Coinbase suspending all Bitcoin Cash trading as SV v ABC fork war heats up

coinbase

Coinbase, which is supporting the Bitcoin Cash ABC (BCHABC) fork, will prevent customers from buying or selling Bitcoin Cash from 8 am Pacific Time on 15 November.

The US exchange had originally said that only deposits and withdrawals would be suspended but has changed its mind until security of the chain (s) is re-established.

In a blog post today, the exchange wrote: “Coinbase will monitor the hard fork process and work to minimize customer disruption until the network meets Coinbase security standards.”

BCH has a six-monthly timescale for software upgrades and the ferocity of the “fork war” that has ensued with rival full node implementations threatening to attack the other’s chain.

“Unlike previous BCH hard forks, there is a competing proposal that is not compatible with the published roadmap,” Coinbase reminds us.

Coinbase says customers that want to still trade BCH during the forking, that they will have to withdraw their BCH before the snapshot take place.

Liquidity drain will see BCH volatility rise

The “pause” for all BCH-related activity will have the effect of curtailing liquidity in the market and applies to Coinbase Pro as well as the consumer-facing Coinbase.

The consequent draining of liquidity will increase price volatility.

BCHSV is 105% higher over the past 24 hours at $237, However, BCHABC continues to decline, 38% lower at $240. BCHSV is about to overtake BCHABC. That is unexpected but the BCHSV buyers shouldn’t cheer too soon, as Bitmain-backed Antpool may be about to spring a trap, as we reported yesterday.

Bitcoin Cash (BCH) falling

The real Bitcoin Cash has dropped below $500 to $487, which is inline with other top also as the overall market loses nearly $4 billion in value over the past two days.

There is no airdrop insulation that often brings out the buyers in the expectation of a “free” airdrop of the rival chain, with the gains from Binance, Coinbase and others supporting the fork buoying BCH prices.

BCHSV for its part is thought to have “hidden hashrate” but will it be enough to challenge Jihan Wu’s Bitmain?

For BCH holders at Coinbase it is down to the exchange whether or not is distributes the forked chain’s token. In the BCH fork from bitcoin in August last year,  Coinbase had to wait months before gaining access to their BCH.

Coinbase’s famed ease-of-use comes at the price of its customers not having access to a cryptoasset’s private key.

“Due to recent developments, we have now determined that it will be necessary to also pause all buys, sells, and trading of BCH starting at 8:00AM PST on Thursday on Coinbase.com, in the iOS and Android apps, and on Coinbase Pro and Prime. Accordingly, during the time of the pause, you will not be able to sell or remove your BCH from Coinbase. If you wish to have access to your BCH during the pause, you will need to remove it from the Coinbase platform prior.”

No replay protection

The new “determination” may be related to the lack of playback protection. Another fork from bitcoin – bitcoin Gold, ran into problem when it launched its chain without replay protection. Such protection prevents a transaction being “replayed” on the competing chain.

Neither BCHABC or BCHSV are thought to have built in replay protection, thereby exposing exposing those trying to trade BCH after the snapshot to security issues.

Craig Wright has threatened to “reverse” all BCHABC transactions, while some “official” fork supporters were talking about changing the proof of work consensus to lockout BCHSV.

 


About the Author

Gary McFarlane
Gary has been writing about cryptocurrencies since 2013 and currently works as the cryptocurrency analyst at interactive investor, the UK's second-largest online investment platform. Gary contributes for Coin Intelligence News in a personal capacity and none of his commentary should be considered investment advice. Gary is the winner of the ADVFN International Financial Awards 2018 Cryptocurrency Writer of the Year. Contact Gary on twitter at: @gary_mcfarlane

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