Why Bitcoin Cash Is A 'House Of Cards'

Why Bitcoin Cash Is A 'House Of Cards'

Why Bitcoin Cash Is A 'House Of Cards'

However, fast forward to today and Coinbase announced that it will support Bitcoin Cash after all, in what looks like an attempt to appease the horde of angry customers that either did not get its original message or couldn't withdraw their Bitcoin in time for the hard fork. Finally, its price crashed to $220 as the BitCoin crossed the $3,000 mark. We made this decision based on factors such as the security of the network, customer demand, trading volumes, and regulatory considerations.

Bitcoin cash plunged almost 36 percent Friday, falling about 9 percent to overnight to a low of $212.

Cryptocurrency exchange Coinbase will support the newly forked bitcoin cash currency after all, though customers will have to wait until 2018, and support will apply only to withdrawals.

Users started to complain on social media recently, accusing Coinbase of holding their Bitcoin Cash hostage and not properly informing them of what the hard fork would entail, and going as far as to threaten a class action lawsuit. Bitcoin cash removed compatibility with a more popular Segregated Witness upgrade proposal and expanded the size of the block - which limits the speed of transactions in the digital currency - from bitcoin's 1 megabyte to 8 megabytes. We have not been able to independently confirm that, but the Coinbase policy change may be an indication.

Trezor, another wallet, released a statement that bitcoin cash is still offline in the Trezor beta wallet as the Bitcore backend (Bitcoin ABC) reindexes. Namely, most bitcoin holders can't yet trade their bitcoin cash because only that portion held in exchanges can be traded.

Users were concerned regarding the status of their bitcoins. Earlier this month, Bitcoin shot past $2,000 for the first time in May and reached nearly $3,000 in June only for the valuation to crash.

The hard fork followed a process similar to cell division in biology, in that both currencies were exactly the same at the point of division, but will pursue different paths moving forward.

"I suspect the price drop is people selling newly minted" bitcoin cash, said Brian Kelly, a CNBC contributor and CEO of BKCM, which runs a digital assets strategy.

Others were concerned that Coinbase would secretly keep the bitcoin cash that was generated on Tuesday.

Sebastian Quinn-Watson, a venture partner for Blockchain Global, an Australia-based exchange, said some traders have said they will exit their BCC positions by August 8.

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