The cryptocurrency market is flakey, says Chris Skinner, who recently received an email about the User Activated Hard Fork proposal.

There are a few exchanges I use for trading cryptocurrencies, such as Kraken and Coinbase, so I was interested to receive this email from Coinbase last Friday:

Dear Coinbase Customer,

We are contacting you to make you aware of recent developments in a number of proposals for technical changes to Bitcoin. All BTC stored on Coinbase will remain safe during these events described below.

The User Activated Hard Fork (UAHF) is a proposal to increase the Bitcoin block size scheduled to activate on August 1. The UAHF is incompatible with the current Bitcoin ruleset and will create a separate blockchain. Should UAHF activate on August 1, Coinbase will not support the new blockchain or its associated coin.

The User Activated Soft Fork (UASF) is a proposal to adopt Segregated Witness on the Bitcoin blockchain and could result in network instability. It is scheduled to activate at the same time as the UAHF.

To ensure the safety of customers’ funds, we will temporarily suspend BTC deposits, withdrawals, and buy/sell starting approximately 4 hours before activation of either fork.

  • If you do not wish to have access to UAHF coins, and do not wish to access your BTC during the fork, you are not required to take any action.
  • If you do wish to have access to UAHF coins or access your BTC during the fork, you should send your BTC from Coinbase to your external address by July 31.

For more information on these potential Bitcoin forks, please refer to this article.

Thank you. Coinbase Team

Flaky market

Some people are congratulating the firm for warning users that if there is a hard fork on 1 August, then at least they have advised that you should withdraw your funds now. I disagree. The reason I disagree is that Coinbase has a limit of £15,000 per week for withdrawals, so if you have more than £30,000 in Coinbase bitcoins, your additional funds will be lost if there is a hard fork. Or rather, they won’t be lost; they will just be taken by Coinbase.

It’s yet another sign of how flaky this cryptocurrency market is – the DAO hack, the Mt.Gox debacle, the Bitstamp affair, the Bitfinex loss, the Parity Wallet breach … the list is endless. All it proves is that if you’re investing or trading in cryptocurrencies, you are as likely to lose your funds as keep them, unless you hold them in a secure wallet of your own, such as Trezor.

Meanwhile, what is this fork all about? This update from 99bitcoins explains all. Over the weekend, it’s notable that BIP91 was activated, making the hard fork option highly unlikely.

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– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Photo by Koldunov Alexey, Shutterstock.com

About the author

Chris Skinner

Chris Skinner is an independent commentator on the financial markets through the Finanser, and chair of the European networking forum the Financial Services Club, which he founded in 2004. He is an author of numerous books covering everything from European regulations in banking through to the credit crisis, to the future of banking.

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