Cryptocurrency exchange Coinbase says it will support the new bitcoin cash by 1 January 2018. This represents a change of mind for the exchange. Before the bitcoin fork on 1 August that created the cash version, Coinbase said it would not support it.
David Farmer, director of communications at Coinbase, has explained the thinking behind the move on the Coinbase blog. He said that a digital currency fork 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, he says. Over the last several days, Coinbase has examined all of the relevant issues and decided to work to add support for bitcoin cash for its customers.
Decisive factors behind U-turn
Coinbase made the decision based on factors such as
- security of the network
- customer demand
- trading volumes
- regulatory considerations
It plans to have support for bitcoin cash by 1 January assuming no additional risks emerge. Once supported, customers will be able to withdraw bitcoin cash. The exchange will make a determination at a later date about adding trading support.
In the meantime, customer bitcoin cash will remain safely stored on Coinbase.
Coinbase says there there are several points to make clear for 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
- It operates by the general principle that its customers should benefit to the greatest extent possible from hard forks or other unexpected events
Forks are usually bad
Ahead of the fork, blockchain expert David Siegel commented: “Forks are usually bad. Forks are generally philosophical bordering on political, and they create bad will among the different camps of the cryptocommunity, which doesn't help the overall image.
“Even if one fork 'wins' and is called bitcoin, it's a blow to gaining the confidence of people around the world who deserve a better monetary system.”
After the event, he said: “It's what I predicted: buy on the rumour, sell on the news. What's important is to look at the combined value, and it's a bit up. From here, it's anyone's guess. The fact that the uncertainty has been released has been good for ether."
Ether is a rival cryptocurrency to bitcoin.
Bitcoin cash value?
On the morning of writing (4 August) bitcoin cash was worth US$322.74 according to bitinfocharts.com, having reached around $750 at one point. Bitcoin original was $2,838.63.