Bitcoin cash has arrived on Coinbase. The cryptocurrency “fork” of bitcoin offers some improvements over its predecessor, and those interested in getting involved the latest use of blockchain technology may want to try and get on board. There are several major differences that users looking to invest will want to know about.
Unfortunately, at the time of writing, Coinbase hasn’t enabled buying and selling of bitcoin cash. The GDAX exchange, also owned by Coinbase, halted trading just two minutes after launch due to “unexpected volatility.” The price of the cryptocurrency surged from $3,500 to $8,500 in a short space of time.
Coinbase CEO Brian Armstrong has announced an investigation into suspicious price movements just before the announcement, suggesting employees could have used the insider information to their advantage. The Coinbase website says it will enable buying and selling “once there is sufficient liquidity on GDAX,” which they expect to occur on Thursday.
Here are the key differences between the two:
The original. The cryptocurrency was first outlined in a 2008 white paper by a mysterious figure known as Satoshi Nakamoto. With the system, users’ transactions are stored on a public ledger known as the blockchain. Mining systems work to solve a complex puzzle to create new bitcoins.
Transactions have become slow, however. Where Visa can process around 24,000 transactions per second, bitcoin only does around seven.
In late July, the community rolled out a change to bitcoin’s data format called segregated witness, or SegWit. This means the data takes up less space in a block, which should mean faster transaction times.
Bitcoin cash solves the transaction problem in a different way. First launched in August, the main difference with bitcoin cash is its use of a larger blocksize. Unlike bitcoin, which is only capable of storing one megabyte of transaction data, bitcoin cash uses blocks eight times larger. This means that more data can be processed at once.
The problem is, this hard fork means that bitcoin cash is not bitcoin. It is not interchangeable with bitcoin on a like-for-like basis. It is not accepted by the same wallets or addresses as bitcoin. It has many of the same technological features of bitcoin, but it’s not bitcoin.
There is a caveat, though. If you owned bitcoin before block 478558 was mined (which is estimated to have taken place sometime on August 1, 2017) then you own bitcoin cash. That’s because the hard fork inherited all the transactions from the previous fork. Coinbase customers will be automatically credited with the correct amount of bitcoin cash, meaning they can jump into the new cryptocurrency immediately when the service gets running.