- Bitcoin Magazine has criticized the recently launched Fractal Bitcoin protocol, calling it a “token scheme” rather than a legitimate sidechain
- The protocol lacks a proper peg mechanism, making it impossible to move Bitcoin between the mainchain and the Fractal Bitcoin system
- The review also highlights flaws in the network’s mining incentives, which could distort Bitcoin miners’ behavior
Bitcoin Magazine has issued a scathing review of the newly launched Fractal Bitcoin protocol, denouncing it as a “token scheme” that misrepresents itself as a scaling solution for Bitcoin. The publication’s critique centers around Fractal Bitcoin’s lack of a peg mechanism, a questionable mining structure, and its use of a pre-mined token, all of which suggest the project is not aligned with Bitcoin’s core principles. According to the review, the protocol, which claims to act as a second-layer sidechain for Bitcoin, is more concerned with benefiting pre-mine holders than contributing to the ecosystem.
No Peg Mechanism and Independent Token
Bitcoin Magazine didn’t pull any punches when it came to its assessment of Fractal Bitcoin, which launched ten days ago, highlighting a number of technical flaws. One of the major issues highlighted in the review is that Fractal Bitcoin does not allow Bitcoin to move between the mainchain and the so-called sidechain, making it an entirely separate system:
…there is no actual mechanism to move your bitcoin back and forth between the mainchain and “the sidechain” Fractal Bitcoin. It is a completely independent system with no actual ability to move funds back and forth.
According to Bitcoin Magazine, this lack of a peg mechanism, a crucial feature of sidechains, renders the protocol fundamentally disconnected from Bitcoin, despite its claims.
Furthermore, Fractal Bitcoin introduces a new native token, Fractal Bitcoin (FB), which has been pre-mined, with 50% of the supply allocated to an “ecosystem treasury,” pre-sale, advisors, and grants.
Bitcoin Magazine criticizes this pre-mine as reminiscent of the early Bitcoin halving era, noting, “This is essentially the equivalent of the entire first halving period of Bitcoin when the block subsidy was 50 BTC per block.”
“Cadence Mining” and Distorted Incentives
Another key concern raised is the mining mechanism known as “Cadence Mining.” Although the network uses the SHA256 algorithm and supports merge mining, only one-third of the blocks can be mined by Bitcoin miners. The other two-thirds must be mined by switching hash power entirely to Fractal Bitcoin.
“This is a poisonous incentive structure,” warns the review, explaining that it distorts incentives for Bitcoin miners by encouraging them to divert their resources from securing the Bitcoin network to securing Fractal Bitcoin.
Bitcoin Magazine emphasizes that this flawed system offers no security advantage and instead weakens the proof-of-work security for both networks. “It guarantees that most of the network difficulty must remain low enough that whatever small portion of miners find it profitable to defect from Bitcoin to FB can mine blocks,” the review argues.
A “Token Scheme” Disguised as a Sidechain
The review ultimately dismisses Fractal Bitcoin as a project with no meaningful connection to Bitcoin’s architecture or values. “Calling this a sidechain, or a layer of Bitcoin, is beyond ridiculous. It’s a token scheme, pure and simple,” concludes the review.
Bitcoin Magazine also criticizes the protocol’s use of buzzwords and half-hearted justifications, arguing that its real purpose is to enrich pre-mine holders rather than provide a legitimate scaling solution for Bitcoin. With no peg mechanism, distorted mining incentives, and security compromises, Bitcoin Magazine‘s review leaves little doubt that Fractal Bitcoin falls short of its lofty claims.
