BIP-110 Fork Creates Duplicate Balances and Replay Attack Risk for Bitcoin Holders

A planned Bitcoin fork tied to BIP-110 could create duplicate balances on two chains, tempting holders to sell the new coins for what looks like free money.

However, selling the forked coins can trigger a replay attack that also spends the seller's real Bitcoin on the main chain. Developers warn that without built-in replay protection until at least early September, the safest course for non-experts is to avoid moving coins during the potential split.

BIP-110 aims to keep pictures, text, and other non-payment data out of Bitcoin transactions for a year. Changing Bitcoin's rules requires miners to agree, but BIP-110 has a second route written into it that allows computers running BIP-110 software to reject any block that does not carry the mark.

Miner signalling is currently near 2.6%, and if a minority branch emerges, every Bitcoin holder initially has the same balance on both chains. The second copy may be worth little or nothing, but someone may still offer to buy it.