SegWit2x Version 2.0 - a Farce?
If we are to believe what we are told - the Bitcoin Blockchain has forked once again after the revival of SegWit2x.
The fork, which was abandoned in November due to a lack of consensus among original signatories of the New York Agreement, proposed an increase in Bitcoin’s block size from 1mb to 2mb in an effort to improve its scalability.
Much like Coinbase’s surprise announcement of Bitcoin Cash support a week ago, SegWit2x’s revival popped up on the internet courtesy of a new website, headed up by a completely new team of developers from those that had worked on the original SegWit2x code.
The developers celebrated the launch of SegWit2x at block number 501451 on Dec. 28, although potential users will only have access to the new B2X coins on Jan. 15, 2018.
The Long Awaited Launch of New Bitcoin SegWit2X Fork Finally Took Place! pic.twitter.com/GC46rYFoOI
— Segwit2X (@Segwit_2X) December 28, 2017
According to the website, B2X features will include a unique address format, a two and a half minute block generation rate while the mining complexity will be recalculated after each new block is generated.
Furthermore, the block size will be increased to four mb, as opposed to the original two mb proposition by the original SegWit2x developers. Replay protection is also being touted, which was a major shortcoming in the proposed fork a few months ago.
All of this sounds great - but it actually sounds too good to be true.
Outlandish promises of Satoshi Nakamoto’s premined Bitcoin
In addition to their proposed changes, the developers have promised to give users a share of 2 million B2X coins, which they claim stem from Satoshi Nakamoto’s original pre-mined Bitcoin. Like Bitcoin, B2X will have a 21 mln coin cap.
We are told that supporters of the fork will get a share of Nakamoto’s originally mined Bitcoin, converted to B2X at a 1:1 ratio.
“In addition, we will distribute a proportional number of "Bitcoins of Satoshi Nakamoto" to all those who support hardfork! By “Bitcoin of Satoshi Nakamoto” we mean what the founder and chief developer of Bitcoin [BTC] mined at the time of zero network activity. They will be credited to the crypto-exchanges and wallets of our partners gradually. The list of partners will be constantly updated on our website! Even if Satoshi Nakamoto wants to get B2X for his pre-mining, he is not able to do this, as we blocked the initial blocks for conversion to Bitcoin SegWit2X. It is worth noting that this present to users who supported us will be credited sometime after the basic conversion 1:1”
Furthermore, the developers insist that only those two mln coins will be premined.
“Satoshi Nakamoto’s Bitcoin [BTC] will be mined and distributed proportionally to all Bitcoin holders on the crypto-exchanges and wallets of our partners (2 mln). There will be no additional pre-mining!”
As Cointelegraph reported on December 28, the SegWit2x GitHub repository actually shows that six mln coins will be premined - with three different addresses committed in the code at different block heights.
The picture below shows two of the three different pre-mine commands going to different wallet addresses.
Pump and dump fears
What this suggests is that the developers will have access to 6 mln B2X coins when trading begins, giving them a massive amount of power over the valuation and supply of the newly-forked cryptocurrency.
If and when people start trading B2X, there is a chance that the developers could pull a ‘pump and dump’ move, selling their new coins at inflated prices, making quick returns on coins that they’d premined.
According to Investopedia, this practice is a scam and is illegal.
Another factor that points towards fishy behavior is the fact that B2X futures contracts are already available on some exchanges - meaning people have started betting on future valuations of the cryptocurrency.
An insider could stand to make some massive short-term gains - with those futures having launched on Dec. 19, according to the website:
“Already now, Bitcoin SegWit2X futures [B2X] are traded on large crypto-exchanges, the list of which is constantly replenished. Stay tuned for updates on our website and social channels!”
Coinmarketcap data shows that futures trading of B2X has been highly volatile - after hitting a high $1205.05 on Dec. 27. That has now dropped to $272.25 as of Dec. 30:
B2X will be supported by FreeWallet and Zumminer, but other wallet providers like Trezor have distanced themselves from the project on their Reddit page. It’s also bizarre to see that exchanges like Coinbase have not made any statements about the new launch.
Draw your own conclusions
All of this information could point to an outright scam. A completely different team of developers seem to have hopped on the SegWit2x bandwagon, hijacked the name and are looking to make a quick buck out of gullible and uninformed investors.
Their website may look legitimate, but poke around enough and there are holes everywhere.
The fact that most of the largest cryptocurrency exchanges have not even recognized the fork or the new B2X coin shows that the legitimacy of the fork is questionable at best.
It will be interesting to see what the coins are trading at on Jan. 15 - and how the wider cryptocurrency community reacts.