Crypto Asset Statement: BCH (Bitcoin Cash)
Last updated: April 18, 2023
About this Statement
CatalX CTS (“Catalyx” or “we”) strives to provide our users with information to assist in understanding crypto assets that are offered for trading on the Catalyx platform (the “Platform”). One of the crypto assets we offer on the Platform is Bitcoin Cash (BCH). This summary sets out certain key information about BCH as well as some of the risks involved in trading it. While we tried to describe the key features of BCH here, this summary doesn’t provide all relevant information on BCH. We encourage users to perform their own research in order to understand any crypto asset that they intend to trade on the Platform.
History & Characteristics of Bitcoin Cash
BCH came into existence in August 2017 as a decentralized network, resulting from a "hard fork" of the original Bitcoin protocol. It is a distinctive chain that is not backwards-compatible with the Bitcoin (BTC) chain. Although BTC and BCH have many similarities, they are different cryptocurrencies. The main difference is that BCH was designed to be used as a currency of exchange, while BTC functions more as a store of value. BCH has a bigger block size making it faster and cheaper to use than BTC, providing for approximately 100 transactions per second vs Bitcoin’s 7. This additional speed allows more people to use it at the same time without causing delays and results in much lower transaction fees which makes it a more practical choice for small, frequent transactions.
This overview provides a summary of certain risks associated with BCH. We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading BCH, and in addition, does not take into account an individual’s particular situation or risk tolerance. Purchasers are encouraged to conduct their own research prior to trading any crypto asset on the Platform. Catalyx users should read the Risk Disclosure Statement for additional discussion of general risks associated with crypto assets made available through the Platform.
Increased Risk of Forking. Because of past instances of blockchain forks, BCH may be more vulnerable to experiencing similar events in the future. BCH was in itself the result of a hard fork of Bitcoin in 2017 and in November 2018, the Bitcoin Cash blockchain split again, this time into Bitcoin Cash and Bitcoin SV. An occurrence of a future blockchain fork in the Bitcoin Cash network negatively affect the value of BCH.
Decrease in Block Reward. Over time, the block reward for BCH will decrease, with the latest reduction occurring on April 8, 2020, from 12.5 to 6.25 BCH. With each decrease in block reward, there will be a greater dependence on transaction verification fees as an incentive for miners to keep dedicating computing resources to the blockchain. However, if these fees become too expensive, the market may become hesitant to use BCH. This reduction in demand could have an unfavorable impact on the price of BCH.
Increase in Transaction Fees. Miners of BCH earn transaction fees for confirming transactions. As the cost of verifying unconfirmed transactions is minimal, miners have typically accepted lower transaction fees. However, if miners engage in anti-competitive behavior and refuse to accept lower transaction fees, BCH users may end up paying higher fees, ultimately reducing the appeal of the Bitcoin Cash Network.
Please note that these risks and the associated summaries or overviews provided for each in the Risk Disclosure Statement are not intended to be an exhaustive discussion pertaining to all such risks and, in addition, there may be other risks that come with exposure to BCH. We encourage all Catalyx users to perform their own due diligence to assess the risks associated with BCH and to determine whether this level of risk is acceptable to them.
How Catalyx determines which Crypto Assets to List
Catalyx has established robust policies and procedures to review each crypto asset offered for trading on the Platform. Among other information, we review available public information relating to the crypto asset on the following topics prior to making a determination on whether a crypto asset will be listed:
The history and characteristics of the crypto asset including whether the crypto asset was launched by ICO;
Analysis of the founders or inventors of the crypto asset/related network and a review of their ongoing involvement with crypto asset/network;
How the crypto asset functions including a review of its utility or purpose;
The market liquidity for the crypto asset;
The current and proposed governance of the ecosystem on which crypto asset operates with a focus on the level of decentralization of such ecosystem; and
The position taken by any regulator with respect to the crypto asset including any enforcement action taken against the crypto asset, the related network, or the founders.
In addition to the above we also conduct an analysis of factors weighing in favor or against the crypto asset being deemed to be a security based on Canadian securities laws.
No securities regulatory authority in Canada has expressed an opinion about BCH or any of the other crypto contracts or crypto assets made available through the Platform, including an opinion that BCH itself is not a security and/or derivative. Changes to applicable law may adversely affect the use, transfer, exchange, or value of any crypto contracts or crypto assets you hold on the Platform.
Certain statutory rights under securities legislation in Canada do not apply in respect of this Crypto Asset Statement.