About the exchanges: The Bitcoin Gold case

In the blockchain and cryptocurrency ecosystem, one of the main elements has been exchanges. Its protagonism is undoubted, in these exchange houses of executes the “Trading” (buy cheap and sell expensive the currencies that they have is its list), besides being able to exchange for bitcoin smaller coins. However, when I’m going to explain what Bitcoin is or any cryptocurrency to exchanges, I’ll name it short.

Because nobody can doubt that of all the Blockchain ecosystem and this spirit of transparency, speed and community the weak link of the chain, without hesitation, are the exchanges for the “cyber attacks” that leave in question their security, authentication problems, accusations by poor customer service and delays in refunds; This is what we can observe the most in specialized forums on the subject.

The latest scandal appears when the Bittrex exchange announces the removal of Bitcoin Gold from its list, a currency positioned in the 30th ranking of the Coinmarket Cap list, with a business volume of $ 356,132,854 USD at the time of writing this article.

On the Bittrex press page appears the announcement that he will remove BTG from his currencies list on September 14, without further explanation.

It all started on May 18 with a so-called double-spending cyberattack, this is an attempt to spend the same coins twice; For example, the attacker could send a deposit to an Exchange wallet and then send those same coins to another wallet of his own at the same time. This is usually resolved in a chain of blocks: when they are added to blocks, transactions are sorted. Now, in this case, the attacker used a 51% attack type, that is to say, “own” the majority of the hash.

This type of attacks is characterized by high cost, so the experts of the subject agree that in order to profit from this system they had to attack large quantities in movement, which is done in the exchanges, because it is where they make the great exchanges.

Therefore, as we can see by following the chronology of the publications on the subject in the Bitcoin Gold Community Forum, the Bitcoin Gold team contacted the exchanges to increase the number of confirmations. But Bittrex was slow to respond and had a leak that added to that of other exchange houses gives a total of 18 million dollars in BTG.

Bitcoin Gold, reacted with a statement where it states the following:

Bittrex informed us that they make this decision because the BTG team does not “take responsibility for our chain” and that taking responsibility meant paying Bittrex 12372 BTG to cover the loss they incurred. Later they informed us that they could cover part of the loss of their own BTG reserves, but they requested that we pay the remaining ~ 6000 BTG, and that if we did not, we would be removed from the list.

This may seem like a small amount for a profitable exchange, but it is a significant fraction of Endowment’s available funds, which is compatible with the Bitcoin Gold project. (Our nonprofit organization has no income sources, all the BTG mining reward goes to the miners, and almost half of the Foundation’s funds will remain blocked for future use – remember that 60,000 of the 100,000 were established coins mined to establish the Foundation – and those funds will be blocked for 3 years from November 2017.) We offered a BTG loan from the Foundation to help Bittrex solve short-term liquidity problems, but they rejected and insisted on a payment .

The explanation given by Bitcoin Gold in its statement is extensive and you can feel discomfort, of those that are mitigated with a coffee. Alejandro Regojo Comunity Member of Bitcoin Gold, has the bad habit of accepting to chat with me so naturally, that I have renounced the “questions and answers”, we just chatted. It is important to clarify that I also tried to contact Bittrex, without success.

Alejandro is calm, Bittrex is not the most important exchange house of the currency, he also knows that they did everything in their power at the time of the attack and also when negotiating with the exchange house.

In addition, it is not a secret that Bitcoin Gold is managed as a community, being able to see its activity in its forum in which “it tries to remove hierarchies and names of the last century starting from the position within the organization”, says Alejandro while taking a breath . The big decisions we made together in the forum and a decision like this, to yield to Bittrex and deliver those coins, would not have been well seen by our community.

We both agree on our concern about the role of exchanges “The health of cryptocurrencies is to strengthen P2P and decentralized exchanges” continues. It is favorable to seek new methods that benefit usability and transparency.

Bitcoin Gold (BTG) is a Bitcoin fork (BTC). It was separated from the original block chain on October 24, 2017, at a height of 491.407 blocks. The project was first announced in July 2017 at Bitcointalk.org, when Jack Liao, CEO of LightingAsic and BitExchange, revealed that he was looking for a way to change the Bitcoin work test algorithm (PoW) from the SHA256 algorithm to Equihash. .

“Bitcoin Gold arises from the desire to protect Bitcoin and ensure that it not only maintains its position as the dominant cryptocurrency, but continues to grow until its liberating roots extend deep into the economic life of all nations.”

Alejandro, when he was born, BTG was born with a combative air, the idea of ​​going back to Bitcoin, to give strength back to the miners. Do you think the expectation was very high?

No, not at all, there has been a correction and a decrease, but has been following the entire cryptocurrency market, now, after our network update we have a much safer blockchain, we have a high computing force thanks to now We have many miners in our community. Honestly, I think Bitcoin Gold is at its best.

And what about the btg that are still in Bittrex?

The users that still have BTG in Bittrex must trust in the seriousness of the exchange, in any case they still have until the 14th of September.

The weakest link, the exchanges and is that there is no week in which one is attacked or closed. However, someone has told me that the true strength of a chain is measured in that weakest link, at the vulnerable point of the ecosystem.

Given this we can remember that on August 20 the Gemini crypto bags, Bitstamp, Bittrex and bitFlyer USA announced the creation of a self-regulatory organization for digital goods, such as cryptocurrencies.

The new group, called the “Working Group of the Digital Goods Association”, aims to help large-scale investors feel more comfortable with the crypto market, work on the formulation of industrial standards and “be a precursor of training of a self-regulatory organization for digital goods such as Bitcoin and Ethereum ”

Will this group also regulate the treatment towards the community and the users or will it create an even more dangerous weakness?


Daniela Caro

Daniela Caro

Writer by birth, curious by profession ... I learn a little more every day from the cryptocurrency.