BitMEX recently liquidated all of its users’ bitcoin cash holdings for bitcoin. The cryptocurrency exchange did not reveal the exact amount of this sell-off. Considering the exchange’s size, however, it was a considerable volume.
Bitcoin Cash (BCH) was created back in August as result of a hard fork on the Bitcoin network. Bitcoin’s scaling issues were the main reason for this fork. Transactions fees for Bitcoin were, and still are, increasing fast with the network being overloaded. Just a couple of months ago, the fees were mere cents, now the fees are $10 or more. This is especially inconvenient for smaller transactions.
Bitcoin Cash solved this issue by supporting larger blocks that didn’t fill up as quickly and therefor, did not charge as much. Bitcoin’s block size is 1 MB, while that of Bitcoin Cash is 8 MB. The larger block size means that the Bitcoin Cash network is able to process a greater number of transactions than the Bitcoin network in the same amount time. Also, the transaction fees for the former is only a fraction of that of the latter’s.
BitMEX's sell off
Both the versions have benefits and disadvantages. The Bitcoin community remains divided between these two coins and the proponents of one have become the rivals of the other. BitMEX’s decision to sell off its bitcoin cash funds has clearly shown its preference for the original bitcoin (BTC).
Cryptocurrency trading platforms benefited tremendously in 2017 by digital currencies’ impressive growth. Some prominent exchanges have grown to an exceptional extent. Any unexpected action from them is enough to alter a cryptocurrency’s value. One such exchange is Hong Kong-based BitMEX, which handles $1 billion in transactions on a daily basis.
Surprisingly, the sell-off did not have any significant affect on BTC or BCH valuation. Both the coins were already seeing a decline. This was a result of South Korea’s move towards designing a stricter regulatory system for digital currencies.
BitMEX compensated its customers in the ratio of 1 BCH to 0.1707 BTC. This move, coming from a leading exchange like BitMEX, is undoubtedly significant. Although the firm did not exactly state its support for Bitcoin over Bitcoin Cash, the sell-off speaks for itself.
BitMEX first announced its plan of liquidation in an official statement back in November. The exchange has been particularly clear about its opinion on Bitcoin Cash since the very beginning. Before the coin was even created, the company had issued a statement detailing various reasons for not supporting it.