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Coinbase warns that bankruptcy could wipe out user funds

fortune.com

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Re: Coinbase warns that bankruptcy could wipe out user funds

#301

Post by SkipperCat »

mellavora wrote: post #220
tablespoon wrote: post #205

Earlier quoted context omitted.

> No, but the users would be last in liquidation preference, so would end up screwed anyways. Cite please, because if true that would be mind-boggling.

not so mind boggling, if you regard it as any other company. Say you ordered a pair of jeans from Sears, via the catalog. And unfortunately your cash transfer cleared on the day they went bankrupt. They owe you a pair of pants, or your money back if they cannot deliver the product you ordered. They also owe their employees money, if they have not issued payroll yet for that month. They also owe their bondholders mone…

I think a shirt would have been more apt. As in, Coinbase blew up and I lost my shirt....

Re: Coinbase warns that bankruptcy could wipe out user funds

#302

Post by vmception »

usrn wrote: post #281
vmception wrote: post #244

Earlier quoted context omitted.

Geth lol. The worst full/fast synced node software out there? Thats what you choose to write? Just let the people use metamask, more full nodes are nice but theyre not there yet

Meh, I'm using it in lite mode. It works fine that way. I'll probably set up a full node at some point.

yeah lite/pruned/fast mode is a good way to get your feet wet, "using your own node" is just so far removed from "use an unhosted wallet outside of exchanges"

Re: Coinbase warns that bankruptcy could wipe out user funds

#305

Post by aaronbrethorst »

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.

Tulip mania, indeed.

Re: Coinbase warns that bankruptcy could wipe out user funds

#306

Post by bragr »

rubyn00bie wrote: post #277
jpmattia wrote: post #266

Earlier quoted context omitted.

deleted erroneous comment about shorting on Coinbase.

How do you short a coin on Coinbase? I have never seen the option nor heard reference to it. It sounds like you’re just assuming this is how it works to me but I’d prefer to be wrong and learn something.

It seems you can no longer directly short on Coinbase but they still offer options contracts that let you bet the price will go down.

Re: Coinbase warns that bankruptcy could wipe out user funds

#307

Post by barkingcat »

tablespoon wrote: post #242
mellavora wrote: post #220

Earlier quoted context omitted.

not so mind boggling, if you regard it as any other company. Say you ordered a pair of jeans from Sears, via the catalog. And unfortunately your cash transfer cleared on the day they went bankrupt. They owe you a pair of pants, or your money back if they cannot deliver the product you ordered. They also owe their employees money, if they have not issued payroll yet for that month. They also owe their bondholders mone…

I get that's true in some situations, but is it true in all cases? Say I rent a safe deposit box, put valuable personal property in it, and the bank goes bankrupt. Does the bankruptcy court sell the box-holders' personal property until the bondholders are made whole? It seems like depositors should be one of the first in line, certainly before bondholders.

coinbase has the decryption keys to the wallet, so they have full control over the currency.

users of coinbase never "owned" or "have" anything. You gave money to coinbase, they have the money now.

If you had the decryption key offline, then you could control the cryptocurrency.

this is cryptocurrency 101 - the very basic nature of the blockchain itself guarantees whoever has the key to have ultimate control.

Coinbase is not a bank, they don't have to give you anything.

Re: Coinbase warns that bankruptcy could wipe out user funds

#308

Post by jobs_throwaway »

tablespoon wrote: post #236
iamthirsty wrote: post #233

Earlier quoted context omitted.

> 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.

> 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. It certainly wasn't the "main intention of the original product," but Bitcoin failed at that. A big part of that failure was the peculiar ideology that got baked in through many of its design decisions.

> but Bitcoin failed at that

what makes you say that? I use bitcoin to conduct private transactions regularly and its pretty darn solid for that purpose. Doing such a transaction over the internet, before bitcoin, required you to use permissioned rails.

Re: Coinbase warns that bankruptcy could wipe out user funds

#309

Post by nybble41 »

gigaflop wrote: post #241
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...

You can 100% create and manage your own wallets on your own hardware. However, most exchanges have transfer fees, on top of whatever costs are incurred on the network by the transfer. And, if you want to sell on an exchange, you likely need to transfer the tokens into the exchange wallet anyways. If someone is buying crypto to hold it for years, then wallets and hardware keys and 12-word passphrases make the most sen…

> However, most exchanges have transfer fees, on top of whatever costs are incurred on the network by the transfer.

Most might, but Coinbase does not. Outgoing transfers are free—they even cover the network fee. For incoming transfers the sender pays the network fee but there is no additional charge.

It's a bit of a hassle to shift funds around, and not having your funds instantly available on the exchange limits your ability to take advantage of short-term opportunities, but in general I would still recommend self-custody over leaving "large" amounts of crypto on an exchange for very long. That's less due to the risk of bankruptcy and more due to the risk of the exchange getting hacked—practically speaking we have more real-world examples of the latter case, discounting bankruptcy directly resulting from a previous hack.

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