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Bitcoin Cash: Pre-Fork Trading Doesn’t Bode Well for Craig Wright’s Camp


bitcoin cash hard fork

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Partisans in the looming Bitcoin Cash civil war now have the opportunity to put their money where their mouths are, and that money is quickly piling up on one side of the debate.

Poloniex Opens Pre-Fork BCH Market

Earlier today, cryptocurrency exchange Poloniex became the first crypto trading platform to allow users to trade coins on both sides of the contentious hard fork, which is scheduled to activate on the BCH network on Nov. 15.

From the announcement:

“We believe the responsible thing to do in this case is remain neutral and allow the community to decide which chain to support, and we want to empower the community to demonstrate their support through trading activity. This is the first time we are offering pre-fork trading and it is part of a broader effort to make Poloniex one of the most innovative exchanges in the world. Going forward, we will evaluate each hard fork individually and decide whether to support the fork or to offer pre-fork trading.”

The bitcoin cash price had risen considerably in the lead-up to the fork, as investors clamored to position themselves to receive the “BCH airdrop.” Now, even before the fork activates, they can begin to cash out.

To trade the pre-fork tokens, users must deposit bitcoin cash on the Poloniex platform and then use the conversion tool to split the coins into an equivalent number of “Bitcoin Cash ABC” (BCHABC) and “Bitcoin Cash SV” (BCHSV). Users can also convert back into BCH and withdraw their coins, but for obvious reasons, BCHSV and BCHABC may not be withdrawn until sometime after the fork.

bitcoin cash fork poloniex
Source: Poloniex

Initially, each BCH token will trade against bitcoin (BTC) and USD Coin (USDC), the stablecoin backed by Circle, Poloniex’s parent company. Notably absent is tether (USDT), the controversial-but-highly-liquid stablecoin.

Following the fork, Poloniex will support both BCHABC and BCHSV, stating in the announcement that “the responsible thing for an exchange to do is remain neutral.” The firm said that it would manually implement replay protection for withdrawals to prevent attackers from stealing funds from the exchange.

However, such replay protection — which prevents a malicious user from broadcasting a transaction on both sides of the fork — does not exist in the wild, so users should be careful about moving their funds if they intend to hold coins on both sides of the fork. That’s particularly true since SV backer Craig Wright — whose firm, nChain, is leading the development of the SV software — has suggested that SV miners could blacklist certain addresses that spend funds on the ABC chain.

Nov. 15 Bitcoin Cash Hard Fork: a Rundown

According to its development roadmap, Bitcoin Cash hard forks semiannually to ensure that developers have a regular opportunity to introduce new upgrades into the protocol, including those that would render the new software incompatible with previous versions.

These planned hard forks were intended to stave off disagreements about whether and when the cryptocurrency should activate these protocol upgrades, which require all full node operators to upgrade their software to the latest version. Nevertheless, the Nov. 15 hard fork — just the second since BCH forked away from Bitcoin — has been hotly debated, as various development groups have significant disagreements about which upgrades should, and should not, be activated on the network.

One particular subject of contention is the manner in which Bitcoin Cash should accommodate smart contracts and BCH-based crypto tokens. Unable to reach a compromise, two development groups, Bitcoin ABC and Bitcoin SV, have launched competing BCH implementations that will be incompatible once the fork activates on Nov. 15.

Traders Place Their Bets on BCHABC

bitcoin cash hard fork pre-fork betting

While Poloniex’s new trading pairs allow investors early access to their “crypto dividend,” these pre-fork markets are useful for more than just allowing traders and investors to double down on their bets about the outcome of the fork. They also, in the aggregate, provide valuable information about which chain the market believes has more economic viability.

Such pre-fork markets were popular prior to both the original hard fork that split Bitcoin Cash away from the main Bitcoin network last August, as well as the planned SegWit2x fork that failed to activate on Bitcoin last December.

This fork will not activate for a full week, but early returns show that traders are much more confident in BCHABC’s ability to retain its value, at least over the short-term. At present, BCHABC is trading at $535 against USDC, nearly six times above BCHSV, which is priced at just $90.

Notably, the pre-fork tokens are collectively trading at $625, almost $40 above the value of BCH itself, which stands at $587 as of the time of writing. That should change as these markets grow more liquid.

Images from Shutterstock

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Bitcoin Cash Price Gets Skewed due to Exchange Trickery

A lot of confusing action is taking place where the Bitcoin Cash price is concerned. Although its actual decline in value is quite obvious for everyone to see, the real price of BCH is not necessarily what people can see on Coinmarketcap. This is primarily because numerous exchanges treat BCHABC as Bitcoin Cash already despite nothing being decided in terms of which chain will be the longest. Bitcoin Cash Value Fluctuates Heavily Depending on where traders look at, the price of Bitcoin Cash will be either close to the $400 level or down to $250-ish. That is quite a large gap between prices, yet one that is also very easy to explain. Bitcoin Cash, as people knew it before the fork, no longer exists. Most professional exchanges have also retired this price ticker, for the time being. As the hash war rages on, there are still a lot of unknown factors waiting to be addressed. Despite this ongoing kerfuffle, there is a net 5.76% decrease in the Bitcoin Cash price, and a 5.4% decline over Bitcoin. More specifically, that is what CoinMarketCap reports at this time, although this is not necessarily the case whatsoever. In fact, some exchanges are clearly jumping the gun by labeling BCHABC as BCH and thus dragging the Bitcoin Cash price down a bit more. Exchanges currently engaging in this activity include Bittrex and Coinex, neither of which plays a big role of importance when it comes to trading. However, based on the current value of BCH on Bitfinex and Gate.io, it seems a similar incident is taking place. One also has to keep in mind Bitcoin Cash was getting battered ahead of the network split as well. Most exchanges have halted trading of BCH indefinitely, primarily because the currency no longer exists. It is evident either BCHABC or BCHSV will take over that name in the future, but nothing has been decided at this point. As such, any trading referring to just “Bitcoin Cash” or “BCH” should be avoided, as most users can never be sure which currency is effectively being traded under this name. All of this skews the picture pertaining to Bitcoin Cash altogether. Coinmarketcap reports there is still $392m in trading volume for BCH, even though that is virtually impossible right now. With so many exchanges freezing deposits and withdrawals, it is evident actual BCH trading is no longer possible whatsoever. Virtually all platforms have deposits of BCHSV and BCHABC frozen as well, which only makes this market trend more confusing. It is safe to say the entire network split has been a bit of a mess first and foremost. In the case of Bitcoin Cash itself, that name will – under the current circumstances- not be used across exchanges for much longer. Instead, the two separate camps need to be treated as such first and foremost. Until things settle down – with might not necessarily happen anytime soon – the Bitcoin Cash price itself is pretty much irrelevant for most traders and speculators. Disclaimer: This is not trading or investment advice. The above article is for entertainment and education purposes only. Please do your own research before purchasing or investing into any cryptocurrency. The post Bitcoin Cash Price Gets Skewed due to Exchange Trickery appeared first on NullTX.

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