Why was Bitcoin's splitting that Bitfinex at a major exchange did not assign the new currency Bitcoin Cash to some users?

ByZach Copley

On August 1, 2017 the virtual currency "Bitcoin (bit coin)"Was divided. Bitfinex of major exchange refused to allocate token of BCC to some users, although splitting will now assign existing Bitcoin holders "Bitcoin Cash (BCC)" Did. The reason for this is as follows when it is explained in view of stock trading.

Bitfinex Did Not Issue Bitcoin Cash Tokens to All Bitcoin Users - The Merkle
https://themerkle.com/bitfinex-did-not-issue-bitcoin-cash-tokens-to-all-bitcoin-users/

Bitcoin Exchange Had Too Many Bitcoins - Bloomberg
https://www.bloomberg.com/view/articles/2017-08-02/bitcoin-exchange-had-too-many-bitcoins

About the division riot of bit coin, you can see the details as to the following article.

"Bitcoin (bit coin)" What is the division problem? A figure that you can understand well what is split up what happens - GIGAZINE


You can find out about the "block size problem" of the underlying root cause by looking at the following article.

What is "Block Size Issue" Bitcoin Is Going to Troubles for Solving - GIGAZINE


By August 1, 2017, as Segwit was introduced as expected, the bit coin split into the traditional "bit coin (BTC)" and the new currency "bit coin cache (BCC)". By this division, what happens to users who possessed bit coins from before division can be understood better if the IT company PayPal is an example of spin-off from the parent company eBay.

When eBay owned PayPal, those who had ebay shares (to be exact, EBAY ticker shares) actually owned eBay shares as well as PayPal stocks that are included in eBay Become. However, when PayPal will spin off from eBay and it is decided that both companies will become independent entities, PayPal 1 shares will be allocated per share of eBay. In other words, shareholders who had held 100 eBay shares had to hold 100 eBay shares and 100 PayPal shares by spinning off PayPal. It is a PayPal stock that seems to have come down suddenly, but since the value of the eBay stock has been decreasing as the PayPal stock is born, there is no funny thing.


This "spin-off" is a parable of bit coin "split", and holders of old bit coins were to be allocated new coins of the bit cache in response to the situation of bit coin splitting. In other words, the owner of 100 BTC became the owner of 100 BTC and 100 BCC after division.

However, even in stock trading as well as in virtual currency trading, credit transactions entering into transactions from "selling" are allowed by exchanges. In other words, those who anticipate the decline of the bit coin market can earn margins by selling bit coins and buying back after the market price declines. By the way, many short selling was done in anticipation of the sharp fall of bit coin price due to the splinter fault of bit coin. According to the following tweets, "Bitfinex sold 5.5 million dollars (about 600 million yen) bit coins in 12 hours".

$ 5.5 million of new$ BTCUSDshort positions have opened up the last 12hrs on Bitfinex

- Alistair Milne (@ alistairmilne)July 14, 2017

The fact that there is a bit coin owner who is assigned BCC by division, meaning that there is a bit coin owner who gets a BCC, on the other hand that a person who has split up with credit selling before division must buy back up to the BCC amount after division It is also. People who trust 100 BTC of the old bit coin need to buy back at 100 BTC and 100 BCC after division.

However, depending on exchanges, the judgment was different whether to allocate BCC by division fault, or not to allocate it in the first place. Bitfinex on the exchange decided that it would not be reasonable to repurchase the BCC at the stage where the value of the BCC occurring after division is unclear and the seller taking the short position decided not to buy back the BCC after division 2017 We did it on 27th July.

By(Mick Baker) rooster

According to this decision, for example, if there is "a long position of 125 BTC and a short position of 25 BTC and the exchange actually has 100 (125 - 25) BTC", since there is no repurchase of BCC from the short position, Since 100 BCC caused by division is assigned to long position, "0.8 (1 × 100 ÷ 125) BCC is allocated per BTC".

However, if you exploit this condition, you can earn margins by simultaneously holding long and short positions, for example with BTC. The 1 BTC before and after the division of the bit coin was about 2700 dollars (about 300 thousand yen), but "I sold 1 BTC short in one account and got 2,700 dollars before split, after creating another account, 2700 If you adopt the two-store strategy of buying 1 BTC in long dollars ", the account in the long position after division will be" 1 BTC and 0.8 BCC ", the account in the short position will be" -1 BTC and -0 BCC ", subtracted You can just get the 0.8 BCC assignment.

In fact Bitfinex said that transactions aimed at margins by both accounts occurred on a large scale. Therefore, Bitfinex decided not to allocate BCC for parts exceeding the hedge balance that existed at the time of the announcement on July 27, 2017. As a result, it seems that the allocation coefficient of BCC has been increased from 0.7757 to 0.8539.