Bitcoin holders risk losing real BTC if they sell coins from BIP-110 fork, says developer
A proposed Bitcoin software update known as BIP-110 could trigger a blockchain fork, creating a risk of replay attacks for users who attempt to sell their new 'forked' coins. Developers warn that selling these coins could inadvertently authorize the transfer of the user's actual Bitcoin, leading to potential loss of funds.
Why it matters
This highlights the security risks inherent in blockchain forks, where lack of replay protection can lead to the accidental loss of assets for users who do not understand the technical implications of interacting with new, unverified chains.
Here is how it goes. Bitcoin may split into two chains in the next few days. If it does, everyone who holds bitcoin ends up holding the same balance twice, once on each chain. Then someone offers to buy the new coins at an unusually good price. They look like free money, so selling them can seem like an easy win.
But take the deal and the buyer can take the seller's bitcoin too. Both chains initially accept identical transactions — so a transaction signed to send the fork coins can also be broadcast on bitcoin. The buyer receives the same amount in actual BTC at the same destination.
This is called a replay attack. The safest move for anyone who does not know how to separate the two balances is to leave the coins alone.
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