Coinbase warns that bankruptcy could wipe out user funds

Post by mellavora » Wed, May 11, 2022, 2:56 PM UTC

patwolf wrote: post #90

sureglymop wrote: post #50

Earlier quoted context omitted.

What i don't understand is why don't people create their own wallet and keep their funds there? Isn't that the entire purpose? Of course they could still use coinbase as an exchange. But if everyone let's another party "manage" their wallet in what way is it really decentralized...

It takes discipline to keep a wallet safe. I used to discount the risk of that, but over time I feel less and less confident in the average person's ability to not lose a wallet or have it hacked. To me Coinbase feels more like bank. Once I deposit money I no longer worry about the physical security of that money. Clearly that isn't the case given it's not FDIC insured, but the fact that it's a multi-billion dollar p…

Post by vmception » Wed, May 11, 2022, 2:56 PM UTC

corydori wrote: post #142

Coinbase is such a shit company...My interactions with them have been absolutely awful. The ended up trying to use a AMEX gift card attached to my papal to buy some crypto, got no error but the funds never went through. Apparently they didn't like that transaction and was flagged as fraud. I was told I can't open a support ticket or have it reviewed for 2 months, "they can't disclose the reasoning behind this." So I…

Post by tablespoon » Wed, May 11, 2022, 2:57 PM UTC

iamthirsty wrote: post #233

tablespoon wrote: post #198

Earlier quoted context omitted.

> What i don't understand is why don't people create their own wallet and keep their funds there? Isn't that the entire purpose? Of course they could still use coinbase as an exchange. But if everyone let's another party "manage" their wallet in what way is it really decentralized... The real purpose of Bitcoin is to speculate on the roller coaster. Everything else is basically woo that's needed to fuel it. The "futu…

> The real purpose of Bitcoin is to speculate on the roller coaster. > Everything else is basically woo that's needed to fuel the speculative roller coaster. For some people sure, but not all, and I would even go as far as to say not the main intention of the original product.

Post by AYoung010 » Wed, May 11, 2022, 2:58 PM UTC

pandemicsoul wrote: post #231

prepend wrote: post #2

Since coinbase isn’t FDIC insured, it makes sense that if coinbase goes bankrupt, the customer currencies will go away as well. And they aren’t SPIC insured in the situations where crypto is a security. It’s funny to see people shocked (SHOCKED!) when crypto doesn’t have the protections of regular banking and investments. That’s why you don’t invest with stuff that isn’t insured. Those aren’t real rates, they are ris…

I was on reddit and someone called bitcoin a "useful savings account" and I was like, "NO, STOP. Do not tell people this stuff is for savings!" I was downvoted to hell and people were like "lmao noob." Got into a back and forth where I was trying to delineate an investment and savings and people just kept replying stuff like, "it goes up, that means you beat inflation, do you not understand how this works???" Sigh.

Post by cinntaile » Wed, May 11, 2022, 3:00 PM UTC

300bps wrote: post #156

cinntaile wrote: post #139

Earlier quoted context omitted.

You already write why that is mathematically impossible, so the logical conclusion would be that it is not meant to be interpreted like that no? Language is not maths, no risk doesn't mean the risk is zero. It means the risk is unlikely.

These are complicated topics. The people buying crypto at Coinbase are not sophisticated investors. It is entirely reasonable to believe that a large proportion of Coinbase users would read, "We have no risk of bankruptcy" and choose to leave their money at Coinbase believing that the CEO must have used some financial mechanism to 100% prevent bankruptcy. Words have meaning, and when you say, "no risk of bankruptcy"…