Bitcoin Cash Will Not Be Supported by BitMEX because of Security Concerns
The upcoming Bitcoin Cash hard fork has caused a lot of confusion already. Some exchanges will support this token and fork, whereas other platforms have no interest in this chain split. One particular exchange feels that Bitcoin Cash offers nothing special and lacks two-way replay protection, among other things. It is quite interesting to see BitMEX taking such an aggressive stance toward this project, but its concerns can easily be justified.
The blog post issued by BitMEX leaves nothing in question. The company all but blasted apart Bitcoin’s upcoming hard fork on August 1st. While the company is always looking to provide the best service to customers, BitMEX also has to protect users from financial harm. The company sought to clarify its position on Bitcoin Cash, and it has no intention of supporting it for many reasons.
First of all, BitMEX feels Bitcoin Cash does not provide adequate two-way replay protection. We have covered the concept of replay protection before. The Bitcoin Cash hard fork does not provide two-way protection by default, even though users can take additional steps to emulate such a service. For the time being, it remains to be seen how this will play out. In its current form, Bitcoin and Bitcoin Cash transactions are not invalid on the other’s chain, which is a big problem.
Additionally, there is the question of how long Bitcoin Cash will be around. Although the chain has the support of ViaBTC in terms of cloud mining contracts, it is possible this new chain will be wiped out over time. If there is no reason to believe Bitcoin Cash will be around for a longer period of time, there is very little reason for companies such as BitMEX to actively support it. This does not mean the exchange may not support it in the future.
To make matters even worse, BitMEX feels Bitcoin Cash poses a security risk related to cryptocurrency wallets. The company feels every fork should modify the block header in order to force wallets to upgrade to follow the new chain. Right now, this block header change is not in place. Nor are there any “pure” Bitcoin Cash wallets, making it very difficult to successfully store the new currency. The bigger question is whether any of the existing wallets will enable support for Bitcoin Cash, and that seems highly unlikely right now.
Last but not least, BitMEX feels the Bitcoin Cash hard fork is a rushed job. This hard fork has not undergone an open review nor open testing by the community. Such a radical change of the Bitcoin protocol warrants more than a three-month testing period, yet the hard fork’s developers felt there was no need. There still should be a testing period after the client is released but before the hard fork effectively happens. That is not the plan for Bitcoin Cash either. A very strange decision indeed, considering this represents a drastic change to the Bitcoin protocol.
The concerns raised by BitMEX are more than valid and should be taken into account by all users. The Bitcoin Cash hard fork is a significant risk in its current form, as there are many unknown factors which could prove to be quite troublesome. It is good to see the company acknowledging that they will not be supporting the hard fork anytime soon. This also gives platform users ample time to move their coins off the exchange assuming they are looking to obtain their share of Bitcoin Cash.
- Oliver is an IT certified Support manager filled with years of experience and a package of passion for teamwork, writing and Blockchain technologies as he believes that they will give a new shape to the future. In his spare time he is an artist and musician.