Coinbase Should Stop Selling Bitcoin Cash (BCH). Seriously!
tl;dr: Bitcoin Cash (BCH) is marketing itself as Bitcoin (BTC), scamming consumers into thinking they are buying Bitcoin at a lower price. Its backers use at least three sites to perpetuate this scam—Bitcoin.com, Reddit (r/BTC) and Twitter (@Bitcoin). Scams have no place on Coinbase, perhaps the best-known American digital asset exchange. But by adding Bitcoin Cash alongside its three other assets, Coinbase has helped legitimize BCH’s scam, inviting a regulatory crackdown in this industry’s early years.
The other day, I was listening to an excellent interview of Papa-Wassa Chiefy Nduom, a banker who has recently made waves arguing that African central banks should add Bitcoin (BTC) to their reserves.
Near the end of the interview — starting around an hour and forty minutes in — Chiefy argues that Coinbase should remove Bitcoin Cash (BCash, or BCH):
CHIEFY: “In terms of that Bitcoin Cash launch, [Coinbase] kind of half-apologized, but they need to apologize for that nonsense . . . You cannot feign ignorance to the responsible way to launch a new asset on a platform. My wish and hope is that they actually remove it from there . . . I’m joking! But I’m not, really.
As I reflected on Chiefy’s statement, it became clear he was right. He might be joking, or says he is, but he’s got a serious point — there was something really fishy about Coinbase’s surprise listing of Bitcoin Cash.
Unlike Coinbase’s other offerings — Bitcoin (BTC), Litecoin (LTC), and Ethereum (ETH)— Bitcoin Cash (BCH) is purposely misleading consumers into thinking they’re getting Bitcoin. The longer it stays on Coinbase, the more it looks like Coinbase is endorsing that scam.
Bitcoin and the rest of the digital asset market is still in its early years. Trust is earned, and it’s earned when the community comes together to fight schemes like this. Coinbase should be helping new people get started, safely— not enabling this attempt to scam them.
Here are just a few examples of how BCash is scamming consumers into purchasing Bitcoin Cash when they mean to buy Bitcoin:
- Using Bitcoin.com as a bait-and-switch for Bitcoin Cash: if you didn’t know anything about Bitcoin and wanted to learn more, you might not know that there really isn’t any company in charge. Thinking it was like Google or Amazon, you might try navigating to Bitcoin.com (instead of to Bitcoin.org or Lopp’s FAQ, which is where most Bitcoin-familiar people would sent you). A cursory look at Bitcoin.com makes it clear that it backs Bitcoin Cash, not Bitcoin, and is actively misleading consumers. Below is the Bitcoin.com home page, the first thing you see when you arrive. See the phone display? It says BTC, which stands for Bitcoin. So far, so good.
But as you keep reading, you’ll see the website is designed to attack Bitcoin, in favor of Bitcoin Cash. For example, the article below: “12 Reasons Bitcoin Cash is the Real Bitcoin.” Below that, “What Happened to Bitcoin?”
Now, you might be a little confused. So you click “Start Here.” When you do, here’s what you would see:
The website promises to teach you the fundamentals of “Bitcoin” — but below, it’s got articles with titles like “Buy Bitcoin Cash with a credit card”, “What is Bitcoin Cash?” and, crucially, “Bitcoin Cash Compared to Bitcoin Core”.
Now you’re maybe wondering: what the heck is Bitcoin Core?
The top of the page says “Buy Bitcoin,” “Use Bitcoin,” “Play Games with Bitcoin” — but there’s no mention of a digital asset called Bitcoin Core. That’s because Bitcoin (BTC) is Bitcoin. There is no currency or digital asset called Bitcoin Core. Bitcoin Core is the name of software you can run on your computer to keep the Bitcoin network running — but it’s not the name of a digital asset.
To be clear: There is only one Bitcoin (BTC), and then there are hardforks like Bitcoin Gold, Bitcoin Cash, Bitcoin Private. There is no digital asset you can buy called Bitcoin Core.
The whole reason BCH must add the word “Cash” after Bitcoin is to show that it is a FORK of Bitcoin, one of many Bitcoin Forks — including Bitcoin Gold, Bitcoin Private, Bitcoin Rhodium, and so on, that have split off during Bitcoin’s history. No other fork pretends to be Bitcoin. Only Bitcoin Cash is committed to the project of trying to trick people into thinking it is Bitcoin.
…But let’s say, even after all this, you still want to proceed with buying Bitcoin. So you download a “Wallet” from Bitcoin.com, since Bitcoin.com advertises that as the “easiest way to use and store Bitcoin”:
If you install and open the Bitcoin.com Wallet, you’ll find that the wallet gives no option for using and storing Bitcoin! Instead, it has two wallets: one for “Bitcoin Cash” and the other for “Bitcoin Core”!
Bitcoin Cash even made its logo the same color as Bitcoin, just with a reversed angle of the “B”. Think consumers are going to have an easy time telling the difference?
Look, I understand that no one knows who invented Bitcoin and as a result no one has brought a trademark consumer confusion claim. But c’mon — if a new consumer just getting started in this space wanted to buy Bitcoin, how sure are you that they could pull it off here? How could they tell which is which?
The big problem here is that when a consumer inevitably gets scammed — when they try to buy some Bitcoin Cash thinking they were getting Bitcoin — how do you think they’re going to feel? Are they likely to stay and keep investing in the digital asset space? I doubt it. I bet that person is going to feel like they got scammed and never invest in digital assets again. And that is a terrible thing for a young industry to endorse.
2. Using r/BTC to trick consumers into buying BCH: If you want to read about Bitcoin on reddit, the proper subreddit (forum) is r/Bitcoin. But let’s say you didn’t know that, and you just wanted to guess. You might try typing r/BTC, since BTC is the abbreviation for Bitcoin. When you got there, you’d think you were in the right place, since everything is referring to Bitcoin:
…but that’s a lie. This subreddit isn’t dedicated to Bitcoin (BTC) — it’s about Bitcoin Cash (BCH), but it’s using the BTC to confuse consumers on purpose. For example, r/BTC’s sidebar links you to a place where you can download a “Bitcoin Full Node”. If you follow that link, here’s what will come up:
That’s NOT Bitcoin (BTC) software — that’s software for Bitcoin Cash (BCH), that you downloaded from r/BTC. If you run that, you won’t be joining the Bitcoin network — you’re joining the Bitcoin Cash network, which is another protocol entirely. The entire r/BTC subreddit is full of misdirection like that, and my guess is they’ll continue to keep scamming people until enough people speak up. When I first started reading about Bitcoin on Reddit, I thought r/Bitcoin and r/BTC were two sites about the same thing. I bet lots of people do too, which is why this is so scammy. I bet you can guess the first website r/BTC recommends: Bitcoin.com.
r/BTC is being used to trick people into buying and running BCH. That’s the kind of scammy product that Coinbase should be fighting, not selling.
3. On Twitter, using @Bitcoin, with Bitcoin’s Logo, to trick people into buying Bitcoin Cash: On Twitter, the scamming story is the same. Bitcoin Cash proponents bought or own the @Bitcoin handle, and use that with the Bitcoin logo in order to trick people into buying Bitcoin cash. The Twitter account constantly pushes content that is negative on Bitcoin and positive towards Bitcoin Cash, including insisting that Bitcoin Cash is “The Real Bitcoin” and frequently linking to Bitcoin.com. Since the @Bitcoin profile picture is Bitcoin’s logo — not Bitcoin Cash’s —it makes its scamming for Bitcoin Cash even more confusing for new users.
Even worse, this scam might be most effective on people with less money: purchasing 1 BCH is approximately 90% cheaper than purchasing 1 Bitcoin, since BCH lacks the developer talent and community support that made Bitcoin this successful this far. For a wealthy person, BTC’s price premium might be seen as a plus. For someone without a lot of money, BCH’s low price might seem like a really good deal for Bitcoin. But it’s not Bitcoin — they just got scammed.
There are way more examples than these, but I’ll stop there, hoping I’ve sufficiently shown you that people behind Bitcoin Cash are clearly trying to trick people interested in Bitcoin (BTC) into purchasing Bitcoin Cash (BCH).
Let’s briefly come back to Coinbase. Until this BCash launch, US-based exchange Coinbase had established itself as the trustworthy first-stop recommendation for someone looking to purchase a digital asset. In fact, Coinbase says its number one priority is to be “the most trusted brand in the space”:
If someone asked how to buy Bitcoin, Coinbase was the place to send them. That is, until they started selling BCash.
Now, look at this screen when you first sign up and try to buy Bitcoin:
Imagine being a new user who just signed up for Coinbase to buy Bitcoin.
COINBASE: Hi, welcome to Coinbase! Please order when ready.
NEW USER: I’d like to buy some Bitcoin!
COINBASE: Which kind — Bitcoin, or Bitcoin Cash?
NEW USER: Err…the Bitcoin? What’s the difference?
COINBASE: Well, [BITCOIN BLAH BLAH FORK TECHNICAL STUFF BITCOIN CASH…]
NEW USER: **doesn’t understand, frantically searches online, finds @Bitcoin on Twitter and www.Bitcoin.com, they both tell him “Bitcoin Cash is the real Bitcoin”, plus it’s cheaper (sweet!) so he figures that’s the one**
NEW USER: Uh, I guess I’ll buy Bitcoin Cash!
COINBASE: Great, here’s one Bitcoin Cash! Thanks, and come again.
NEW USER: **realizes he got scammed** I’m never buying a digital asset again!
C’mon, Coinbase — how is this making it easy to onboard new people? Or is Coinbase trying to develop a reputation as someone trying to scam them too?
Compare Coinbase’s screen to say, the home screen of Gemini, another US-backed exchange. Not the prettiest thing, but it’s simple. They allow you to buy and sell Bitcoin (BTC) and Ethereum (ETH), and trade between them.
Those are what efforts look like when they’re not trying to trick consumers: simple and easy.
By contrast, Coinbase’s surprise launch and support of Bitcoin Cash is making the market more confusing and allowing new customers to be scammed.
There is much more evidence than I have shown here about how BCash has tricked consumers, but I hope I have presented a sufficient amount to show that it’s happening.
Given BCH’s clear pattern of trying to scam consumers, I think it’s clear: Coinbase has got to get rid of this thing. It is toxic for Coinbase’s brand.
By hosting it on their site, Coinbase is effectively endorsing and participating in Bitcoin Cash’s attempts to trick people. Some have taken to calling Bitcoin Cash “BCash”, in order to reduce confusion, and I think that tact makes sense. But beyond that, Coinbase needs to step up and admit the mistake in launching it. Bitcoin is open-source, and that means anyone can fork it. There will presumably be a number of hardforks in the future, and Coinbase will only add to market fragmentation if it tries to host them all on its exchange.
By de-listing BCH, Coinbase kills two birds with one stone: it admits its mistake in launching a new asset without any prior notice to its customers, and it sends a message to the nascent digital asset market that consumer fraud and misrepresentation will not be accepted here. In de-listing BCash, Coinbase will say: that kind of behavior might work on an unregulated exchange, but not here. If you want your product sold at here, you better make sure it’s clean.
BCash shouldn’t be considered anywhere close to clean enough for Coinbase. It’s engaging in a dirty campaign to mislead consumers, the kind of scamming that threatens consumer confidence in this young industry— because regulators will think (and perhaps rightfully so), that they need to shut this down before more people get hurt. Coinbase can give customers a window whereby they can send their BCH elsewhere (in fact, this is what they originally promised to do), so anyone who wants to trade in BCash can be free to do so on another exchange.
In sum: “Bitcoin Cash (BCH)” is not Bitcoin (BTC), but it keeps trying to trick consumers into thinking it is. Coinbase made a mistake in adding it, but it would be a second mistake to keep it. Coinbase should drop it, apologize for aligning itself with scammers, and start the process of earning back its customers’ trust.
Thanks for reading! If you agree that Coinbase should drop BCash, please consider sending your opinion to @Coinbase @GDAX so they hear it too. And if you have any other thoughts, I’m all ears, on Twitter @MishaGuttentag.