Bitcoin Exchanges Coinbase, Bitfinex Issue Guidance Before SegWit2X Hard Fork
SegWit2x seems imminent as major exchanges offer guidance on what to do before it
Many have called for a rejection of the previously ratified New York Agreement after the peaceful activation of SegWit, while others have claimed that Segwit2X is a necessary fork for change.
Today, two major exchanges issued statements regarding their position. Because exchanges provide support for users in both camps, they must remain centrist, while still advising clients regarding what to do with Bitcoin.
Coinbase, the largest of the exchanges, and the most rapidly growing, issued their statement via Twitter.
The statement provides guidance for consumers who are currently storing Bitcoin in Coinbase wallets. Unlike their activity during the previous Bitcoin Cash hard fork, Coinbase has committed to allowing trading on both exchanges, though not without some delay. The statement makes it clear that neither fork will be operational immediately after the fork, until Coinbase has determined that both chains are safe.
The largest exchange in BTC trading, Bitfinex, also provided detailed direction regarding their position on SegWit2X. In a similar manner to Coinbase, Bitfinex did not take a hardline stance for or against the fork. The exchange did indicate that they would call the newly forked currency B2X, regardless of which chain has the majority hashing power.
For users, Bitfinex indicated that they will take a similar policy in halting transactions until chain stability can be proven. The goal is to prevent a transaction being replayed on both chains. According to the announcement:
“The lack of strong two-way replay protection in Segwit2x means that we must take steps to protect customer funds. At the moment of the fork, all deposits and withdrawals for both BTC and B2X will be halted until we are able to:
- ‘taint’ our customers’ Bitcoins to ensure withdrawals cannot be replayed on both chains; and,
- ensure that we can properly credit deposits in the event a transaction is replayed on both chains. We expect this process to require at least 24 hours, and potentially significantly longer. If the event happens, announcements will be made throughout the process to keep everyone up to date.”
The announcement also made clear that for peer-to-peer financing controls, Bitfinex will take a similar approach to the customary equity, stock-spinoff, and dividend distributions in traditional trading markets. The methodology undergirding this system is complex, but is likely the most protective for users and the market as a whole. According to the company:
"Imagine a situation where lenders do not receive B2X. They would be incentivised to stop lending if a hard fork appears imminent. Consequently, lending liquidity could completely disappear, and Bitfinex would be obliged to begin partial liquidations of financed positions when BTC loans expire and cannot be renewed.”
More to come
Both companies also suggested that, as the date of the potential fork approaches and more information is brought to light, announcements will continue to be forthcoming. While neither exchange indicated a positive or negative position regarding the fork, the overall tenor of both announcements seems to indicate that the consensus is against a fork which would immediately cause division and confusion among Bitcoin enthusiasts.