fork as a new asset. The existent bitcoin – Bitfinex calls it “incumbent” – will furthermore be listed with the ticker symbol BTC, while the new Bitcoin – SegWit2x – will get the symbol B2X. This will even be the case when B2X has more hash power.
Bitfinex says this will be done for pure pragmatical reasons. Politics don’t play any role in this decision. This might be true, or it might not be true. But it doesn’t eliminate the massive and far-reaching political implications of the decision; by giving SegWit the BTC symbol, Bitfinex will treat SegWit2x, the coin which has the support of more than 90 percent of the miners, as an altcoin.
It might be pragmatically motivated or politically – but with this decision, Bitfinex massively sides against the hard fork. The hard fork was planned to prevent a split, and it was planned as an upgrade, not the creation of a new coin.
The most important question of the next month will be, if other exchanges follow Bitfinex or if they continue to treat SegWit2x as an upgrade.