Bitcoin is facing a major threat as a cloned cryptocurrency that shares its name and many of its key features launched on one of the largest cryptocurrency exchanges, sending Bitcoin prices tumbling.
Bitcoin's price fell 10 per cent on Tuesday as Bitcoin Cash, a rival digital coin, arrived on Coinbase, one of the most popular cryptocurrency trading platforms. Bitcoin has fallen from almost $20,000 (£15,000) on Sunday to under $17,000 on Wednesday morning.
Bitcoin Cash was launched over the summer by a splinter faction of cryptocurrency developers. It has gained traction in recent months soaring to around $3,000 (£2,200) per coin and jumping almost 50 per cent in overnight trading.
The price of Bitcoin Cash briefly reached more than $8,500 on Coinbase's own exchange, significantly more than the $3,500 it was trading at on other indexes.
Coinbase was forced to halt Bitcoin Cash trading its...
After months of rumors, it's official: Bitcoin Cash (BCH) is coming to Coinbase.
A blog post on Tuesday has officially confirmed what many have been speculating for months: Bitcoin Cash—a fork of the Bitcoin blockchain—is headed to popular cryptocurrency brokerage Coinbase, effective as soon as there is "sufficient liquidity" on GDAX.
Users will be able to buy, sell, send, and receive Bitcoin Cash on the platform.
This follows a recent surge in price in BCH. Following the announcement, Bitcoin plunged by 12 percent, dropping below $17K, while BCH jumped several hundred dollars, clearing the $3K mark. The current listed price on CoinMarketCap is $3,387.54.
In the post, Coinbase expressed their belief that customers should not be hurt by forks that occur outside their control, saying:
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.
Coinbase's previous update about Bitcoin Cash can be found here. Read this post on Blockgeeks for more information on Bitcoin Cash.
Editor’s Note & Disclosure: The author invests in cryptocurrency markets. Neither the author nor Forbes endorses participation in any token sale or cryptocurrency investment, all of which have significant inherent risk. Seek advice from a financial advisor as well as do your own due diligence before considering investment.
Image copyright Getty Images Image caption Coinbase's chief executive said he had emailed staff ordering them to keep the Bitcoin Cash launch a secret
One of the US's leading crypto-currency exchanges is carrying out an insider trading investigation.
Coinbase fears its own workers may have exploited its move into Bitcoin Cash - a spin-off of the original Bitcoin.
The San Francisco-based firm announced the move after Bitcoin Cash's price jumped.
Coinbase began letting its users buy, sell, send and receive Bitcoin Cash on Tuesday in a surprise decision but has temporarily suspended trade.
The company's chief executive intervened after several market watchers posted allegations of illegal activity on social media sites.
Brian Armstrong responded that he had repeatedly warned his staff not to disclose its launch plans to family or friends or to trade in the digital asset themselves.
"It appears the price of Bitcoin Cash on other exchanges increased in the hours before our announcement," he wrote on the news site Medium.
"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."
Image copyright Reuters Image caption Bitcoin Cash was created four months ago
Bitcoin Cash - which is no more tangible than Bitcoin itself - came into being in August after several developers became frustrated at lengthening transaction times for the original crypto-currency.
Bitcoin Cash addressed this problem by tweaking the underlying technology - the blockchain - to allow bigger chunks of data to be processed at a time.
Although there have been other Bitcoin splits before, this "fork" was unusual in that everyone who owned the original virtual currency was offered a matching sum of Bitcoin Cash. This effectively created money out of nothing.
However, many exchanges, including Coinbase, initially refused to support the innovation, casting doubt on its prospects.
Price surge
Claims of insider dealing were not the only hitch that Coinbase experienced when it finally added support for the new asset.
Trade of Bitcoin Cash was frozen just four minutes after it began on the firm's Global Digital Asset Exchange (Gdax) and existing orders were cancelled.
The move seems to have been a reaction to an apparent price surge in Bitcoin Cash on the platform beyond its already elevated level elsewhere.
When Coinbase launched Bitcoin Cash at 17:20 PST (01:20 BST) it was valued at about $3,500 (£2,612) per coin.
At the time it suspended it, the company was quoting a price of about $8,500. It remains unclear whether or not this was a software glitch or if deals were really being made at this level.
Coinbase has yet to give a full explanation but has said that it intends to reopen Bitcoin Cash order books later on Wednesday.
Bitcoin Cash is currently the world's third biggest crypto-currency with a total market capitalisation of about $59bn, according to Coinmarketcap.
That compares with there being $77bn worth of Ethereum and $282bn worth of the original Bitcoin.
Bitcoin fell Tuesday after Coinbase, the leading platform for buying and selling bitcoin in the United States, said Tuesday it was rolling out support for bitcoin cash.
"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," Coinbase said in a blog post Tuesday.
However, Coinbase said in a subsequent, 11:15 p.m. ET tweet that buying and selling would likely not be available until Wednesday. Bitcoin cash trading was also suspended on GDAX until noon ET Wednesday. Coinbase has struggled several times this year to keep up with high demand.
Bitcoin cash split off from the original bitcoin on Aug. 1 after a group of developers decided to try to improve bitcoin transaction speeds and costs. Roger Ver, an outspoken and early bitcoin investor, is a major supporter of bitcoin cash.
The majority of developers who supported the original bitcoin failed to reach an agreement this fall on their own upgrade proposal, SegWit2x.
The offshoot currency soared more than 70 percent Tuesday evening ET to a record high of $3,813.70 and was trading near $3,339 as of 11:37 p.m., ET, according to CoinMarketCap.
The original bitcoin was down about 10 percent to near $17,074, according to Coinbase, after earlier dropping as low as $15,005.
Investors in bitcoin at the time of the split should have received an equivalent amount of bitcoin cash, but Coinbase did not immediately do so, and said it would provide support by January. On Tuesday, Coinbase said all customers at the time of the split would have bitcoin cash.
The announcement follows news in the last few days that a large bitcoin payments processor BitPay and major cryptocurrency storage company Blockchain would support bitcoin cash.
Clarification: This story has been updated to reflect that Coinbase would soon allow customers to buy and sell bitcoin cash. The service was not available immediately.
