TRUST. The entire crypto market relies on it. It will never reach its potential if trading exchanges cannot be trusted beyond doubt.
And yet, several major exchanges have decided to take a questionable approach of simply saying “we won’t recognize Bitcoin Cash”. (great chart here) In the world of cryptocurrency, that approach is not recognizing reality. The largest and by far most important cryptocurrency just executed a hard fork, and there’s simply no way to ignore it.
It would mean a lot to investors if they were notified by major exchanges such as Coinbase, GDAX and Poloniex specific details on how they plan on delivering Bitcoin Cash to holders of Bitcoin as of the fork. The current approach is not only questionable, it’s dangerous for market stability in general. Here are several reasons why:
- Markets hate uncertainty. The hard fork created enough FUD, there’s no possible benefit to exchanges so many traders rely on to add more (especially while others don’t).
2. There is already a major trust problem for exchanges.
GDAX has had multiple glitches, reports of Poloniex insolvency are circulating, and those are “good” exchanges compared to nightmares like BTC-e and many others. The biggest exchanges simply must build 100% confidence from investors or it will be increasingly hard to keep investors in the game and bring new and important institutional investors into the market no matter how much profit is possible or how low fees are.
3. Full access and disclosure of details of BTC and Bitcoin Cash are needed to make appropriate investment decisions.
There’s already a clear value relationship between BTC and BCH on Kraken where BTC is dropping as BTC rises and vice verse. How can traders on any exchange (including Kraken) intelligently trade the most heavily traded crypto in the entire market without full access to all elements effecting BTC’s price?
This isn’t some fly by night crypto we’re talking about — this is BITCOIN — if exchanges create FUD by hodling back coins that belong to BTC owners — the frustration can easily spread to a complete mistrust of the crypto market (as if trading and investing isn’t hard enough in stable situations). Instead of recommending exchanges to business associates and friends, traders will continue to wonder how they’ll get screwed next.
The crypto market is simply too new and unstable to allow chaos at the top of the food chain. ALL major exchanges need to step up do everything possible to ensure investors get full value for their BTC and have access to all price, chart and indicator information for Bitcoin and Bitcoin Cash in order to have maximum confidence in their investments, their research and to make informed investment decisions.
If some of the biggest exchanges keep ignoring this reality by waiting weeks or months to notify customers they have finally decided to award customers their Bitcoin Cash, this will create significant mistrust in those exchanges, no matter how honest their intentions.
More importantly, while these delays seem only related to certain exchanges regarding Bitcoin Cash, we think failing to resolve this matter quickly is important enough that it could spiral into a much bigger deal for all cryptocurrency investors no matter where you trade.
Disclosure: Author has a VERY small position in BTC and Bitcoin Cash
This site is for educational and entertainment purposes only and not in any way intended to be investment or trading advice. You are 100% responsible for your financial decisions at all times. It is highly recommended you DO NOT make any investment or trading decisions depending upon what you read on this blog/newsletter! All information presented (c) 2017 JBP cons, inc. All rights reserved.