In March 2017, Bitfinex introduced an innovative new token class called a Chain Split Token (CST). CSTs allow market participants to speculate on the future outcome of a potential cryptocurrency protocol change. In March, that potential forking event concerned Bitcoin Unlimited.
Now, we are launching a new pair of CSTs for another proposed consensus change: Segwit2x
Bitfinex is introducing new CSTs that will allow traders to speculate on the potential activation and mining of the Segwit2x consensus protocol. We are designating these CSTs as BT1 (Incumbent Bitcoin Blockchain) and BT2 (Bitcoin Segwit2x).
These CSTs will trade against BTC and USD pairs, initially, without financing capabilities. We will reevaluate that decision at a later date if and as there is sufficient liquidity.
Users will be able to create or destroy these new CSTs in any amount using the Token Manager located in the Order Type drop down menu of the sidebar order ticket. Upon creation, the BTC will be debited from your account and an equivalent amount of BT1 and BT2 will be credited. Users will also be able to reverse this process at any time, trading in equal numbers of BT1 and BT2 to extract BTC. Please refer to the Segwit2x CST Terms & Conditions for more information.
One of the interesting characteristics of open-source projects is that developers are free to split the code into new projects if they want to take a project in a new direction. In open-source terms, this is called forking the project.
Bitcoin is an open-source project, and there is a scheduled change in the consensus protocol called Segwit2x, the specifications for which can be found in the Github repository https://github.com/btc1/bitcoin.
Because the value of a network grows exponentially as the size of the network grows, it is advantageous to have only one version of Bitcoin. For this reason, in the future, the dominant Bitcoin implementation will likely converge on either Segwit2x or remain on the incumbent version that uses the consensus protocol defined on the Github repository https://github.com/bitcoin/bitcoin.
At this time, the Bitcoin ecosystem, through node and miner signalling, is trying to decide which protocol consensus rules it wants to support. This has introduced uncertainty and speculation about the value of each respective blockchain and the future of the Bitcoin network. This uncertainty affects many of our users who trading using financing. CSTs will provide a pricing continuity through the Chain Split Event and, in particular, the order books for the BT2 trading pairs will become the order books for the B2X pairs.
We have reached out to consult, share ideas, and elicit feedback on this process. We welcome more and continued discussion and debate so that we can improve on these kinds of product offerings in the future.
We hope that this innovation brings some much-needed price discovery for the future of the Bitcoin ecosystem.
Metaverse (ETP) trading has now begun on Bitfinex and is available on trading pairs ETP/USD, ETP/BTC & ETP/ETH.
Metaverse is a public blockchain based on the PoW consensus mechanism. Metaverse is committed to providing decentralized services based on asset registration, digital asset exchange, digital identity and value intermediaries in order to build an open ecosystem in which digital value can be circulated freely. ETP is the token used on Metaverse and can be used to measure the value of smart properties in Metaverse or as collateral in financial transactions. ETP is also used to pay transaction and other fees applied on Metaverse.
Margin trading for these pairs will be enabled at a later point in time, once the order book develops sufficient liquidity.
NEO (NEO) exchange trading has now begun on Bitfinex, and is available against the pairs USD, BTC & ETH. Margin trading for these pairs will be enabled gradually, at a later point in time, once the order book develops sufficient liquidity. Bitfinex is excited to support the NEO ecosystem and the team behind the token, and to experience first hand the growth and development of the project.
NEO is China's first ever open source blockchain. Founded in 2014, NEO's mission has been to reinvent the way commerce is done. We believe technology drives progress and together we can create the future. Motivated by this, NEO has been created to shift our traditional economy into the new era of the Smart Economy.
On August 11, 2017, Bitfinex made an announcement with respect to certain of our services provided to U.S. individuals. The focus of our statement was the efficient allocation of corporate resources to various customer groups.
Nothing in our announcement should be taken as fact or opinion that any particular digital token, including any of the digital tokens mentioned in the announcement, are a security pursuant to U.S. law and we apologize if any statements we made were misleading or could be misconstrued.
Bitfinex is making changes to the services we provide to U.S. individuals. These changes impact the verification process and trading of certain digital tokens for U.S. customers. Some changes are effective immediately, and others will be gradually implemented in the coming weeks.
Suspension of U.S. Individual Verification Requests
We regret to announce that, effective immediately, we will no longer be accepting verification requests for U.S. individuals.
We have for some time considered pulling away from the retail marketplace in the U.S., and now with a current backlog of verification requests and ongoing difficulties in providing USD deposit and withdrawals for U.S. individuals, we feel that the time has come to begin disengaging from U.S. retail customers.
Several factors have gone into this decision:
We are thankful to all of our loyal U.S. customers that have consistently traded with us but, unfortunately, we have an obligation to our whole customer base and to our shareholders to make rational resource allocation decisions.
Furthermore, over the next 90 days, we will be discontinuing services to our existing U.S. individual customers. We will be communicating further with affected users on timing and specifics. Our intention is to reduce disruption as much as possible for our U.S. customers.
We will continue to take advice and implement further changes as circumstances warrant.
Restrictions on U.S. Persons Trading Certain Digital Tokens
Bitfinex will be barring U.S. customers from trading ERC20 tokens issued through "ICOs." That ban will go into effect at noon UTC on Wednesday, August 16, 2017. No trading of these tokens will be allowed for U.S. customers as of that date and time. Please note that nothing in this announcement should be taken as fact or opinion that any such ERC20 tokens are a security pursuant to U.S. law or require regulation under U.S. law.
Once again, we regret any inconvenience this change in policy might create.
The IOTA Foundation released an announcement yesterday detailing immediate improvements and upgrades to IOTA. The upgrade requires Bitfinex to temporary suspend IOTA deposits and withdrawals until approximately Wednesday, August 9th, 12:00 UTC.
We regret the temporary inconvenience, but the safety of customer funds is our number one priority.
We strongly advise users that have one or more recent IOTA withdrawals showing as completed on Bitfinex but still pending on the Tangle to keep “reattaching” it in the IOTA wallet until the snapshot occurs. Please note that following the upgrade, prior IOTA deposit addresses will no longer be valid transaction targets - we will be generating new addresses for all user wallets.
We believe that the IOTA Foundation improvements - and an improved Bitfinex IOTA wallet manager - will substantially improve user experience with transactions on the IOTA Tangle.
BCH Distribution Update
Bitcoin Cash (BCH) distributions have been calculated for qualifying Bitfinex users, and corresponding balances have been credited. Balances were aggregated across wallets with the resulting BCH being credited to each user’s Exchange Wallet.
What follows is an explanation of the calculations and adjustments used for determining the distribution coefficient.
After the fork, Bitfinex held 101,798.8855 BCH to distribute coming from 131,237.8562 BTC in settled wallet balances and -29,438.9707 BTC in unsettled margin positions, resulting in a distribution coefficient of 0.7757.
However, after adjustments for manipulation attempts (outlined below), the final coefficient used for distributing BCH was 0.8539
The intent of the BCH distribution mechanism was to protect lenders who were already locked into loans at the time of the announcement and to avoid distributing negative balances to shorts on an uncertain value of an unproven digital asset.
With this intent in mind, the BCH tokens were distributed with an adjusting factor to account for long/short imbalances in gross margin positions. Accordingly, as shorts would not have to ‘pay’ BCH, we believe it was fair and symmetrical to not credit margin longs, yielding an adjusting factor that historically seldom varies more than 10% when compared with gross balances.
After the methodology announcement on July 27th, several accounts began large-scale manipulation tactics in an attempt to obtain BCH tokens at the expense of exchange longs and lenders on the platform, causing the distribution coefficient to artificially plummet.
We have determined that this kind of manipulation - including wash trading and self-funding shorts - is in violation of Bitfinex’s terms of service. Those who intended to take unfair advantage of the circumstances surrounding the BCH distribution at the expense of other users have been sanctioned accordingly.
Upon careful review and analysis, we have decided to disallow any hedged BTC balances in excess of any such hedged balances that may have existed at the time of the July 27th distribution announcement. While this may be disappointing to some, it is welcome news to the many users with bona fide BTC exposure through settled wallet balances. This adjustment increases the distribution coefficient from 0.7757 to 0.8539.
We do not take this action lightly. The inadequate timelines imposed upon Bitfinex forced swift action when addressing and remediating this situation. Our purpose has been to distribute all BCH to our users in the fairest way possible. Given the aforementioned restrictions, with our corrective actions, we believe that we have made good on that promise.
The next step is to monitor the forked network and open BCH withdrawals. We expect BCH withdrawals will be opened within the next 24 hours.
Regarding the possibility of adding BCH trading pairs, we continue to monitor the market. BCH deposits will only be enabled if and when BCH markets are created.
We will have another update within the next 48 hours to address these potential next steps.
This post is an update to the July 27th post regarding the August 1st, 2017, forking event. It further addresses the Bitcoin (BTC) and Bitcoin Cash (BCH) hard fork ramifications for our users.
What timestamp will Bitfinex use to determine how many BCH users holding a BTC balance will receive?
Bitfinex will use the timestamp of the last common block, meaning the timestamp of the first block that makes the median time increment to 12:20 pm UTC (or later) on August 1st. This happened at block height 478,558 - timestamp August 1st, 2017, 13:16:14 UTC.
What is the cutoff for new BTC deposits to receive BCH?
We stopped processing BTC deposits at 12 pm UTC on August 1st, 2017. Any deposit that was not credited to Bitfinex wallet balances at that time is not eligible for BCH distribution.
Will Bitfinex be listing BCH trading pairs?
We will form a view on whether to list BCH markets based on how the situation evolves. As soon as a decision has been made, we will alert our users via an announcement on https://www.bitfinex.com/posts and via www.twitter.com/bitfinex
When will BTC deposits and withdrawals be re-enabled?
BTC deposits and withdrawals have been re-enabled already.
When will BCH withdrawals be available?
BCH withdrawals will not be enabled until we deem it is safe to do so. It is impossible to approximate the exact time, and it could potentially take 24 hours or longer.
When will BCH deposits be available?
BCH deposits will only be enabled if we decide to list BCH trading pairs. Do not send BCH deposits until we make BCH addresses available. This is very important. In the event that BCH deposits are enabled, be sure to split your coins post-fork before sending deposits.
Can I use my BCH as margin collateral?
BCH will not be eligible as collateral for margin positions.
What is the difference between BCC and BCH on the Bitfinex platform?
Before the fork event on the August 1st, 2017, Bitfinex had already allocated the symbol BCC as an eventuality of what would happen in the case of an entirely different fork. You can read more about chain-split tokens and their associated terms. Given the prior existing of the BCC symbol, the decision was made to designate the Bitcoin Cash token as BCH. (Furthermore, the cryptocurrency BitConnect also uses the BCC symbol).
These two tokens, BCC and BCH, are completely different, and we strongly encourage all users to recognize and understand this fact.
A minority of Bitcoin miners will be forking on August 1st, 2017 to create a new chain called Bitcoin Cash. The fork does not impact Bitcoin balances, but it creates a new token. At the time of the fork, all Bitcoin addresses holding a balance will automatically have equivalent balances in Bitcoin Cash.
There has been a variety of responses by the community about how to handle this new token. After a significant show of interest from our customers, we have decided to take steps to facilitate the distribution of Bitcoin Cash balances to those holding a settled Bitcoin balance on Bitfinex. We may also list markets for this new token, but that decision will be made after the fork event.
Although we see this token referred to as BCC on other platforms, unfortunately, that ticker symbol is already in use on our platform by the chain-split token representing Bitcoin Core. As such, we plan to use BCH as the ticker symbol and “Bcash” as the descriptive name to avoid confusion with Bitcoin.
Although several months ago, we developed a methodology for handling contentious hardforks, we will be applying a different methodology for what we regard as a spurious forking of the Bitcoin project with little mining support. Although we have not supported such Bitcoin UTXO-based distributions in the past (Stellar Lumens, Clams, etc.), we will support the distribution of Bitcoin Cash due to significant customer interest.
BCH will be distributed to settled bitcoin wallet balances as of the UTC timestamp of the first forking block, which is expected to occur on August 1st, 2017.
The token distribution methodology will be:
Due to the net amount of BTC committed in margin positions at the time of the fork, the above methodology may result in Bitfinex seeing a surplus or deficit of BCH. As such, we will be resolving this discrepancy in the form of a socialized distribution coefficient. For example, currently, there are more longs than shorts on the platform, causing a distribution coefficient of ~1.091 (Meaning that for each qualifying BTC a user will receive 1.091 BCH). The actual coefficient will be calculated at the moment of the distribution. Please note that if there are more shorts than longs at the fork event, this coefficient will be less than one. This coefficient can be roughly computed from publicly available information from our API (longs & shorts) and the Blockchain (cold storage).
We recognize that this model is not perfect, but given the short time frames imposed upon us, better choices are not available. It would be an undue burden to create negative BCH balances for BTC/USD shorts and XXX/BTC longs. Furthermore, lenders may be locked in for up to 30 days and would be adversely impacted. In the end, we believe that this solution creates the least amount of disruption and facilitates a timely distribution of BCH.
Margin longs who wish to receive BCH should consider either claiming some or all of their position or exchanging and holding BTC collateral in their margin wallet as opposed to other assets. We hope to make withdrawals available soon after the fork, assuming everything is fine with the BCH blockchain.
Once again we want to reassure our customers that your bitcoin is safe and this event will not affect your bitcoin balances, positions, or loans - you will simply be receiving an additional token balance based upon the aforementioned methodology.
On Friday 14th July 2017 we will be adding support for OMG trading with BTC, ETH and USD exchange pairs. Margin trading for these OMG pairs will be enabled as the order book develops suitable liquidity.
OmiseGO is an impressive and professional project, which aims to deliver on the initial promises of blockchain technology: to revolutionize the traditional financial world. OmiseGO provides a wallet and payment network for both fiat and crypto currencies.
Bitfinex supports and will continue to support these sorts of projects in bringing blockchain technology to mainstream consumers. We see projects like OMG as one of the crucial building blocks that will enable the creation of a new and truly revolutionary decentralised financial ecosystem.
Learn more about OmiseGO at https://omg.omise.co