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Bitcoin Cash (BCH) spiked today because it was added to Coinbase, the most popular cryptocurrency trading platform in the U.S.
Bitcoin Cash is a hard fork of the original Bitcoin blockchain.
The hard fork happened on August 1st, 2017.
A hard fork is a change in the software rules regarding how the blockchain functions, specifically how the blockchain allows new blocks to be created, validated and added to the chain.
The fork changed the block size limit from one megabyte (Bitcoin) to eight megabytes (Bitcoin Cash).
Holders (HODLers?) of Bitcoin before August 1st should have received an equal amount of Bitcoin Cash to their Bitcoin.
However, on July 28th, 2017, Coinbase announced that it did not intend to support the Bitcoin Cash that would result from hard fork of Bitcoin.
Then, in August, Coinbase backpedaled slightly, and announced that it would provide “support” for Bitcoin Cash on January 1st, 2018.
Why Did Bitcoin Cash (BCH) Spike Today In Particular?
Today Coinbase surprised everyone by adding Bitcoin Cash to its trading platform.
This expanded the number of cryptocurrencies it accepts from three to four:
- Bitcoin (BTC)
- Ether (ETH)
- Litecoin (LTC)
- Bitcoin Cash (BCH)
As the #1 U.S. trading platform for cryptocurrencies, massive interest in Bitcoin on Coinbase led to increased interest Ether and Litecoin.
It was anticipated that if Coinbase added support for Bitcoin Cash, that the exposure alone could cause the cryptocurrency to spike significantly.
Trading of Bitcoin Cash Halted Abruptly
Shortly after Bitcoin Cash was added to Coinbase, trading was halted abruptly.
The buying and selling of BCH was disabled on the platform four minutes after going live. Trading of Bitcoin Cash went live at 17:20 PST and was halted at 17:24 PST.
The last quoted price of Bitcoin Cash on Coinbase was at almost $9,000, or $6,000 above the market price only four minutes earlier.
The price of Bitcoin Cash can be found on CoinMarketCap.
The current status of Bitcoin Cash trading on Coinbase can be found here.
Greater Oversight of Cryptocurrencies
By offering trading of less than 1% of the cryptocurrencies available, Coinbase is being very restrictive in its coin offerings.
This is a good thing.
The increasingly scammy cryptocurrency market needs more exclusivity and control in the right places.
Just today, the SEC suspended trading on “The Crypto Company”, a public company that had seen its stock skyrocket recently. According to CNN:
The Securities and Exchange Commission suspended trading Tuesday of The Crypto Company until January 3, citing “concerns regarding the accuracy and adequacy of information” about compensation paid to promote the firm and plans for insider sales.
The Wall Street Journal published an article today on a new ICO (initial coin offering) with a coin that is broadly advertised by its founders as having “no purpose”. Nevertheless, the company has raised over half a billion dollars.
Other public companies, such as Overstock, are finding new opportunities by pivoting and reinventing themselves as blockchain companies.
The Paradox of Coinbase as Trusted Third Party
Blockchain technology promises to introduce greater efficiencies to many business models by eliminating the need for a trusted third party.
Ironically, by acting as a trusted third party, arbiter and exfoliator of cryptocurrencies, Coinbase is weeding out the garbage and revealing the hidden crypto-gems in which its clients may invest.
The thought behind it is useful. And the Coinbase service seems to be more reliable than other U.S. providers, such as Kraken.
Ultimately, by pruning the tree, Coinbase is providing a very valuable service to the cryptocurrency investor community.