Farhad and Mike’s Week in Tech: Cuckoo for Cryptocurrency

This week, Coinbase, one of the largest Bitcoin exchanges, added Bitcoin Cash to its service. And that’s when things went crazy. The price of Bitcoin Cash surged to three times its original price. Coinbase had to halt trading, cancel some trades, and now it’s in the process of investigating what happened — in particular, to look for evidence of insider trading.

You’ve been tweeting about this all day, so I know you have some thoughts.

Mike: I have to admit, I’ve kind of gone cuckoo for cryptocurrency. It’s just so weird, lawless and interesting! If you’d have told 14-year-old me that I’d be into esoteric new forms of digital finance in my 30s, I’d have called both you and my future self a huge nerd. And a time traveler, I guess.

So, a few things. First, the Coinbase thing is interesting because the evidence of the company accepting Cash appeared a few days before on Reddit, which gave some folks a heads up and the decision to invest in Cash ahead of the debut.

Why does that matter? Glad you asked! Well, as I noted last week, any currency that Coinbase decides to accept on its platform typically immediately goes up in price, because it’s one of the most popular exchanges and growing quickly among American newcomers. And, as we saw last night, that’s exactly what happened. Anyone who had the luck, foresight and inside information to trade on that detail probably made a lot of money.

But is insider trading illegal? If we’re talking about the securities world of exchanges like the Nasdaq and N.Y.S.E., then yes, it is very much illegal. Don’t do it. But as many of our friends on Twitter pointed out to me, it’s not illegal to trade commodities on inside information, though perhaps it is unethical! And right now, we’re not even fully sure whether Bitcoin is classified as a security or a commodity. What a world.

Farhad: What’s striking to me about this space is how lawless and reckless it is. There’s a feeling like in the 1990s…

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