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Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

fortune.com

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Re: Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

#81

Post by Cthulhu_ »

bdonlan wrote: post #42

It's an interesting situation, but assigning liability to coinbase for this seems like it'd be a problem long term. Unlike traditional securities, there's nothing stopping me from going out and making my own fork tomorrow - and then would all exchanges be required to add support for that fork, too? Where do you draw the line?

There was a hint that customers should withdraw their BTC from Coinbase before the split and (if they want to) move it back afterwards; the people that are suing knew this, and knew that Coinbase wasn't going to support it (at first), and yet kept their BTC hosted in Coinbase's wallets.

Re: Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

#82

Post by e12e »

gruez wrote: post #46
MichaelGG wrote: post #24

Earlier quoted context omitted.

You can read up on it all over. But the short answer is Bitcoin Cash forked Bitcoin and has 8MB blocks, which would have eliminated congestion and lowered fees on Bitcoin during the past year. Both sides (small Vs big) have economic incentives behind them, making the argument extra vitriolic. But larger blocks allow on chain growth, keeping it peer to peer without requiring any 3rd parties. (And the answer that 8x mo…

8 MB blocks = 1.15GB per day, or 420GB per year. Sure it might be feasible to run a node if you're in a first world country with fast internet and cheap storage (cost of living wise), but even in rural america, 34.5GB is a significant chunk of bandwidth. Not to mention they eventually plan to raise it to 32MB, which works out to 4.6GB a day or 1.63TB/year.

1 gb ~ 2 hours 15 minutes of 1 mbps. 1 tb ~ 3 "mbps months". You need ~ 100mbit to do 1 tb in 24h. (These number are probably underestimating protocol overhead a bit).

Re: Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

#83

Post by throwaway2016a »

chrisabrams wrote: post #60
bdonlan wrote: post #42

It's an interesting situation, but assigning liability to coinbase for this seems like it'd be a problem long term. Unlike traditional securities, there's nothing stopping me from going out and making my own fork tomorrow - and then would all exchanges be required to add support for that fork, too? Where do you draw the line?

It's a good way of looking at it. Another perspective, which makes this issue so complicated, is that we could compare this to: a company on the stock exchange splitting into two companies, investors should be getting shares in both companies, but the brokerage decides they are not going to recognize the second company and thus the investors don't get their shares in the second company.

In practice that's often not how that works, though.

I had a company I have shares in that split in two and they gave me a choice, either convert my shares to the new company or keep them in the existing company. I didn't automatically get shares in the new company and if I opted too I would have lost the shares in the original company.

Re: Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

#84

Post by Expez »

Cthulhu_ wrote: post #81
bdonlan wrote: post #42

It's an interesting situation, but assigning liability to coinbase for this seems like it'd be a problem long term. Unlike traditional securities, there's nothing stopping me from going out and making my own fork tomorrow - and then would all exchanges be required to add support for that fork, too? Where do you draw the line?

There was a hint that customers should withdraw their BTC from Coinbase before the split and (if they want to) move it back afterwards; the people that are suing knew this, and knew that Coinbase wasn't going to support it (at first), and yet kept their BTC hosted in Coinbase's wallets.

With withdrawal limits being what they are, this is easier said than done for a lot of users, I'd guess.

Re: Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

#86

Post by jmilloy »

I don't really follow these cryptocurrencies very closely.

I assume that Coinbase is sitting on keys/wallets that own Bitcoin belonging to their customers, which would mean that they are now also sitting on keys/wallets that own Bitcoin Cash. So could Coinbase short (some of) that Bitcoin Cash by selling it on other exchanges?

I read this statement from Coinbase: "If this decision were to change in the future and Coinbase was to access Bitcoin Cash, we would distribute Bitcoin Cash to customers associated with Bitcoin balances at the time of the fork." So as long as Coinbase bought back enough Bitcoin Cash to distribute it to customers at time-of-fork-value, they would be true to their word.

Or is there something that prevents Coinbase from even accessing the Bitcoin Cash associated with Bitcoin it is holding?

Edit: I'm not trying to make any judgments here, I don't know enough. Just trying to understand.

Re: Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

#87

Post by MichaelGG »

gruez wrote: post #46
MichaelGG wrote: post #24

Earlier quoted context omitted.

You can read up on it all over. But the short answer is Bitcoin Cash forked Bitcoin and has 8MB blocks, which would have eliminated congestion and lowered fees on Bitcoin during the past year. Both sides (small Vs big) have economic incentives behind them, making the argument extra vitriolic. But larger blocks allow on chain growth, keeping it peer to peer without requiring any 3rd parties. (And the answer that 8x mo…

8 MB blocks = 1.15GB per day, or 420GB per year. Sure it might be feasible to run a node if you're in a first world country with fast internet and cheap storage (cost of living wise), but even in rural america, 34.5GB is a significant chunk of bandwidth. Not to mention they eventually plan to raise it to 32MB, which works out to 4.6GB a day or 1.63TB/year.

So for those people they can use a light client or run a node online. What is their benefit to running a full node?

Not to mention, if Bitcoin becomes a settlement layer then no one can run a full node since most transactions will be off chain. Plus the enjoyment of running a full node is greatly reduced if you're just seeing settlement data between large payment systems.

Re: Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

#88

Post by lawn »

Cthulhu_ wrote: post #78
lawn wrote: post #74

Earlier quoted context omitted.

As others have said, it really depends on the value of the fork. If you make a fork worth nothing, nobody's going to care. But as right now Bitcoin Cash is worth $634 and regular Bitcoin $2727 per coin according to coinmarketcap.com. That's 23% the customers are loosing out on instantly. And the defense that the users should be responsible to withdraw your coins if you want to keep it on both forks is disingenuous. T…

But there's other cryptocurrencies with a nontrivial market cap out there; Coinbase only supports three. Then there's fiat currency, of which Coinbase's support is also limited. Again, where do they draw the line?

It's irrelevant if Coinbase supports trading of the coin. What they should do is allow the customers to withdraw their Bitcoin Cash coins.

What other cryptocurrencies have been forked of another coin gaining such a large value, placing the exchanges in the same spot?

I can think of only one: Ethereum and Ethereum Classic. The same thing happened there. Coinbase was forced to allow the customers to withdraw their Ethereum Classic coins.

> Again, where do they draw the line?

If a forking chain survives and gains a significant share they should allow withdrawal of their coins. Not keep them, as they are doing now.

Re: Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

#89

Post by lawn »

Alex3917 wrote: post #65
abhi3 wrote: post #56

Earlier quoted context omitted.

And if the price of BCC were to crash to single digit USD in a week it takes for Coinbase to come to a decision then the customers would have lost a fortune.

They already came to a decision. They told people who wanted BCC to withdraw their coins before August 1st. Everyone who wanted BCC already has them.

... Giving a few days to do it. Ignoring withdrawal limits the customers cannot raise.

Re: Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

#90

Post by colordrops »

Cthulhu_ wrote: post #78
lawn wrote: post #74

Earlier quoted context omitted.

As others have said, it really depends on the value of the fork. If you make a fork worth nothing, nobody's going to care. But as right now Bitcoin Cash is worth $634 and regular Bitcoin $2727 per coin according to coinmarketcap.com. That's 23% the customers are loosing out on instantly. And the defense that the users should be responsible to withdraw your coins if you want to keep it on both forks is disingenuous. T…

But there's other cryptocurrencies with a nontrivial market cap out there; Coinbase only supports three. Then there's fiat currency, of which Coinbase's support is also limited. Again, where do they draw the line?

They should quit representing themselves as bank holding your coins/private keys, which is not what they are doing. They are issuing IOUs for a certain amount on a particular blockchain. It would be more honest to be explicit about this in their marketing and website copy, and would avoid this problem, but that's not sexy and doesn't get VC funding. I have no sympathy for their plight.
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