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12/26/2017 Was Coinbase's Bitcoin Cash Rollout A Designed Hit?

Published on Zero Hedge (http://www.zerohedge.com)

Home > Was Coinbase's Bitcoin Cash Rollout A Designed Hit?

Was Coinbase's Bitcoin Cash Rollout A

Designed Hit?
By Tyler Durden
Created 12/25/2017 - 13:55

by Tyler Durden [1]
Dec 25, 2017 1:55 PM
[2] [3]

Authored by Tom Luongo, [4]

There’s an excellent article over on Breitbart that looks at the details of Coinbase’s surprise roll-
out of Bitcoin Cash [5] (BCH) as a trading vehicle on their in-house exchange GDAX. It details the
whole sordid mess and I would recommend anyone interested in the topic to read it for what it


To me, however, being the cynic that I am if there is a path to harming Bitcoin and the
cryptocurrency market available to the money center banks, then they will always opt for

I’ve been pretty vocal about the need for having a slow, annoying reserve asset in the
cryptocurrency space. I’ve talked about it multiple times (here [7] and here [8]). This doesn’t jibe
with Bitcoin Cash proponent and Bitcoin.com CEO Roger Ver’s image of Bitcoin.

And that is to Roger’s credit, actually. It’s pretty obvious from a cursory glance at Roger’s
Twitter feed [9] that he approaches Bitcoin as a radical libertarian/Austrian Economist
would — a purely decentralized, trustless money that can wrest control of the world’s
monetary system from rentiers in Government and Banking.

Music to my ears.
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12/26/2017 Was Coinbase's Bitcoin Cash Rollout A Designed Hit?

Solution in Search of a Problem

On the other hand is the very shady attitude of Blockstream and the Bitcoin Core group who
prevailed in the Segwit 2x fight, which, from Roger Ver’s perspective is actually a mop-up
operation, not the decisive battle in the war.

The reason there is so much hostility from Bitcoin Core towards Bitcoin Cash is
because Core knows they have stolen the name but are advocating a completely
different system than what was originally described by Satoshi.

Bitcoin Cash is Bitcoin

— Roger Ver (@rogerkver) December 19, 2017 [10]

The real battle for the soul of Bitcoin happened back in August with the fork that created
Bitcoin Cash. Complaining about all of these other forks are, to Roger, is like closing the barn
door after the horses are gone.

By keeping Bitcoin slow and expensive they create the need for new solutions to improve it.
Why solve a problem when you can artificially create one and then sell everyone the

So, I’m ambivalent about this fight for the soul of Bitcoin, because I want a real digital analogue
to Gold which only moves the most important transactions. I don’t want all coins to be all things
to all people.

But, I also know that with this much money at stake there will be pushback from the ‘powers-
that-be.’ The Banks and central banks are staring at an existential threat to their future and are
doing what they can to stop it from happening.

And that, to them, means gaining control over the Bitcoin blockchain. It also means cutting off
the means of entry and exit from the cryptocurrency market for average people.

And that brings me back to Coinbase.

Coin Wars
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12/26/2017 Was Coinbase's Bitcoin Cash Rollout A Designed Hit?

I have an article up on Crypto-News.net this morning [11]that makes the point that Coinbase is, in
my opinion, becoming the biggest problem in the crypto-space.

Coinbase’s liquidity and technical infrastructure is now far too small a pipe
through which to push through all of trading activity in the crypto-markets. And
with it only trading four coins, that artificially concentrates capital into those
assets as the expense of others, destabilizing the entire cryptocurrency space.

And that’s exactly how Coinbase can be used to exert external control over the
entire industry by Wall St. and the central banks. By constantly breaking and
providing poor to no customer service Coinbase is now the barrier to more
money entering the cryptocurrency space. The allure of easy profits will be
matched by the headache of someone actually taking your money to buy some
Bitcoin or Ethereum without a major hassle. And then, if the market freezes up
every 20 minutes and the price always seems to move against you, you’re going
to walk away angry.

Again, most of the other exchanges don’t want Americans as customers, we’re
too expensive thanks to the regulatory requirements for handling our money,
thanks to laws like FATCA.

The idea here is simply to make Bitcoin unusable and remote from the average person.
And then once achieved, promote off-chain and side-chain payment processing that
allows for the centralization of transactions as hubs, via the Lightning Network, and
replicate the same broken, rent-seeking system in place today.

How The Banks Bought Bitcoin | The Lightning Network

The only difference is that the Bitcoin mempool backs it all up with some amount of trust. They
know they can’t destroy Bitcoin, but they can seek to take control of it via backdoor means
without any of the ‘normies’ being the wiser.

Think about this. I’m plugged into this space and it’s still difficult for me to explain it all, no less
see the ramifications of everything. How in the hell can this be explained to the average person

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12/26/2017 Was Coinbase's Bitcoin Cash Rollout A Designed Hit?

who just bought $250 worth of Bitcoin with their credit card on Coinbase?

Now add cash-settled futures markets having the ability to ‘wag the dog‘ on price; volatility can
be pushed and pulled to strip-mine the coins away from hodlers the same way they’ve
concentrated capital in the equity and bond markets and the takeover is complete.

Paging Emperor Palpatine

So, thinking this through and going back to my title, was the strange roll out of Bitcoin
Cash by Coinbase, a company that took months to support a fork that should have been
child’s play to implement, coordinated with the advent of CME Group futures trading to
inflict maximal damage on cryptocurrencies in general and Bitcoin Cash in specific?

Since Bitcoin Cash and its leadership are vocal opposition to this perceived takeover of
the Bitcoin network, they have motive and reason to implement this scheme. At the same
time Roger Ver can be scapegoated for ‘insider trading’ by implication (regardless of what the
blockchain could reveal through analysis).

Coinbase is the artificial funnel for all U.S.-based crypto-investments erected by bad legislation,
tax laws and uncertain regulatory guidance. Using it as the fulcrum on which to move the Bitcoin
market in the direction desired by the money center banks only makes sense.

Most of the chaos we are seeing in the crypto-markets stem from this. It reminds me of the best
line of dialogue in The Phantom Menace uttered by then-Senator Palpatine, “I will make it legal.”

You have to be aware that direct assault on the cryptocurrency space will not kill it.
Better to allow it to thrive and subvert it to your gain than simply smack it down. The
latter behavior tips your hand and hardens the opposition ideologically.

Violence only begets greater pushback. Just look at what happened in Spain this week as
Catalan secessionists won a majority in the local elections in response to the crackdown by
Madrid in October.

Subversion of both the opposition coins and their proponents is the right strategy to winning
people to your side, which reminds me of the only good piece of dialogue in Attack of the
Clones, “This is how liberty dies…. to thunderous applause.”

A New Hope
But the thing is that none of this will work. There are too many projects out there that can and
will function better than either Bitcoin or Bitcoin Cash as mediums of exchange and stores of

And that competition within the cryptocurrency market will, in fact, neuter all attempts at control
over it. People are funny when it comes to money. They take it far more seriously than they do
the things they buy with it.

The rentiers of the banking world think that erecting new barriers will create a crypto-version of
the monetary system that will win out over its competition. And it all comes down to the hashing
power undergirding both networks.

If Bitcoin Cash can shrug off this attack on its credibility then it’s superior performance
for end-users will see some of the traffic reserved for Bitcoin go to it instead. And that
will shift the hashing power away from one and towards the other.

A natural balance will eventually be established between the two while other coins, like DASH in
particular, attract a larger percentage of the mining community.

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12/26/2017 Was Coinbase's Bitcoin Cash Rollout A Designed Hit?

Looking at the situation currently, Bitcoin Cash is the only real competition for Bitcoin in this
respect. But, DASH is coming up quickly [12]. It how commands more hashing power then
Ethereum and Litecoin, but is still less than one percent of Bitcoin Cash’s hashing power.

This is where we’ll see the real fight for the cryptocurrency market play out.
The rentiers are trying to lock down public perception of Bitcoin as the only coin worth owning,
while the market is shifting resources towards other networks to combat this from happening.

All of which will, in my mind, marginalize Bitcoin itself. And it will become relegated, like all
industries locked down by regulations and barriers-to-entry, to the sidelines as capital flows to
where it is treated best and most needed.

By making Bitcoin slow and unusable, the bad guys are fueling the development of
superior coins and hashing networks which will obviate their means of control.

We’ll go through an ugly period of time where as the market adjusts but I’m confident that we’ll
see both my vision of Bitcoin as reserve asset which the banks can control if they want, but the
rest of the market will be free to to business without such annoyances.

Which brings me to the last line of dialogue that comes to mind when looking at this
situation, “The more you tighten your grip, Tarkin. The more star systems will slip
through your fingers.”

Alternative currencies Bitcoin Bitcoin Blockchains Bond Central Banks Coinbase

Cryptocurrencies Decentralization Draft:Bitcoin Gold Economics of bitcoin Finance
Free software Insider Trading Money None paging Twitter Twitter Volatility

Source URL: http://www.zerohedge.com/news/2017-12-25/was-coinbases-bitcoin-cash-rollout-designed-hit

[1] http://www.zerohedge.com/users/tyler-durden
[2] http://www.zerohedge.com/printmail/609813
[3] http://www.zerohedge.com/print/609813
[4] https://tomluongo.me/2017/12/23/was-coinbases-bitcoin-cash-rollout-a-designed-hit/
[5] http://www.breitbart.com/tech/2017/12/20/bitcoin-coinbase-surprise-launch-bcash/
[6] http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/25/20171225_but.jpg
[7] https://tomluongo.me/2017/11/16/the-foundation-of-the-next-cryptocurrency-bull-market/
[8] https://tomluongo.me/2017/11/11/with-bitcoins-adolescence-comes-real-competition/
[9] https://twitter.com/rogerkver
[10] https://twitter.com/rogerkver/status/943218973495107584?ref_src=twsrc%5Etfw
[11] https://www.crypto-news.net/bch-coinbase-and-the-pipe-problem/
[12] https://bitinfocharts.com/comparison/hashrate-btc-eth-bch-ltc-dash-xmr-btg-zec.html#log#1y

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