Coinbase Faces Backlash, Legal Risk Over Bitcoin Cash
The world’s most popular digital currency exchange, Coinbase, is under fire from angry customers over its decision not to support a new version of bitcoin that could also make it vulnerable to “ruinous legal trouble,” according to a prominent legal scholar.
Coinbase’s headaches are tied to a breakaway faction of bitcoin miners, who are responsible both for generating new coins and for the software called blockchain that is used to record transactions. On August 1, the miners will implement a software update that will create a so-called “fork” and result in two versions of the bitcoin blockchain—and two forms of the currency as well.
The creation of the new currency means every existing bitcoin holder is entitled to an equal amount of what the breakaway miners call “Bitcoin Cash.” Coinbase’s decision against supporting the new version, however, means its customers will not receive this benefit.
This is significant because the new Bitcoin Cash is expected to be worth real money. As of July 31, futures markets predict a unit of the new currency will be worth hundreds of dollars.
This has led customers to post angry messages on Coinbase message boards, accusing the company of stealing their property and threatening class action lawsuits.
Such a lawsuit may not be far-fetched, according to Tim Wu, a prominent legal scholar who writes extensively about technology. In a series of tweets, he likened Coinbase’s decision to a broker withholding shares from its customers.
In my opinion, @coinbase is courting serious, maybe ruinous legal trouble if it doesn't give its users the full value of the Bitcoin fork
Imagine a stock split where the broker declined to issue the new stock to its owners– that the @coincase position right now
In an email to Fortune, Wu added that common law property rules mean that the newly issued Bitcoin Cash belongs to the Coinbase customers in the same way a newborn calf belongs to the owner of a cow.
Coinbase, however, has been conspicuously advising its customers that it does not intend to support any new currency that emerges from a bitcoin fork. In addition, a section of the company’s terms of service (titled “forked protocols) clearly state Coinbase has the discretion whether to support any changes to the software that underlies digital currency like bitcoin.
Wu, though, is not persuaded that terms-of-service will be enough for Coinbase to deflect responsibility for Bitcoin Cash.
“My bottom line is that, if you’re holding cows for someone else, I’m not sure it’s enough to say ‘we don’t sell veal’,” said Wu, who added that his assessment was still preliminary.
As for Coinbase, a spokesperson stated that the company has no intention of keeping customers’ Bitcoin Cash for itself or even access the “cash” at all. He added that, if Coinbase decides to support Bitcoin Cash in the future, it will distribute the balances that accrue at the time of the August 1 fork.
Up until July 31, Coinbase customers who wished to access their Bitcoin Cash, they would need to transfer their funds to an outside bitcoin wallet. But such a step, while not highly technical, may be outside the comfort zone of the everyday crypto-currency investors to which Coinbase caters.
Worried about security — or the price of bitcoin?
Coinbase customers wondering if they’ll ever get their hands on their Bitcoin Cash may take some comfort in what happened following a similar digital currency fork—involving a currency called Ethereum—last year. In that case, Coinbase eventually let customers withdraw their share of the new currency, known as “Ethereum Classic,” even though it still does not allow it to be bought and sold on the Coinbase site.
There’s no guarantee, of course, that Coinbase will create a similar withdrawal system for Bitcoin Cash. But there will likely be public relations pressure—and maybe legal pressure too—for the company to do so, especially if the value of Bitcoin Cash begins to climb.
Indeed, this issue of crypto-currency prices is likely what underlies the decision by Coinbase and some other exchanges not to support the Bitcoin Cash fork.
“If I put myself into the mind of one of those exchanges, they’re kind of damned if they do and damned if they don’t [support a fork] because their success depends on the price of bitcoin,” said Stefan Thomas, the CTO of crypto-currency company Ripple.
According to Thomas, exchanges dislike forks because it undercuts the network effects that increase the value of digital currencies like bitcoin. On the other hand, he says a failure to support a forked version of the currency can lead to companies leaving a given exchange in favor of one that will.
Thomas added that Ripple’s own digital currency, known as XRP, is less vulnerable to forks or unpredictable changes because, unlike bitcoin, it relies on voting measures that favor users more than miners.
Coinbase declined to say whether its stance towards Bitcoin Cash is because of any concern about the price of bitcoin. But a source close to the company who did not wish to speak publicly told Fortune that a big reason for its decision relates to the cost and complexity of supporting a new type of currency, and for ensuring that any new currency is secure from robberies.
This is unlikely to be the end of the drama for the bitcoin owners. Even though it appeared the bitcoin community reached a consensus in mid-July over improving its underlying blockchain software, those improvements have yet to be put into effect, and another fork could occur in the future.
All of the controversy over the August 1 fork, however, appears to have done little to spook crypto-currency. As of Monday evening, bitcoin prices were around $2,850, not far from its all-time high of just over $3,000.
Correction: an earlier version of this story said Coinbase customers could, prior to July 31, transfer custody of the “private keys” to their Coinbase wallet. It’s been amended to say Coinbase required customers to move their bitcoin to an outside wallet.
Coinbase blames extreme buyer demand for last month's bitcoin cash disaster
The price of bitcoin cash surged on December 19 after Coinbase added support for the cryptocurrency. Markets Insider
- Massive demand for bitcoin cash sent prices spiking on December 19, the first day the popular exchange Coinbase let its users trade the new cryptocurrency, according to the company.
- Some 90% of requests on the exchange were from people looking to buy, according to Coinbase, which meant demand for bitcoin cash far outstripped supply.
- Coinbase was highly criticized following its launch of bitcoin cash trading, with some users speculating that insider trading sent the price flying.
Coinbase says extreme user demand is to blame for the huge spike in the price of bitcoin cash seen on its marketplace when the company opened up trading in the new cryptocurrency last month.
When the company first launched support for bitcoin cash on its GDAX exchange December 19, the price of the currency jumped from less than $2000 to $9,500, even as its price hovered around $3,600 on other exchanges.
That price surge occurred because 90% of the requests were from people looking to buy the newly added currency, Adam White, GDAX's general manager, said in a blog post published Tuesday. There simply wasn't enough bitcoin cash for sale for the amount of demand.
"Despite our best efforts to create a fair and orderly market, the launch did not go as expected, and we understand why many of our customers and members of the community are upset," White said.
In the post, White shared a detailed timeline of what went wrong. Coinbase kept trading in the currency open for a total of 2 minutes and 40 seconds on December 19 before cancelling all purchases until the next day. Around $15.5 million in trades were made, and 4,443 orders were placed, according to White, though most of the orders were cancelled by Coinbase because there wasn't enough bitcoin cash being sold.
Coinbase reopened trading in bitcoin cash on the GDAX exchange on December 20 and has allowed it since.
Coinbase is still looking into whether insider trading occurred
YouTube / Screenshot Price gains in the hours before Coinbase's official announcement, along with the subsequent halt in sales on the GDAX, led some users to accuse the company of insider trading and manipulating the exchange for its own benefit.
The company quickly responded to the criticism and launched its own investigation into the matter, though it has not made any results public.
"Given the price increase in the hours leading up the announcement, we will be conducting an investigation into this matter," Coinbase CEO Brian Armstrong said at the time. "If we find evidence of any employee or contractor violating our policies — directly or indirectly — I will not hesitate to terminate the employee immediately and take appropriate legal action."
Bitcoin cash is a relatively new cryptocurrency. It's a clone of bitcoin that operates separately and follows different technological protocols from the original. It was created on August 1 via a so-called hard fork in the original bitcoin blockchain.
Because of a longtime policy of supporting only established and vetted cryptocurrencies, Coinbase didn't support bitcoin cash when it launched. But after online uproar and a user exodus that jammed up its exchange, the company announced in August it would add support for the new cryptocurrency before the end of the year.
Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue
A new version of bitcoin hit the market on Tuesday and, on its second day of trading, it has already tripled in price and its market cap is now third biggest of all digital currencies.
Known as Bitcoin Cash, the new currency arrived via a so-called “fork” in which a faction of people who run the software that controls bitcoin started a breakaway version.
The price of Bitcoin Cash hovered between $200 and $300 for most of Tuesday and then suddenly shot up. As this screenshot from CoinMarketCap shows (look to the right of the graph), Bitcoin Cash has also appreciated in relation to bitcoin—one unit of the new currency is now worth about 30% of the original one:
Meanwhile, the price of the original bitcoin has, contrary to the fears of many bitcoin owners prior to the split, maintained its value. On Wednesday, bitcoin was trading around $2,700, which is not far from its all-time high of $3000.
As for Bitcoin Cash, it can be seen as a new asset class that achieved a valuation of $12 billion literally overnight (Update: as of mid-afternoon, the price had fallen to closer to $450 for a market cap closer to $8 billion.)
It’s unclear if Bitcoin Cash will be able maintain its value since, like other digital currencies, its real world use is limited and its value derives primarily from what investors assign to it.
And part of Bitcoin Cash’s surge in value may be tied to a liquidity issue arising from a decision by some exchanges to refuse to distribute the new currency to their customers.
Lawsuits Brewing
The creation of the fork in bitcoin’s blockchain—the software ledger that permanently records all transactions—by a minority of bitcoin operators followed a period of bitter infighting in the bitcoin community.
The details are esoteric (they center on the size and processing speed of the “blocks” on the blockchain), but the upshot is there are now two bitcoin blockchains, each with its own currency.
Upon the creation of the new chain, the breakaway faction chose to award Bitcoin Cash on a one-for-one ratio to every owner of bitcoin. So if a person owns five bitcoins, they are entitled to five units of Bitcoin Cash.
This scheme has been complicated, however, by the decision of the world’s biggest bitcoin exchange, Coinbase, not to support Bitcoin Cash. For practical purposes, this means the millions of people who maintain a wallet on Coinbase did not receive the new “Cash” and, as of now, there is no way for them to do so.
Coinbase has clearly stated the company is not taking customers’ Bitcoin Cash for themselves, but its decision to withhold the new currency has led one prominent legal scholar to suggest the company will be sued.
And, indeed, that now looks likely to transpire. An activist group, which claims Coinbase’s decision is akin to a brokerage withholding new shares from its investors, warns it will commence a class action suit after August 15 if the company doesn’t release the Bitcoin Cash.
Meanwhile, an attorney named Priyanka Ghosh-Murthy told Fortune she intends to file a complaint—invoking negligence, breach of fiduciary duty, and unjust enrichment—in Florida by the end of the week.
Coinbase, which set out its decision on Bitcoin Cash in a July 27 blog post, did not immediately respond to a request for comment.
Update: On Thursday afternoon, Coinbase reversed course and said it would support Bitcoin Cash—but only starting in January, 2018.
Coinbase investigates possible insider trading of bitcoin cash
A bitcoin spinoff called bitcoin cash has been suspended from one of the most popular exchanges after possible insider trading by that exchange's staff.
The cryptocurrency website Coinbase said it was looking into price movements that occurred shortly after Coinbase launched bitcoin cash on its exchange.
Coinbase CEO Brian Armstrong said in a message posted to his blog that it suspended trading of bitcoin cash after seeing a wild price increase on other exchanges before its launch.
"If we find evidence of any employee or contractor violating our policies — directly or indirectly — I will not hesitate to terminate the employee immediately and take appropriate legal action," said Armstrong in his blog.
Bitcoin cash is an alternative form of bitcoin that emerged in August. It features a change in the digital software that was designed to speed up the efficiency of transactions as the value of bitcoin ballooned.
Armstrong said that all Coinbase employees and contractors were "explicitly prohibited" more than a month ago from trading in bitcoin cash and from revealing launch plans.
Coinbase did allow some trades for bitcoin cash on Tuesday. But just minutes after opening, Coinbase suspended trades and eventually canceled orders.
The price of bitcoin cash soared to $9,500 as trading began on the Coinbase exchange, GDAX, according to coinmarketcap.com, which tracks transactions. Coinmarketcap placed a red flag on that price and refers to it as "excluded," noting there was an "outlier detected." Coinbase does not recognize the $9,500 price on its exchange.
On other exchanges, such as Kraken, bitcoin cash traded at about $3,600 on Wednesday.
Coinbase is a trading site popular with digital currencies like ethereum and litecoin as well as bitcoin, the original cryptocurrency which was trading at about $17,000 on Wednesday. Coinbase tends to drive up prices for cryptocurrencies, like bitcoin, when it includes them in its exchange.
The company, which is based in San Francisco, declined to comment about the price increase to CNNMoney. Attempts to contact the creators of bitcoin cash were unsuccessful.
Unlike traditional currencies, cryptocurrencies are not backed by any government, prompting outgoing Federal Reserve Chairwoman Janet Yellen to call them "highly speculative.
The rising value of bitcoin, which has increased about 20-fold this year, has prompted greater scrutiny by the Securities and Exchange Commission. Even more scrutiny can be expected now that bitcoin futures are trading on the Chicago Mercantile Exchange.
For example, the SEC on Tuesday suspended trading of The Crypto Company, a red-hot bitcoin stock, citing "concerns regarding the accuracy and adequacy of the information." The SEC has warned investors to be on the lookout for "potential scams" regarding initial coin offerings, which are fundraisers used by cryptocurrency companies, as it recently shut a couple of them down.
Hackers have also created concerns, stealing as much as $70 million from the cryptocurrency marketplace NiceHash. It's also a problem in South Korea, the global epicenter for cryptocurrency, where the bitcoin exchange Youbit filed for bankruptcy on Wednesday after cyber-thieves raided a fifth of its clients' holdings.
Buy, sell, send and receive Bitcoin Cash on Coinbase
We’re excited to announce that customers will be able to buy, sell, send and receive Bitcoin Cash on Coinbase. You can read more about Bitcoin Cash on our FAQ page.
Sends and receives are available immediately. Buys and sells will be available to all customers once there is sufficient liquidity on GDAX. We anticipate that this will take a few hours. See our update below.
Our customers should benefit from forks
Coinbase operates by the principle that our customers should benefit to the greatest extent possible from forks or other networks events. This is essential in our mission to make Coinbase the most trusted, safe, and easy-to-use digital currency exchange.
Bitcoin Cash was created by a fork on August 1st, 2017. All customers who held a Bitcoin balance on Coinbase at the time of the fork will now see an equal balance of Bitcoin Cash available in their Coinbase account. Your Bitcoin Cash balance will reflect your Bitcoin balance at the time of the Bitcoin Cash Fork, which occurred at 13:20 UTC, August 1, 2017. You can read more about what a bitcoin fork is here and our previous update on Bitcoin Cash here.
We have been monitoring the Bitcoin Cash network over the last few months and have decided to enable full support including the ability to buy, sell, send and receive. Factors we considered include developer and community support, security, stability, market price and trading volume. You can learn more about Bitcoin Cash here.
We will abbreviate Bitcoin Cash as BCH on our platform. Customers will be able to buy Bitcoin Cash using all of our supported fiat currencies: USD, EUR, GBP, CAD, AUD and SGD.
Coinbase maintains a strict trading policy and internal guidelines for employees. Coinbase employees have been prohibited from trading in Bitcoin Cash for several weeks.
Update on December 19 at 8:15pm
Bitcoin Cash sends and receives are functional. Buys and sells on the Coinbase website and in our mobile apps will be available to all customers once there is sufficient liquidity on GDAX. We anticipate that this will happen tomorrow.
Update on Bitcoin Cash
We wanted to give our customers an update on the recent Bitcoin hard fork. You can read more about what a digital currency fork is here.
Forks enable innovation and improvements to digital currency and we believe that we will see an increasing number of forks in the future. We expect this to be a vibrant and innovative community.
When a digital currency forks, it creates a new digital asset. Adding new digital assets to Coinbase must be approached with caution. Not every asset is immediately safe to add to Coinbase from a technical stability, security, or compliance point of view.
Our top priority is the safety of customer funds and we spend extensive time designing, building, testing and auditing our systems to ensure that the digital assets we support remain safe and secure. We may not always be first in adding an asset, but if we do, you can be sure that we’ve invested significant time and care into supporting it securely. We believe this is the best approach for us to maintain customer trust.
In the case of bitcoin cash, we made clear to our customers that we did not feel we could safely support it on the day it was launched. For customers who wanted immediate access to their bitcoin cash, we advised them to withdraw their bitcoin from the Coinbase platform. However, there are several points we want to make clear for our customers:
- Both bitcoin and bitcoin cash remain safely stored on Coinbase.
- Customers with balances of bitcoin at the time of the fork now have an equal quantity of bitcoin cash stored by Coinbase.
- We operate by the general principle that our customers should benefit to the greatest extent possible from hard forks or other unexpected events.
Over the last several days, we’ve examined all of the relevant issues and have decided to work on adding support for bitcoin cash for Coinbase customers. We made this decision based on factors such as the security of the network, customer demand, trading volumes, and regulatory considerations.
We are planning to have support for bitcoin cash by January 1, 2018, assuming no additional risks emerge during that time.
Once supported, customers will be able to withdraw bitcoin cash. We’ll make a determination at a later date about adding trading support. In the meantime, customer bitcoin cash will remain safely stored on Coinbase.
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Your search engine does not find any satisfactory results for searches. It is too weak. Also, the server of bing is often off
I created a yahoo/email account long ago but I lost access to it; can y'all delete all my yahoo/yahoo account except for my newest YaAccount
I want all my lost access yahoo account 'delete'; Requesting supporter for these old account deletion; 'except' my Newest yahoo account this Account don't delete! Because I don't want it interfering my online 'gamble' /games/business/data/ Activity , because the computer/security program might 'scure' my Information and detect theres other account; then secure online activities/ business securing from my suspicion because of my other account existing will make the security program be 'Suspicious' until I'm 'secure'; and if I'm gambling online 'Depositing' then I need those account 'delete' because the insecurity 'Suspicioun' will program the casino game 'Programs' securities' to be 'secure' then it'll be 'unfair' gaming and I'll lose because of the insecurity can be a 'Excuse'. Hope y'all understand my explanation!
I want all my lost access yahoo account 'delete'; Requesting supporter for these old account deletion; 'except' my Newest yahoo account this Account don't delete! Because I don't want it interfering my online 'gamble' /games/business/data/ Activity , because the computer/security program might 'scure' my Information and detect theres other account; then secure online activities/ business securing from my suspicion because of my other account existing will make the security program be 'Suspicious' until I'm 'secure'; and if I'm gambling online 'Depositing' then I need those account 'delete' because the insecurity 'Suspicioun' will program the casino game 'Programs' securities' to be… more
chithidio@Yahoo.com
i dont know what happened but i can not search anything.
Golf handicap tracker, why can't I get to it?
Why do I get redirected on pc and mobile device?
Rahyaftco@yahoo.com
RYAN RAHSAD BELL literally means
Question on a link
In the search for Anaïs Nin, one of the first few links shows a picture of a man. Why? Since Nin is a woman, I can’t figure out why. Can you show some reason for this? Who is he? If you click on the picture a group of pictures of Nin and no mention of that man. Is it an error?
Repair the Yahoo Search App.
Yahoo Search App from the Google Play Store on my Samsung Galaxy S8+ phone stopped working on May 18, 2018.
I went to the Yahoo Troubleshooting page but the article that said to do a certain 8 steps to fix the problem with Yahoo Services not working and how to fix the problem. Of course they didn't work.
I contacted Samsung thru their Samsung Tutor app on my phone. I gave their Technican access to my phone to see if there was a problem with my phone that stopped the Yahoo Search App from working. He went to Yahoo and I signed in so he could try to fix the Yahoo Search App not working. He also used another phone, installed the app from the Google Play Store to see if the app would do any kind of search thru the app. The Yahoo Search App just wasn't working.
I also had At&t try to help me because I have UVERSE for my internet service. My internet was working perfectly. Their Technical Support team member checked the Yahoo Search App and it wouldn't work for him either.
We can go to www.yahoo.com and search for any topic or website. It's just the Yahoo Search App that won't allow anyone to do web searches at all.
I let Google know that the Yahoo Search App installed from their Google Play Store had completely stopped working on May 18, 2018.
I told them that Yahoo has made sure that their Yahoo members can't contact them about anything.
I noticed that right after I accepted the agreement that said Oath had joined with Verizon I started having the problem with the Yahoo Search App.
No matter what I search for or website thru the Yahoo Search App it says the following after I searched for
www.att.com.
WEBPAGE NOT AVAILABLE
This webpage at gttp://r.search.yahoo.com/_ylt=A0geJGq8BbkrgALEMMITE5jylu=X3oDMTEzcTjdWsyBGNvbG8DYmyxBHBvcwMxBHZ0aWQDTkFQUEMwxzEEc2VjA3NylRo=10/Ru=https%3a%2f%2fwww.att.att.com%2f/Rk=2/Es=plkGNRAB61_XKqFjTEN7J8cXA-
could not be loaded because:
net::ERR_CLEARTEXT_NOT_PERMITTED
I tried to search for things like www.homedepot.com. The same thing happened. It would say WEBPAGE NOT AVAILABLE. The only thing that changed were all the upper and lower case letters, numbers and symbols.
Then it would again say
could not be loaded because:
net::ERR_CLEARTEXT_NOT_PERMITTED
This is the same thing that happened when Samsung and At&t tried to do any kind of searches thru the Yahoo Search App.
Yahoo needs to fix the problem with their app.
Yahoo Search App from the Google Play Store on my Samsung Galaxy S8+ phone stopped working on May 18, 2018.
I went to the Yahoo Troubleshooting page but the article that said to do a certain 8 steps to fix the problem with Yahoo Services not working and how to fix the problem. Of course they didn't work.
I contacted Samsung thru their Samsung Tutor app on my phone. I gave their Technican access to my phone to see if there was a problem with my phone that stopped the Yahoo Search App from working. He went to Yahoo and… more
Coinbase blames extreme buyer demand for last month's bitcoin cash disaster
The price of bitcoin cash surged on December 19 after Coinbase added support for the cryptocurrency. Markets Insider
- Massive demand for bitcoin cash sent prices spiking on December 19, the first day the popular exchange Coinbase let its users trade the new cryptocurrency, according to the company.
- Some 90% of requests on the exchange were from people looking to buy, according to Coinbase, which meant demand for bitcoin cash far outstripped supply.
- Coinbase was highly criticized following its launch of bitcoin cash trading, with some users speculating that insider trading sent the price flying.
Coinbase says extreme user demand is to blame for the huge spike in the price of bitcoin cash seen on its marketplace when the company opened up trading in the new cryptocurrency last month.
When the company first launched support for bitcoin cash on its GDAX exchange December 19, the price of the currency jumped from less than $2000 to $9,500, even as its price hovered around $3,600 on other exchanges.
That price surge occurred because 90% of the requests were from people looking to buy the newly added currency, Adam White, GDAX's general manager, said in a blog post published Tuesday. There simply wasn't enough bitcoin cash for sale for the amount of demand.
"Despite our best efforts to create a fair and orderly market, the launch did not go as expected, and we understand why many of our customers and members of the community are upset," White said.
In the post, White shared a detailed timeline of what went wrong. Coinbase kept trading in the currency open for a total of 2 minutes and 40 seconds on December 19 before cancelling all purchases until the next day. Around $15.5 million in trades were made, and 4,443 orders were placed, according to White, though most of the orders were cancelled by Coinbase because there wasn't enough bitcoin cash being sold.
Coinbase reopened trading in bitcoin cash on the GDAX exchange on December 20 and has allowed it since.
Coinbase is still looking into whether insider trading occurred
YouTube / Screenshot Price gains in the hours before Coinbase's official announcement, along with the subsequent halt in sales on the GDAX, led some users to accuse the company of insider trading and manipulating the exchange for its own benefit.
The company quickly responded to the criticism and launched its own investigation into the matter, though it has not made any results public.
"Given the price increase in the hours leading up the announcement, we will be conducting an investigation into this matter," Coinbase CEO Brian Armstrong said at the time. "If we find evidence of any employee or contractor violating our policies — directly or indirectly — I will not hesitate to terminate the employee immediately and take appropriate legal action."
Bitcoin cash is a relatively new cryptocurrency. It's a clone of bitcoin that operates separately and follows different technological protocols from the original. It was created on August 1 via a so-called hard fork in the original bitcoin blockchain.
Because of a longtime policy of supporting only established and vetted cryptocurrencies, Coinbase didn't support bitcoin cash when it launched. But after online uproar and a user exodus that jammed up its exchange, the company announced in August it would add support for the new cryptocurrency before the end of the year.
Coinbase says it will support Bitcoin Cash after all — but it isn’t committed to trading yet
Coinbase, one of the world’s largest (if not the) largest cryptocurrency exchanges, has reversed its stance on Bitcoin Cash and said it will introduce support for the fork next year.
Coinbase was among numerous exchanges to opt out of trading Bitcoin Cash after it came into existence on August 1 on the grounds that it wasn’t proven or safe. Beyond refusing to facilitate trading, Coinbase also said it wouldn’t allow customers storing original Bitcoin on its platform to claim their Bitcoin Cash entitlement. Those who wanted it were told to remove their coins and go elsewhere to do that.
But now the company — which was started by former Airbnb engineer Brian Armstrong (pictured above) and is reportedly raising funding at a $1 billion valuation — has changed its stance slightly. It told customers via email that it will introduce “support” for Bitcoin Cash by January 1.
“Once supported, customers will be able to withdraw Bitcoin Cash. We’ll make a determination at a later date about adding trading support,” Coinbase said.
In other words, let’s see what happens before we commit to trading
That’s almost certainly a response to anger from Coinbase customers, who threatened to move their coins elsewhere and, in some cases, take legal action over their Bitcoin Cash entitlement. (Tl;dr people like free stuff, especially people who are into crypto.) It is unclear exactly what impact this had on the Coinbase business, but signs aren’t great. One analytics firm estimated that its cold storage reserves dropped to half of their previous level following customer withdraws.
Yet, despite that, a number of Coinbase investors told Business Insider that they aren’t overly concerned about the pushback, while the overall future of Bitcoin Cash itself is unclear. Principally that’s because the fork has the same mining difficulty as Bitcoin, but a smaller fraction of its hashrate.
Right now, Bitcoin Cash became the third largest cryptocurrency based on total coins in the market on day one, but it’s $7 billion market cap trails Bitcoin ($44 billion) and Ethereum ($21 billion) by some way. Its situation may have changed by January, too, while also Coinbase has tended to take a conservative approach to bringing new currencies on.
Right now it offers trading for Bitcoin, Ethereum and Litecoin — the latter of which was only added this past May despite gaining significant attention in 2013. Indeed, Litecoin’s founder had been director of engineering at Coinbase for nearly four years before leaving this summer — that gives some insight into how stringent its policy is.
Note: Article corrected to note that Litecoin founder Charlie Lee is no longer with Coinbase.
Should Coinbase Stop Selling Bitcoin Cash?
- More on Bitcoin
It's Now Cheaper to Bankrupt Crypto Networks
Ever since it was launched, bitcoin cash has been engaged in a “civil war” of sorts with its parent, bitcoin. Bitcoin cash proponents claim it represents bitcoin founder Satoshi Nakamoto’s original vision for a cryptocurrency because it has a variable block size to enable fast and easy transaction processing on its platform. But critics claim bitcoin cash is profiting from bitcoin’s brand and attempting to usurp its position.
Cryptocurrency exchange Coinbase was drawn into the war this week after Misha Guttentag wrote a Medium post asking it to stop offering investors the facility to buy bitcoin cash through its platform. The recent Yale Law graduate claims that bitcoin cash is engaged in “consumer fraud” and “misrepresentation.”
Coinbase included bitcoin cash on its exchange last year. The news, which was announced suddenly, resulted in a surge in bitcoin cash’s price and led to an outage on Coinbase. (See also: Coinbase Investigates Possible Insider Trading Before Bitcoin Cash Announcement.)
The Problem With Bitcoin Cash
To make his case against bitcoin cash, Guttentag illustrated a number of instances where the currency has deliberately copied bitcoin or deluded investors into thinking that they were dealing with the original.
For example, Roger Ver, a vociferous backer of bitcoin cash, owns bitcoin.com, possibly a first stop for potential coin investors interested in learning about the topic. (See also: Who Is Roger Ver aka Bitcoin Jesus?)
The site offers a downloadable wallet that stores bitcoin cash, instead of bitcoin, but does not explain differences between the two. Instead, it takes advantage of the striking similarity between the logos of bitcoin and bitcoin cash to advertise its wallet. (See also: Bitcoin vs. Bitcoin Cash: What's The Difference?)
According to Guttentag, Coinbase is endorsing bitcoin cash’s attempts to portray itself as bitcoin by allowing its purchase on the platform. “Coinbase has got to get rid of this thing. It is toxic for Coinbase’s brand,” he writes, adding that Coinbase can kill “two birds with one stone” by eliminating support for bitcoin purchases on its exchange.
First, it will make amends for its “mistake” in supporting bitcoin cash without prior notification. Second, the move will warn other coins interested in being listed on its exchange that “that kind of behavior might work on other unregulated exchanges, but not here,” Guttentag wrote.
That this is a sensitive topic within cryptocurrency circles is obvious from the responses to Guttentag’s post. The commenters are divided between support and disdain for bitcoin cash and have expounded at length for their position. Meanwhile, bitcoin cash has partially reversed its precipitous decline from the beginning of this year. The cryptocurrency started the year trading at $2510 and fell to $783 on Tuesday morning. At 3:11 UTC, as of this writing, it was trading at $1240.85, up 24.4% from its price 24 hours ago.
Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns small amounts of bitcoin.
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