Why Bitfinex’s “Chain Split Tokens” are completely biased towards the small block side (again)
- Their previous prediction market contract was equally biased, and not an attempt to discover price. It was just a manipulative bet on a hard fork happening: ‘If no fork occurs by December 31, 2017, then BCU will expire worthless and BTC will be given in exchange for each BCC holder.’ Obviously the community saw through this and it never really took off, and resulted in a completely skewed and manipulated price.
- After giving extensive feedback to them on how to make their contract better next time, they had the courtesy to contact me on oct 5th 2017 to ask for input on their new Chain Split Token contract. I explained to them that such a contract would only be fair if both tokens would either become worthless, or ideally, refunded, if no hard fork happened.
- I even gave them a proper contract, which I worked on with other people after Bitfinex’s previous biased Chain Split Token, to make sure this would not happen again.
- Unfortunately they still decided to publish the biased version today, which clearly establishes their bias and leaves them no more room for excuses.
The contract published today, is clearly biased towards the small block side because of the following reasons:
- When you bet on BT1 (small block Bitcoin), you will not lose your tokens if no hard fork happens. However, those betting on BT2 will see their tokens destroyed.
- This results in this NOT being a fair price discovery contract. It makes this a bet on a hard fork happening or not, with a big price bias and unfair advantage towards the small block Bitcoin.
- It should not be sold by Bitfinex as a way to discover the price of each chain, unless they make the following changes:
- a) Make both BT1 and BT2 tokens worthless in case no hard fork happens
- b) refund both BT1 and BT2 tokens in case no hard fork happens (this is the preferred method).
Bitfinex has a clear history of being small block supporters
- Bitfinex was the first to rename “BCC” (Bitcoin Cash) to “BCH” with the excuse that “BCC” was taken by their previous biased smart contract. They are also purposefully using the derogatory “Bcash” name instead of “Bitcoin Cash”, while “Ethereum Classic” is listed with its proper name and not as “Eclassic”.
- Philip Potter, one of their main people, is a very well known small blocker on Whalepool and has a big influence in the company.
- Philip Potter / Bitfinex, were co-signers of the Blockstream-initiated and very unpopular “Hong Kong Agreement” in 2016 which derailed a block size increase to 2 MB. The Hong Kong Agreement was the root cause for Bitcoin’s transactions to be stuck and transaction fees to rise to ridiculous levels. This resulted in Bitcoin to lose its first mover advantage and made the rise of Ethereum and other altcoins possible. https://medium.com/@bitcoinroundtable/bitcoin-roundtable-consensus-266d475a61ff