Most of the comments so far are misunderstanding the cause-effect relationship. Coinbase is signalling that the Bitcoin Cash fork will die and thus isn't worth the engineering effort to support. Because Coinbase is one of the more prominent voices in the industry, this signal diminishes the perceived value of Bitcoin Cash, which increases the chance that the actual value will indeed drop to zero (or never rise above it) if/when it comes into existence. Coinbase's announcement helps ensure the fork will die.
Their decision is rational even if you don't view them as an influencer. If the fork dies, they were smart to ignore it. If it thrives, they can add support later and nobody but short-term traders (who wouldn't have kept their funds in Coinbase to begin with) will have missed out on anything.
I agree with this entirely. Coinbase isn't just "one of the more prominent voices", they're also one of the more respectable voices. They come across as the bridge to more traditional systems (like banks and simplified consumer transactions), filtering out some of the more "radical" elements of the Bitcoin community, and a statement like this from them may well have a material effect on the efficacy of a fork.
They might well decide, afterward, to provide a means of cashing out the "alternate" currency after all. But even if they do, and even if they plan to at this point, there's PR value in them not saying that.
There is also a Machiavellian path where an exchange executes a devastatingly well-timed series of sales of its customers' holdings of the alternate version of the currency, thereby tanking the value and ensuring that its preferred outcome comes to pass. What it does with the minuscule revenue from that is probably irrelevant, but it'd make sense to credit to its customers' accounts as BTC.
As you say, Coinbase is a respectable firm, and it seems unlikely it would choose this tactic. But it would be consistent with a strategy to ensure the fork fails to thrive.
> Simple solution: Coinbase adds "convert BCC to BTC" button, which does exactly what you say, but charges a fee for this service.
That's exactly what I want. (That or a "convert BCC to cash" button, they're equivalent.) They already charge transactions fees. Just write a careful announcement saying something like "due to the nature of the fork, anyone with 1 BTC at time X is entitled to 1 BCC as well, and we're providing a service to cash in that BCC for you".
>I agree with this entirely. Coinbase isn't just "one of the more prominent voices", they're also one of the more respectable voices.
Yeah, wasn't their original pitch to be the "Gmail of the Bitcoin world" or something like that. The warm blues, friendly emails, YC backing, etc all point in that direction.
This cannot be underscored enough if BitC* is to be used for anything more than modern day drug dealing. The paper trail is important for things like paying taxes, and obeying sanctions[0] that businesses follow.
Correct me if I'm wrong, but if you hold BTC with Coinbase (or any wallet you don't control) you'd be extremely foolish not to pull it out now.
The value of BTC after the fork will presumably be the value of BTC + BCC after the fork. If BCC has any value at over the coming months, then that is effectively yours but inaccessible. And if it retains value, Coinbase is going to be in a very awkward situation where they're sitting on an asset that may or may not be yours any more.
-- EDIT:
Actually, the savviest move is probably to sell. Coinbase's position mean that it's more than likely that a lot of BCC is inaccessible even if it has value. That means BTC drops with no way to recover the lost value. Either the value of BCC drops to zero (and BTC recovers over time) or Coinbase eventually releases BCC (people who held it get BCC equivalent to the loss in BTC value). Either way if you sell immediately before the fork and purchase when it drops, you should retain the lost BCC value.
Selling is reasonable, but so is just withdrawing and taking the BCC, especially if you want to defer taxes. Coinbase won't let you sell the BCC directly, but you'll be able to exchange the BCC for BTC on many other exchanges quickly and easily, then you can just sell the additional BTC on coinbase.
Even so, there will be a certain amount of BCC that is locked up and unavailable on any market. For a time, there will be simply less BCC than BTC. BTC should remain suppressed while the question of the locked up BCC is resolved (either by tending to $0 or it becoming available to trade).
Given those assumptions, you might break even (or gain if you're particularly quick/smart) if you sell the BCC after the fork, but it would seem like you near guarantee a profit if you sell BTC before and buy back after. That profit is off the back off value locked up in BCC by users who didn't pull it out.
Well if I read those charts correctly you could've sold ETH at about $20 and bought at $12. It then stabilised around $15. And ETC was able to be sold for what, $1? Seems like selling and buying ETH would've been a good move.
Of course this stuff swings all over the place - you're as likely to get stung by some random swing in values as anything else I guess.
For Ethereum, was/is it possible to sell your coins on the fork you're not interested in? With BCC, you can create a transaction that transfers only BCC, thus allowing you to sell your newly-acquired BCC, while keeping your BTC.
I'd be interested in knowing if this were the same with Ethereum (Classic), since I would assume it would put a large selling pressure on the minority fork (the greater the minority the greater the relative selling pressure).
> For Ethereum, was/is it possible to sell your coins on the fork you're not interested in?
Yes. There was no replay protection (transactions were valid on both chains) but soon after the fork people created smart contracts that got initialized to a different state on each of the chains. So you could, e.g., send your coins to the smart contract which then would forward it to your address A on the first chain and to your address B on the second chain.
'wipeout' is a total longshot and we ought to be able to see it coming. either way it's not really a problem unless you have transactions on both versions to reconcile, and you can avoid that by simply not spending coin for a couple days. Coinbase can't just freeze everyones coin so having to reconcile with a fork after it achieves majority hashrate would be a real nightmare.
well sure, but i'm referring to additional risk relative to 8/1. if you were comfortable storing your money with Coinbase before then 8/1 shouldn't deter you.
Poloniex let's you do something very close: short BTC/USDT. USDT is a digital currency called Tether[1], one unit of which is approximately equal to $1.
Why not allow deposits of USD instead of the USDT workaround, you may ask? My theory is so that the exchange is not subject to the same level of oversight as it would if it accepted dollars - look at the BTC-e situation for example. What's amazing about Poloniex is that they're one of the most popular Bitcoin/altcoin exchanges, and almost nothing is known about those running it (it's US based).
Coinbase's handling of this is completely reasonable.
Anyone can create an altcoin fork of Bitcoin at any time, and they can do it as many times as they want. Coinbase may not even know about it.
ABC isn't the first fork to award coins to existing Bitcoin users, there have been several others like Clams and bitcore (https://bitcointalk.org/index.php?topic=1883902.0) (how deceptive these jerks are...).
In spite of the seriously short notice coinbase had done an admirable job taking a clear and consistent position and communicating it to the public. It's a position that can be applied to any further such events. In ABC's case they took serious bludgeoning just to get the most basic replay protection into place-- and they still have many unnecessary conflicts with Bitcoin: duplicate address types, duplicate p2p port, duplicate p2p magic, duplicate data dir... all making it unnecessarily complicated and risky for people who want to use their altcoin.
Consider if they went another way-- what about the next one? and the one after it? People could effectively flood them with them, a fork a week-- forks that contain malware backdoors that steal Bitcoin keys, forks that will never have more than a few dozen users. forks that are only publicly announced months after they split off (but pretend to have been public all along).. etc.
No one can reasonably keep up with that. If you want to chase some of these silly things, that is your decision-- one which you have the freedom to make by keeping your Bitcoin's in your custody. Expecting other people to deal with those potentially unbounded costs on your behalf wouldn't be reasonable.
I don't think they could have done that much about the timing, aside from having a general policy announced in advance:
Just a couple weeks ago this "UAHF" thing was something Bitmain saying they would only do if BIP148 resulted in a split chain (which seemed pretty unlikely).
It would have been nice if there had been some kind of indication of the cross-posting, but this looks more like simple copy-pasting than a spambot. HN voting can absolutely handle that. (Have you you noticed the recent spam campaign about oh so easy ways to make money working from home? Probably not, if you don't have showdead on.)
While bitcoin abc is the main bitcoin cash implementation for now, the plan is to have multiple "independent development teams" for BCC [https://www.bitcoincash.org/].
It is true that BCC will be a continuation of the original chain, and it is also true that in some substantial sense bitcoin cash can be said to be a continuation of the original bitcoin blockchain and incentive model to a greater degree than bitcoin core will soon be, as bitcoin core moves over to segregated witness with a "block weight cap" rather than "block size cap".
I therefore rate MichaelBurge's sentence "BCC is not actually a fork but is the original chain/software, isn't it?" as false (it is a fork), true (it is a continuation of the original chain), and true (it is a continuation of the original software).
I suppose there's actually 3 forks in scope: The Segwit chain that Coinbase is supporting, the big-blocks ABC chain that they are denouncing, and the original chain that nobody seems to want. And I think I heard rumors of a Segwit + 2MB blocks fork?
Or are the Segwit chains completely irrelevant here?
the third fork is https://github.com/btc1/bitcoin which combines segwit and large blocks, afaik they all support segwit - they just differ in how they reach consensus. I don't think anyone is pushing for no change since transaction fees and latency what they are it's pretty clear something has to change.
No, segwit is an optional backwards compatible protocol extension that people can choose to use... not a fork. You can bridge an original bitcoin node onto the network using segwit and modulo segwit unrelated software bugs that just make it get stuck, it will reach consensus with the network fine.
Not only is it a fork of the software, it is a fork of the blockchain. Traditional alt-coins fork the software but start over with their own blockchain.
More than a few altcoins have started with another altcoin's blockchain. Litecoin is more popular but it's been done before with Bitcoin too. (taking the whole chain has some pretty serious disadvantages however).
I'm a little surprised they won't at least let you withdraw the Bitcoin Cash. Otherwise it seems like they're asking for a "run on the bank" with a bunch of people pulling out Bitcoin.
If BCC is even 10% as valuable as the main chain(Ethereum Classic is still at ~$15 vs. $200 for Ethereum main, it looks like), then why wouldn't people take the free money?
A "run on the bank" would be annoying for them because it would mean they have to pull a bunch of money out of cold storage. But I suppose allowing BCC withdrawals would have the same problem, and might add even more risk since there'd be temporary code involved.
I wonder if they plan to sell customers' unclaimed BCC for themselves if it later retains any significant value.
They are at least consistent: They did the same thing with Stellar earlier. Which makes sense, since there seem to be a lot of fork-like ways to get alternative cryptocurrencies if you hold Bitcoin, and it's probably less hassle to not deal with each unique situation.
> Otherwise it seems like they're asking for a "run on the bank" with a bunch of people pulling out Bitcoin.
To be clear, Coinbase should have adequate Bitcoins on hand to cover 100% of customer balances. Even if every single customer withdraws every single Bitcoin, the only effect on Coinbase should be a few engineers, accountants, and customer service people getting overtime ensuring the process goes smoothly (e.g. by manually taking coins out of cold storage, answering phones, double-checking balances, etc.).
This is a very different thing than the traditional "run on the bank" scenario where the bank potentially ends up bankrupt because they don't actually have the funds to cover every deposit.
I don't understand how Coinbase can justify this. Of course Bitcoin cash will have value, and of course they are trying to pocket all that value themselves. If I had any money in Coinbase, I would withdraw it immediately, because a company that thinks they could pull something like this off on their customers are seriously deluded.
I agree 100%. It seems absolutely bonkers to me that one would leave their money on coinbase if this is the case. How is this even a debate? They will not hesitate to keep the BCC value themselves and even if they somehow magically find it in their hearts not to assume the value of BCC, why let their customers' assets go to waste?
IMO, they're neither good nor credible custodians of their customers' assets.
What percentage of their customers do you believe will hear about this and go to the trouble of actually doing it in the next five days (two of which being a weekend)? When a fork happens, a lot of people who have BTC stored at Coinbase who don't notice or don't bother are then going to be financially isolated from the fork, which removes a ton of people who might otherwise be financially incentived to participate. This thereby could also be acting as a way to hobble a fork (which maybe they have determined the existence of to be bad for them in some way).
What percentage will hear? ~100%, inasmuch as they emailed out OP to customers and you need a working email account to do things like device confirmations. The real question is how many understand the discussion of "you will not have access to BCC" to imply that the customers might wind up taking a haircut to the extent of however much BCC becomes worth, and that they probably want to withdraw? (I withdrew mine last week.)
Anecdotally, I did. I'm a complete bitcoin noob, but owned 5 coins in CB since it was super easy to do. Read the Ask HN from last week when the first email came out from Coinbase.
Downloaded Bitcoin-core for OS X, went to Receive and got a QR code, pointed the Coinbase App at my screen and sent the funds (tested it first with a few dollars worth). Then did the big bucks.
Note: the most painful part was downloading the entire block chain. Took many many hours.
Copied the wallet.dat to a few other hosts and I'm done. Hopefully this will be helpful to anyone else on the fence.
I'm sure a lot of people will take "the free money" but it would also mean Coinbase has to write a lot of code to handle those transactions separately, and do so in a very short span of time, oh and that code would need to be safe to put millions of dollars through.
Sounds like time to call the local Nope dealer and tell him he's got some stuff competition.
Play barely-regulated games, win barely-regulated prizes?
That said, Coinbase has played the regulation game better than anybody else (they're the only entity allowed to sell cryptocurrency in New York last I checked) so credit where credit is due.
By saying they won't support BCC, they are trying to help make BCC fail. They are very influential. If BCC ends up surviving, I have no doubt they will start withdrawals.
I don't think the majority of people who own Bitcoin use Coinbase, maybe those who have identification but there's other exchanges like Gemini and Kraken. And this isn't included outside the U.S. or unregulated exchanges either.
Customers who wish to access both bitcoin (BTC) and bitcoin cash (BCC) need to withdraw bitcoin stored on Coinbase before 11.59 pm PT July 31, 2017.
This applies to all online wallets and exchanges. You should have all Bitcoins in your own off-line wallet before the fork. Then your coins are available on both blockchains.
Look what happened when Etherium forked. Etherium Classic is still around and tradable. It dropped, but not to zero. Why give up that value? Bitcoin Cash might get some traction. If not, you haven't lost anything.
one of the issues is that having your currency added to coinbase gives it huge legitimacy. every altcoin would love to be on there.
The most simple way for coinbase to distribute the coins would be if coinbase "listed" the forked coin. They would also be compelled to do this when other coins airdrop based on holdings of BTC (eg. Stellar and Byteball). This would set a precedent resulting in large numbers of ropey forks and altcoins trying to do drops to push coinbase to list them.
PSA: If you're considering moving your bitcoin from Coinbase to a wallet you control, and if you store any in the Coinbase vault, it will take 48 hours to transfer from the Coinbase vault to a standard Coinbase wallet. Then you can transfer to an external wallet.
I don't follow cryptocurrency news much, and don't really understand the consequences of this. I do have some BTC in Coinbase, though I don't really spend it. Would you recommend I withdraw it ahead of the fork?
It's hard to predict what the market is going to do on August 1st, but Bitcoin is splitting and it's reasonable to assume some of the value will go to BCC and some will go to the new BTC (or the old BTC depending on how you look at it).
A very small futures market is predicting about 20% of the current BTC value to go to BCC. If that's correct, you'll miss out on about 20% of the value of your holdings if you don't withdraw prior to August 1st. This number is very uncertain though, I think it could end up being anywhere between 5% and 50%.
I also think it's reasonable to assume that a chain split does not mean a market cap split, given that we didn't see this when Ethereum split into Ethereum+Ethereum Classic.
In my opinion, market cap is too superficial to capture what happens in the market. A better measure would be market depth: how many coins can you sell into the market before the price goes to zero? This figure very well might split into two, since otherwise it would require action on part of the market makers, i.e. entering the BCC/USD or BCC/BTC market.
I'd recommend it. If Coinbase is set on sticking to the original blockchain, in the event the fork prevails, that means your money effectively becomes unusable - you don't control that wallet, but Coinbase won't submit your transfers to that forked blockchain. The money dies on that chain the moment Coinbase decides not to interact with it.
If you have it on your own, you can technically use it on both chains independently. The history breaks August 1st. From there are on it is basically two currencies.
Though in general you should keep your bitcoin close to home. If Coinbase gets hacked or just ceases operations your money could just be gone if the fallout is lost in litigation hell.
As a rule of thumb, if you're not completely technologically illiterate or a trader then you are better off withdrawing your money and storing it offline. Exchanges lose their customers' funds all the time.
If BCC takes hold, with its 8x block-size increase, I'd say the bar would be going up from "not completely technologically illiterate" to "a bit of a storage engineer"
Well you're going to need to add more than 1TB each year, from the back-of-the-napkin calculations I saw.
In 20 years maybe it won't be so uncommon to have 20TB lying around, but I know I don't have a lot of things on my computer that take up more than 1TB and only ever grow. I certainly won't have two of them...
If you want to transact the coins out of the wallet, then yes you need to download the blockchain. I know there are some clients that don't need the whole block chain, but I'm not sure if I trust them over core bitcoin? Do you have a favorite one that supports importing keys from a wallet.dat?
I'm not being disingenuous, I had coins in a cold offline wallet, and it was a serious endeavor to get them out to where I could spend or cash them. I had to spend days downloading a block chain and the only thing that kept me from freaking out was that I knew this would work, having done it plenty of times when the chain was shorter. I couldn't find any way to retrieve coins from a wallet.dat without downloading the block chain first. I had thousands of dollars tied up for days while I waited.
I can't imagine what it would be like when the block chain was 8x its current size, or if I had more than one cold wallet and I needed to empty all of them in any kind of a hurry (like, in time to capitalize on a bubble before it pops!)
> Would you recommend I withdraw it ahead of the fork?
You basically get free money if you withdraw, because you can split the coins so that they can be spent on both chains. But you need to be able to do this without messing anything up, which has gotten more difficult since 2013 or whenever.
Wallets have new features to protect privacy, but the trade off is that they are more dangerous to work with. A few years ago the best practice was to make a cold wallet and then delete the private key from your computer, but doing that with a modern wallet can result in losing all your coins.
This is the part I'm slightly confused by. Obviously it makes more sense to hold in your own wallet (which I do), but what happens to the BTC people decide to keep on Coinbase when a separate fork is created? If those people are not getting the BCC for "free", who is? Coinbase?
The "in case" part is what I don't understand. This wording from Coinbase also makes it seem like things are still up in the air. August 1st is in a few days! How can there still be ambiguity with what is going to happen? That seems crazy to me.
What happens is an emergent phenomenon based on the actions of at least a few hundred actors who each will be watching closely and may revise their decisions several times along the way.
This is a pedantic point, but Bitcoin forks happen frequently as part of the blockchain design (see https://blockchain.info/orphaned-blocks for around 20 forks last month). The only differences for the August 1 event are that the fork will be given a name (Bitcoin Cash), and that some people will be running modified code that doesn't care if its fork is shorter than the main chain. Observing that the fork will exist isn't the important thing. It's whether anyone will care after a week or two.
People are using 'fork' to mean 'multiple branches of the blockchain are considered authoritative', not 'multiple branches of the blockchain exist in an immediately-abandoned state'.
Can you afford to see those funds depleted? If so I'd keep it in there, see what happens. Ideally your portfolio is diverse enough that your little BTC corner can handle a rodeo. Risk exposure is important.
If you're planning to withdraw from Coinbase now, you may already be too late: they're implementing 72 hour withdrawal delays for transactions over some undisclosed maximum (4 figures USD?) unless you submit to some fairly intrusive ID checks to speed things up.
There's a lot of people generally locked out of their accounts, myself having tried to get in for a week. In time for this fork or not I'm getting harmed by not having access to my funds. I'm really pissed off
They are not allowing transfers out.. processing 24 hrs now..
Placed a small transfer (10 usd worth) no peoblem. Holding my large transfer... coinbase = garbage
I guess the problem here is that Coinbase themselves might not have all the liquid BTC that their customers have, meaning they don’t necessarily have all the BCC to just give either?
Unjustifiable decision IMO. They are basically stealing money from their customers. Regardless of your thoughts on the matter BCC will have _some_ value (no matter how little). Coinbase has always been very pro-core.
Nope, nobody's forcing people to use Coinbase. If they want their BCC, they should just withdraw into their own wallets. And why should Coinbase dedicate effort to support a new untested altcoin?
Their decision is rational even if you don't view them as an influencer. If the fork dies, they were smart to ignore it. If it thrives, they can add support later and nobody but short-term traders (who wouldn't have kept their funds in Coinbase to begin with) will have missed out on anything.