What is Bitcoin Cash (BCH)?
As the original cryptocurrency, Bitcoin, grew in popularity, some of its community members raised concerns with its scalability and transaction speed. Its “blocks” are only 1 MB in size and process only seven transactions per second (versus 1500+ transactions per second with traditional payment processors like VISA.) This causes the network to clog up and become expensive to run (result: high gas fees.)
A group of Bitcoin coders and community members proposed a solution: increase block size to 8 MB, making the chain 8x as capable of processing transactions, and re-aligning its capabilities to its mission of being an efficient payments option. But other Bitcoin members didn’t agree with this proposal and felt that the smaller block sizes enabled more decentralization since requiring less processing power means it’s easier for anyone to run a blockchain node from their computer.
Discussions within the Bitcoin community ensued, consensus was not reached, and in 2017 a group of Bitcoin coders “forked” the Bitcoin blockchain—that is, they split from the Bitcoin blockchain to forge a new path. The new chain, called Bitcoin Cash (BCH), seeks to optimize the technology that underpins the Bitcoin blockchain for payments (its original purpose) by increasing individual block sizes.
In 2018, there was a disagreement within the Bitcoin Cash community with respect to block sizes and other development choices, so another fork occurred. The new chain created from the fork is called Bitcoin SV for “Satoshi’s Vision,” on the belief that it better preserves the vision of Bitcoin’s creator, Satoshi Nakamoto. This new chain has not garnered as much support or market size and is not currently supported by Wealthsimple Crypto.
Bitcoin Cash isn’t as large as Bitcoin, but it’s still a major cryptocurrency, ranked #10 on CoinMarketCap as of May 2021.
Before trading any crypto assets it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.
No securities regulatory authority or regulator in Canada has evaluated or endorsed the Crypto Contracts or any of the crypto assets made available through the platform.
Wealthsimple has performed an assessment of whether BCH can be supported by Wealthsimple’s platform, including whether BCH is a security and/or a derivative and is being offered in compliance with securities and derivatives laws.
We evaluated Bitcoin Cash based on publicly available information, including (but not limited to):
- The creation, governance, usage and design of Bitcoin Cash, including the source code, security and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that first created Bitcoin Cash;
- The supply, demand, maturity, utility and liquidity of Bitcoin Cash;
- Material technical risks associated with Bitcoin Cash, including any code defects, security breaches and other threats concerning Bitcoin Cash and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them;
- Legal and regulatory risks associated with Bitcoin Cash, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of Bitcoin Cash; and
- Statements made by regulators or securities regulatory authorities in Canada and other jurisdictions regarding whether BCH, or generally about whether the type of crypto asset, is a security and/or a derivative.
Wealthsimple monitors ongoing developments related to crypto assets available on its platform for significant changes that may affect Wealthsimple’s original assessment of those assets, including Wealthsimple’s assessment of the application of securities and derivatives laws. Any significant changes relating to BCH may result in changes to this Crypto Asset Statement and/or Wealthsimple’s ability to support BCH.
Like all other crypto assets, there are some general risks to investing in BCH. These include short history risk, volatility risk, liquidity risk, demand risk, forking risk, cryptography risk, regulatory risk, concentration risk, electronic trading risk and cyber security risk. Please review the Wealthsimple Crypto Product Risk Disclosure for additional discussion of general risks associated with the crypto assets made available through the platform.
We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading Bitcoin Cash. Investors should perform their own assessment to determine the appropriate level of risk for their personal circumstances.
Wealthsimple is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Wealthsimple Investments Inc. dated December 18, 2023 (the Decision).
The statutory rights of action for damages and rescission in section 130.1 of the Securities Act (Ontario), and, if applicable, similar statutory rights under securities legislation of other jurisdictions of Canada, do not apply in respect of this Crypto Asset Statement to the extent a Crypto Contract is distributed under the prospectus relief in the Decision.
Last updated: January 1, 2024