BIP-110 Fork Warns: Selling New Coins Could Cost You Real Bitcoins

A potential soft fork of BIP-110 could lead to the loss of actual Bitcoins if not managed carefully, warns blockchain specialist Kevin Loaec. The upcoming fork will create a double balance situation, where the same amount of assets is reflected in both chains simultaneously.

According to Loaec, malicious actors may exploit this situation by buying coins from the new network using real Bitcoins. Initially, transactions are valid in both versions, but signing a transfer of fork tokens inadvertently provides the buyer with a template for an identical operation in the main network.

The result is that an equivalent amount is deducted from the same address in real Bitcoins, and fees are charged twice. The wallet is not emptied, but the exact amount declared for sale is lost. Loaec notes that large holders are at the greatest risk and suggests that the only reliable strategy is to keep assets stationary.

The Bitcoin network has experienced a similar hard fork before, with the separation of Bitcoin Cash in 2017 requiring developers to integrate a special mechanism into the new network to prevent transaction transfers between chains. The BIP-110 specification lacks such protection, which could lead to the loss of Bitcoins if not managed correctly.