Bitfinex, the Hong-Kong based bitcoin, and cryptocurrency exchange announced today they are launching a new pair of (Chain Split Tokens) CSTs for Segwit2x, another proposed Bitcoin consensus change.
Back in March 2017, the exchange introduced the innovative new token class called a Chain Split Token (CST).
CSTs allow market participants to speculate on the future outcome of a potential cryptocurrency protocol change. In March, that potential forking event concerned Bitcoin Unlimited.
As the proposed consensus protocol Segwit2x project appears likely to activate, Bitfinex also stated they have elected to designate the Segwit2x fork as B2X, for now. The existing Bitcoin consensus protocol will continue to trade as BTC even if the B2X chain has more hashing power.
Today’s newly announced CSTs will allow traders to speculate on the potential activation and mining of the Segwit2x consensus protocol. They are designating the tokens as CSTs as BT1 (Incumbent Bitcoin Blockchain) and BT2 (Bitcoin Segwit2x).
These CSTs will trade against BTC and USD pairs, initially, without financing capabilities.
Users will be able to create or destroy these new CSTs in any amount using the Bitfinex Token Manager. Upon creation, the BTC will be debited from user accounts and an equivalent amount of BT1 and BT2 will be credited.
Users will also be able to reverse this process at any time, trading in equal numbers of BT1 and BT2 to extract BTC.
The Bitfinex team said:
One of the interesting characteristics of open-source projects is that developers are free to split the code into new projects if they want to take a project in a new direction. In open-source terms, this is called forking the project.
Bitcoin is an open-source project, and there is a scheduled change in the consensus protocol called Segwit2x, the specifications for which can be found in the Github repository.
Because the value of a network grows exponentially as the size of the network grows, it is advantageous to have only one version of Bitcoin. For this reason, in the future, the dominant Bitcoin implementation will likely converge on either Segwit2x or remain on the incumbent version that uses the consensus protocol defined on the Github repository.
At this time, the Bitcoin ecosystem, through node and miner signaling, is trying to decide which protocol consensus rules it wants to support. This has introduced uncertainty and speculation about the value of each respective blockchain and the future of the Bitcoin network. This uncertainty affects many of our users who trading using financing. CSTs will provide a pricing continuity through the Chain Split Event and, in particular, the order books for the BT2 trading pairs will become the order books for the B2X pairs.
We have reached out to consult, share ideas, and elicit feedback on this process. We welcome more and continued discussion and debate so that we can improve on these kinds of product offerings in the future.
We hope that this innovation brings some much-needed price discovery for the future of the Bitcoin ecosystem.