Why Bitcoin Gold Got Delisted from Bittrex

Exchange of Crypto Bittrex is intended to remove Bitcoin Gold (BTG), a hard fork of Bitcoin (BTC), by September 14, after the details of a $ 18 million hack of the BTG network in May emerged this week. How unexpected was this announcement coming from the exchange and what are the chances for BTG to find itself in the middle of another scandal?

The "One CPU one vote" ideology: how Bitcoin Gold was created

Bitcoin Gold (BTG) is a hard fork of Bitcoin (BTC). It is chipped from the original blockchain on October 24, 2017, at a block height of 491.407. The project was announced for the first time in July 2017 on 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.

"Given the current dysfunctional reality of the Bitcoin mining sector", as read in the BTG roadmap, Liao and his team wanted to create a digital currency that did not require expensive hardware and cutting-edge mining . In mid-2017, presumably 70% of the BTC extraction was performed by application-specific integrated circuits (ASICs), ie specialized hardware designed exclusively for extraction purposes. ASICs can perform SHA256 calculations significantly more quickly and efficiently than an average computer. BTG, with its Equihash protocol, in turn, would allow productive mining powered by random graphics processing units (GPUs).

Meanwhile, unlike its relatively successful predecessor Bitcoin Cash (BCH) – a BTC hard fork whose supporters claim it to be "the real Bitcoin" – BTG was not designed to take control of the original Bitcoin: [19659006] "Bitcoin Gold arises from the desire to protect Bitcoin and ensure that it does not maintain its position as a dominant cryptocurrency but continues to grow until its liberating roots extend deeply into the economic life of all nations."

In short, The ideology of BTG is to be a virtual currency that has roots in the original Bitcoin and returns hands to the casual miner equipped with a GPU. This ideology was outlined in more detail in the project's white paper:

"Satoshi's vision of" one-CPU-one-vote "was replaced by an ASIC-one-vote. The ASIC resistor is a permanent attribute of Bitcoin Gold.It is much more difficult to create ASICs for a hard memory algorithm like Equihash rather than SHA256, but it is not impossible.If the day comes when the Equihash ASICs start to proliferate 39, mining activity begins to centralize, Bitcoin Gold will have another hard fork to implement a new PoW algorithm. "

" This is what will be required to make the right mining accessible to the general public, "Robert Khune, strategist of the Bitcoin Gold project, he told Bloomberg in October 2017. "A successful fork will show that Bitcoin always has the ability to escape any potential manufacturer of violent mining hardware."

First blood: DDoS sub attack ito after the launch

Nonetheless, the BTG had started decisively. Soon after the launch on October 24th, the project suffered a serious security breach. According to the tweet of the BTG team sent that day, their cloud site was verifying around 10 million requests per minute, which blocked legitimate traffic.

A few hours later, Bitcoin Gold tweeted that the attack was "managed", but "it will take a little longer" for the site to work normally. The website eventually went online, but the community's reaction was apparent at that point: the DDoS attack coincided with a series of angry posts about BTG's faults, where community members pointed out that about 100,000 BTG coins were presumably premised – the confusion was later clarified by the development team, who explained that some coins were set aside as a bonus for the team, while GPUs could be used in large-scale mining operations just like ASICs.

Recognition Issues

According to the nature of a difficult fork, to claim BTG coins, crypto users had to keep the original Bitcoin at the fork to automatically receive an equal amount of BTG at the same address. The BTG team warned that the fork was set to run in November 2017 and recalled checking whether cryptographic exchanges supported the hard fork to those who kept the BTC on external platforms instead of private software or hardware portfolios. Normally, in view of an important fork, cryptographic exchanges make an announcement that explains whether their customers would be reimbursed with new currencies or not.

So, before the hard fork, a series of large cryptographic exchanges – including Coinbase, Poloniex and Kraken – stated that they chose not to support BTG (although Poloniex actually did it approximately four hours after the fork ):

"The information on this fork has been limited and there are concerns about its safety and stability," said Coinbase in a press release. "As a result, we do not believe it is safe to allow support for Bitcoin Gold at this time."

This type of response from some operators in the sector was partially caused by the fact that, for a limited period of time, BTG was in danger of replay attacks. During a short period after the fixed fork has started, the cryptocurrency has not implemented the complete protection of reproduction, a security function that guarantees that transactions on one chain are not valid on the other chain. However, this issue was resolved by November 1, 2017.

It is noteworthy that another major US-based cryptocurrency Bittrex announced a couple of days before the fork that was supporting BTG – however, it also put its customers are warned of a number of potential shortages associated with the new currency. Bittrex stated that, at the moment, Bitcoin Gold did not have "a fully-formed consent code, [an] implemented reproductive protection, adequate code for testing and auditing, publicly known code developers." And the exchange reminded his users the pre-eminent problem:

"The Bitcoin Gold codebase also contains a private premine of 8000 blocks (100,000 BTG) .Please be aware that if a market opens up, there is the possibility that developers sell their award-winning BTG on the open market. "

Rocky launch followed by a robbery

On November 13, Bitcoin Gold became mineable, as the team tweeted :" For those who had doubts , the BTG Blockchain was born # 1CPU1VOTE "

" A massive attack was made in an apparent effort to stop the launch of mainnet, but the Bitcoin Gold team managed to make the network work … even if a po 't more ardi expected, "added the BTG developers in a post release after launch.

However, the launch of BTG has been complicated again, albeit with a much more common type of scam in the encrypted world: thieves have used Twitter's handle @bitcoingolds as a basis for deceiving user migration In addition, towards the end of 2017, the BTG website was compromised for an unspecified period of time, as it promoted a link to a fake BTG wallet, encouraging users to upload their old private keys to claim their free BTG tokens. An archived version of the website confirms this. The BTG team also tweeted links to the fraudulent wallet and strengthened users to use it, leading to a massive total of $ 3.3 million stolen.

Last drop for Bittrex: double expense attack

On May 18, Bitcoin Apparently, gold had experienced its biggest trick to date. The hijackers have managed to accumulate over 18 million dollars in BTG from various exchanges, including Bittrex.

Following the hack, the Bitcoin Gold team explained that the attackers were deploying a combination of a 51% attack and double spending to defraud cryptographic exchanges. They noted that the attackers targeted the exchanges because they "accept large deposits automatically, allow the user to quickly exchange a different currency and then withdraw automatically."

Thus, the scammers were making large deposits of BTG in the exchanges and, at the same time, sending the same funds to their cryptographic portfolio. When the exchanges realized that the transaction was false, the hackers had already withdrawn funds from the exchanges and multiplied their original funds.

Bittrex did not specify the sums lost as a result of the BTG attack. However, the exchange required more than 12,000 BTGs (equal to approximately $ 255,000 at the time of printing) as compensation from Bitcoin Gold for the double-expense attack.

While Bittrex blamed BTG's PoW algorithm as the reason that led to the double-expense attack, Bitcoin Gold said their team "is not responsible for security policies at all times." 39, internal to private entities such as Bittrex ", adding that exchanges" must manage the related risks and are ultimately responsible for their own safety ". However, with this BTG developers have recognized the risks represented by their blockchain and have already announced a fork upgrade plan.

BTG's Unclear Future

After the last attack on BTG, the Bittrex exchange decided to remove the currency from their September 14 exchange rate, a move that found approval among a number of Reddit. Bittrex handles about 3.40% of BTG / BTC transactions at the time of printing, according to CoinMarketCap data.

In response, the Bitcoin Gold development team issued a statement claiming that eventually Bittrex mitigated their ultimatum: [19659019] "Bittrex informed us that they made this decision because the BTG team did not we would have "assumed the responsibility of our chain" and that assuming responsibility meant paying Bittrex 12.372 BTG to cover the loss suffered, later informing us that they would cover part of the loss from their BTG reserves and asked to pay the remaining ~ 6,000 BTG ($ 127,000), and that if we did not, we would be canceled from the list. "

While it is still unclear whether other exchanges will follow Bittrex in the delisting of BTG, at the time of printing, Bitcoin Gold's market share it amounts to $ 368 million and the currency is trading around $ 21.39, ranking at 30 ° by market capitalization, according to CoinMarketCap data. In 2017, its performance was much more impressive, with the collapse of the price of BTC after the emergence of BTG, which ranked in 5th place in terms of total capitalization by the end of the year.

Source link