Does this mean that customers in a short position owe Bitcoin Cash?
https://www.bloomberg.com/view/articles/2017-08-02/bitcoin-e...
It's an interesting read even if you don't care about shorts or bitcoin at all.
This really is an interesting situation. In the hours approaching the BCH fork an absolutely massive number of short positions were opened on various bitcoin exchanges, but the price remained steady. I assumed people were shorting in expectation of a crash, but the outlined scenario makes much more sense.
Similarly to the trade outlined in the article, if you already held bitcoin, you could short the equivalent amount and you would still receive bitcoin cash. This trade also had the nice side effect of your exposure to fiat currency staying flat through all the potential fluctuation.
Anyone who borrowed BTC may have implicitly borrowed BCH. Suppose Person A owns shares in OldCo. Person B borrows those shares and sells them short to Person C. OldCo spins out NewCo. On Thursday evening, you go to bed with 1 OldCo share in your account; Friday morning, you wake up with 1 OldCo share and 1 NewCo share.
Bought Person A and Person C own OldCo shares, and so expect to receive one NewCo share. The company provides one. Who provides the other? The short seller. Presumably by buying Person A's NewCo shares. Same thing happens with dividends.
So if you borrowed BTC pre-fork and returned it post-fork, you're may find yourself owing BCH. Shorting is complicated, which is why I'm bemused by its proliferation around a blockchain that doesn't even natively support lending or interest rates.
But whoever lent the BTC would most likely want the BTC + BCC they are entitled to, even though you don't really have one to give.
actually gdax just announce they would support BCC
Here's Coinbase support posting a "how do I use GADX?" article: https://community.coinbase.com/t/what-is-gdax-how-do-i-use-i...
If I borrow your hen and it lays an egg and that hatches a chick, shouldn't I give you the chick back with the hen?
That being said, I think when margin trading on GADX no actual Bitcoin transactions are occurring. So, Coinbase is just doing accounting for the trades using internal assets. I think they could later on replay everything but treat all of the short positions as having exited directly at the split or something along those lines.
Coinbase — consumer product
GDAX — institutional/professional product