Bitcoin Cash Sent to BTC Address? The Bitcoin Cash Bandit Will Help... For a Price
There is a disturbing trend that seems to only be growing in scope and scale. In increasing numbers, users are sending Bitcoin Cash (BCH) to Bitcoin (BTC) wallets by mistake. In some cases, funds may be recoverable. However in most cases, once sent to the wrong address, the money is gone. Period. So, why is this happening, and why so often?
The main culprits behind this oft-repeated problem boil down to these two issues. One, is that most Bitcoin and Bitcoin Cash wallets cannot tell the difference between a BCH and a BTC address. Normally, wallets are smart enough to know if an address is invalid. For example, if one were to attempt to send Ethereum to a Litecoin address, the wallet would know the address was in the wrong format and would prevent the transaction.
With BTC and BCH however, they use exactly the same address format. As a result, if a user mistakenly confuses the two currencies, the funds will still be sent and potentially lost forever.
The second problem could quite simply be the similarity between the names of the two currencies. Inexperienced users could simply not understand that there is a very significant difference between 'Bitcoin' and 'Bitcoin cash', and that the two are not interchangeable. Imagine for a moment if 'USD Cash' and 'USD' were two completely different currencies. The confusion caused would be palpable at best.
The BCH bandit enters stage left
Someone appeared on Reddit in the last 24 hours and posted the same message to three Bitcoin and Bitcoin Cash related subreddits, (r/bitcoin, r/btc, and r/bitcoincash) claiming that they have successfully claimed all BCH that was mistakenly sent to BTC addresses. At the moment, the BCH address has been found here, and it currently holds 493.544 BCH. That toal is worth over $600,000 dollars.
The individual or group of individuals who use the Reddit name bchsegwitrecover, claim that if you can provide sufficient proof of ownership, they will return the funds to you, minus a "recovery fee" of 30%.
The community responds
Community response to the BCH bandit has been mixed. Some have called them a hero, a white hat (meaning helpful, non-nefarious) hacker, and others still call them a con man.
Redditor PVmining commented on the bandit, saying: “While I think what [the bandit] did is questionable morally and legally, it is a quite clever hack.”
User Sureshok, who seems out of luck, says: “I am on this list. Tho the coins i sent were from an exchange. so i can't sign a message from that input. is that right?”
To which the bandit themselves responded: “That is correct. Unless you can get the exchange to sign a message for you, it will be difficult for me to recover your coins.”
Some Redditors have expressed their annoyance with the bandit, declaring them to be overly greedy. Such as Redditor bch_ftw, who said: “You really think the effort is worth $200K+? Come on. Take $100/hr or something reasonable. Or, you know, be nice and send it all back right now for free because you're a good guy who cares about people. It's just money. Fuck greed, man.”
It seems however, that the majority largely approves of the bandit. The above comment by bch_ftw was, at press time, downvoted to a minus 7, showing general disapproval from the community.
True bandit, or misunderstood hero?
The address that holds the "recovered" funds still shows so transactions out. While it's too early to tell, it is safe to say that the BCH bandit is being honest, and will return funds where the sender can prove ownership. Users that sent from an exchange however are likely out of luck. They will be unable to provide the kind of proof the bandit is asking for. In these cases, the bandit will certainly keep the funds after an as of yet undefined length of time.
What is true, however, is that if the bandit were completely nefarious and selfish, they could just as easily have done nothing and kept the funds to themselves entirely. If the bandit follows through with their promise of returning at least some of the funds, then it's safe to say we can consider them to at least be something of a misunderstood anti-hero, as opposed to a straight up villain.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.