By Jon Russell
Coinbase, one of the world’s largest (if not the) largest cryptocurrency exchanges, has reversed its stance on Bitcoin Cash and said it will introduce support for the fork next year.
Coinbase was among numerous exchanges to opt out of trading Bitcoin Cash after it came into existence on August 1 on the grounds that it wasn’t proven or safe. Beyond refusing to facilitate trading, Coinbase also said it wouldn’t allow customers storing original Bitcoin on its platform to claim their Bitcoin Cash entitlement. Those who wanted it were told to remove their coins and go elsewhere to do that.
But now the company — which was started by former Airbnb engineer Brian Armstrong (pictured above) and is reportedly raising funding at a $1 billion valuation — has changed its stance slightly. It told customers via email that it will introduce “support” for Bitcoin Cash by January 1.
“Once supported, customers will be able to withdraw Bitcoin Cash. We’ll make a determination at a later date about adding trading support,” Coinbase said.
In other words, let’s see what happens before we commit to trading
That’s almost certainly a response to anger from Coinbase customers, who threatened to move their coins elsewhere and, in some cases, take legal action over their Bitcoin Cash entitlement. (Tl;dr people like free stuff, especially people who are into crypto.) It is unclear exactly what impact this had on the Coinbase business, but signs aren’t great. One analytics firm estimated that its cold storage reserves dropped to half of their previous level following customer withdraws.
Yet, despite that, a number of Coinbase investors told Business Insider that they aren’t overly concerned about the pushback, while the overall future of Bitcoin Cash itself is unclear. Principally that’s because the fork has the same mining difficulty as Bitcoin, but a smaller fraction of its hashrate.
Right now, Bitcoin Cash became the third largest cryptocurrency based on total coins in the market on day one, but it’s $7 billion market cap trails Bitcoin ($44 billion) and Ethereum ($21 billion) by some way. Its situation may have changed by January, too, while also Coinbase has tended to take a conservative approach to bringing new currencies on.
Right now it offers trading for Bitcoin, Ethereum and Litecoin — the latter of which was only added this past May despite gaining significant attention in 2013. Indeed, Litecoin’s founder had been director of engineering at Coinbase for nearly four years before leaving this summer — that gives some insight into how stringent its policy is.
Note: Article corrected to note that Litecoin founder Charlie Lee is no longer with Coinbase.