Coinbase, the leading mainstream brokerage for buying bitcoin, added bitcoin cash to its platform on Tuesday night. Coinbase has more than 13 million customers. It also added bitcoin cash to GDAX, its separate exchange for institutional investors.
This makes bitcoin cash (BCH) the fourth digital token Coinbase deals in. The site, which launched in 2012, added ether (ETH), token of the ethereum network, in 2016, and added litecoin (LTC) earlier this year. Both of those coins have soared in 2017, by delivering higher price spikes than bitcoin.
It is a huge step for faith in bitcoin cash, and immediately sent the price of bitcoin cash so much higher that Coinbase and GDAX temporarily halted trading of bitcoin cash just four minutes after adding it. As of Dec. 20, the digital asset is up 630% in 2017, and 160% in the last month.
Accusations of insider trading
Bitcoin cash had already soared on Dec. 19 in the hours before Coinbase’s announcement, leading many to raise alarms about potential insider trading: people with knowledge that Coinbase would be adding bitcoin cash buying up the coin in the hours just before the announcement.
Bitcoin cash hit a new record high of $3,704 on Tuesday before Coinbase’s surprise announcement.
Very strange accumulation and pump on Bcash in the hours leading up to the @Coinbase BCH add. If I didn't know better, I'd think that was potential insider trading activity. @GDAX 'ed? #bitcoin #bcash #bch pic.twitter.com/leX8ro0MFf
— Whalepool (@whalepool) December 20, 2017
The accusations grew so loud so quickly that Coinbase CEO Brian Armstrong wrote a blog post, at 1 a.m. EST Tuesday night, in which he shared Coinbase’s employee trading policy and announced the company will investigate the run-up in price of bitcoin cash before its announcement.
“Given the price increase in the hours leading up the announcement, we will be conducting an investigation into this matter,” Armstrong wrote. “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.”
What is bitcoin cash?
Bitcoin cash resulted from a fork of the bitcoin blockchain on Aug. 1 of this year. Think of the coin as a bitcoin spinoff that runs on a faster network.
As demand has increased for the limited space on the bitcoin blockchain, the issue of transaction processing power stoked a fierce political debate amongst the bitcoin developer community over whether to expand the size limit of blocks, the bundles of transaction data that miners upload to the blockchain. The original bitcoin blockchain has a block size limit of 1 MB, while bitcoin cash runs on a blockchain with block size limit of 8 MB.
The idea of the fork was to create a separate blockchain that could move faster. The fork resulted in the creation of bitcoin cash. (See below for a Yahoo Finance video from August, just before the fork.)
What Coinbase says about bitcoin cash
At the time of the fork that created bitcoin cash, Coinbase and its CEO Brian Armstrong took criticism for not immediately adding it at its inception. Now, four months later, the company is yielding.
“We have been monitoring the Bitcoin Cash network over the last few months and have decided to enable full support,” Coinbase writes in a blog post. “Factors we considered include developer and community support, security, stability, market price and trading volume.”
All Coinbase customers who held any amount of bitcoin on Coinbase before the Aug. 1 fork that created bitcoin cash have been instantly credited with the same balance of bitcoin cash. So if you held 2 bitcoins on Coinbase before Aug. 1, you now have a separate bitcoin cash wallet with 2 BCH in it.
You can now buy bitcoin cash on Coinbase using US dollars, euros, British pounds, Canadian dollars, Australian dollars, and Singapore dollars. You can sell bitcoin cash via Coinbase once you have some, and you can send or receive bitcoin cash to or from your Coinbase BCH wallet.
Coinbase, in a BCH FAQ on its web site, also gives this pithy definition of bitcoin cash: “an alternative version of Bitcoin that makes use of new features and rules, and has a different development roadmap.”
A different roadmap, indeed. In the first hours after Coinbase’s announcement, BCH rose and BTC fell. Stay tuned to see how Coinbase’s addition of BCH will continue to impact the price here at the very end of 2017.
Disclosure: The author owns less than 1 bitcoin, purchased in 2015 for reporting purposes.
—
Daniel Roberts covers bitcoin and blockchain at Yahoo Finance. Follow him on Twitter at @readDanwrite.
Read more:
Bought bitcoin? You must practice ‘cold storage’
What exactly is the blockchain?