A Major Coinbase Milestone: 1 Million Consumer Wallets • Hacker News Board

Re: A Major Coinbase Milestone: 1 Million Consumer Wallets

#31

Post by gnaritas » Thu, Feb 27, 2014, 6:50 PM UTC

diego wrote: post #28

sillysaurus3 wrote: post #18

Quick question: What's preventing Coinbase from shutting down operations tomorrow and walking away with everyone's money, as MtGox walked away with mine? Or, what if the founders orchestrated some sort of disaster wherein all of the coins are claimed to be lost, but in reality they're simply transferred to the founders? I know they wouldn't actually do that. My question is, what's stopping them? Why wouldn't someone…

Nothing, so most people should use Coinbase the same way they use a grocery store: buy what they need and take it somewhere else. Unfortunately most people do not know enough to do that. I wrote a blog post about it if you're interested. http://diegobasch.com/do-you-know-enough-to-securely-own-bit...

> Nothing

False. Theft is against the law. Bitcoins don't magically avoid being subject to existing law. The owners are known and subject to US jurisdiction, you have legal recourse through the courts should they try and steal your funds.

Re: A Major Coinbase Milestone: 1 Million Consumer Wallets

#32

Post by granfalloon » Thu, Feb 27, 2014, 6:51 PM UTC

sillysaurus3 wrote: post #18

Quick question: What's preventing Coinbase from shutting down operations tomorrow and walking away with everyone's money, as MtGox walked away with mine? Or, what if the founders orchestrated some sort of disaster wherein all of the coins are claimed to be lost, but in reality they're simply transferred to the founders? I know they wouldn't actually do that. My question is, what's stopping them? Why wouldn't someone…

Because they would go to jail for a very long time?

Re: A Major Coinbase Milestone: 1 Million Consumer Wallets

#33

Post by panarky » Thu, Feb 27, 2014, 6:55 PM UTC

sillysaurus3 wrote: post #18

Quick question: What's preventing Coinbase from shutting down operations tomorrow and walking away with everyone's money, as MtGox walked away with mine? Or, what if the founders orchestrated some sort of disaster wherein all of the coins are claimed to be lost, but in reality they're simply transferred to the founders? I know they wouldn't actually do that. My question is, what's stopping them? Why wouldn't someone…

The fact that the identities of Coinbase people are known, and apparently you can hire a hitman with Bitcoin. If you have any Bitcoin left.

Seriously, though, Coinbase and other online wallets and exchanges need to get with the program and prove they're not running a fractional reserve.

Radical transparency is a big part of the answer, and it's much more feasible with Bitcoin's public blockchain than with the dinosaur monetary system.

Re: A Major Coinbase Milestone: 1 Million Consumer Wallets

#34

Post by dangero » Thu, Feb 27, 2014, 6:57 PM UTC

sillysaurus3 wrote: post #18

Quick question: What's preventing Coinbase from shutting down operations tomorrow and walking away with everyone's money, as MtGox walked away with mine? Or, what if the founders orchestrated some sort of disaster wherein all of the coins are claimed to be lost, but in reality they're simply transferred to the founders? I know they wouldn't actually do that. My question is, what's stopping them? Why wouldn't someone…

Third option would also be actual negligence which is an interesting case because people are used to dealing with banks and do not realize that they will not get their money back. Im not suggesting FDIC style protection for Bitcoin exchanges is a good idea, but that is just what people are conditioned to expect and I think that is why so many people leave their money in exchanges like Coinbase or MtGox.

Re: A Major Coinbase Milestone: 1 Million Consumer Wallets

#35

Post by baddox » Thu, Feb 27, 2014, 6:57 PM UTC

sillysaurus3 wrote: post #18

Quick question: What's preventing Coinbase from shutting down operations tomorrow and walking away with everyone's money, as MtGox walked away with mine? Or, what if the founders orchestrated some sort of disaster wherein all of the coins are claimed to be lost, but in reality they're simply transferred to the founders? I know they wouldn't actually do that. My question is, what's stopping them? Why wouldn't someone…

I'm not sure what your point is. My best guess is that you're implying that the only reason people don't do things that are illegal is the fact that they are illegal. If I'm wrong, please correct me, and disregard the next paragraph.

I see two problems with this point. Firstly, while I'm not entirely sure how the legal system in the US works, but I suspect it would be illegal for Coinbase to shut down and run away with everyone's Bitcoins. I doubt that USD is the only asset that is legally protected from theft/fraud. Secondly, I suspect that Coinbase has a huge incentive to not do this even if it were legal to do so. Namely, they should be able to make a lot more money by conducting their business legitimately and continually than if they ran off with one lump sum.

Re: A Major Coinbase Milestone: 1 Million Consumer Wallets

#36

Post by baddox » Thu, Feb 27, 2014, 6:59 PM UTC

gnaritas wrote: post #31

diego wrote: post #28

Earlier quoted context omitted.

Nothing, so most people should use Coinbase the same way they use a grocery store: buy what they need and take it somewhere else. Unfortunately most people do not know enough to do that. I wrote a blog post about it if you're interested. http://diegobasch.com/do-you-know-enough-to-securely-own-bit...

> Nothing False. Theft is against the law. Bitcoins don't magically avoid being subject to existing law. The owners are known and subject to US jurisdiction, you have legal recourse through the courts should they try and steal your funds.

Lots of people in this thread seem to think that there is either no incentive for Coinbase to conduct their business legitimately, or that the law is the only incentive. That ignores the much more obvious and presumably stronger incentive: they should be able to make a lot more money as a legitimate business than if they just ran away with one lump sum.

Re: A Major Coinbase Milestone: 1 Million Consumer Wallets

#37

Post by baddox » Thu, Feb 27, 2014, 7:00 PM UTC

granfalloon wrote: post #32

sillysaurus3 wrote: post #18

Quick question: What's preventing Coinbase from shutting down operations tomorrow and walking away with everyone's money, as MtGox walked away with mine? Or, what if the founders orchestrated some sort of disaster wherein all of the coins are claimed to be lost, but in reality they're simply transferred to the founders? I know they wouldn't actually do that. My question is, what's stopping them? Why wouldn't someone…

Because they would go to jail for a very long time?

Because they run what I suspect to be a fairly lucrative business which, if operated competently, should make them a lot more money in the long run than if they just stole everyone's bitcoins?

Re: A Major Coinbase Milestone: 1 Million Consumer Wallets

#38

Post by CoachRufus87 » Thu, Feb 27, 2014, 7:00 PM UTC

gnaritas wrote: post #31

diego wrote: post #28

Earlier quoted context omitted.

Nothing, so most people should use Coinbase the same way they use a grocery store: buy what they need and take it somewhere else. Unfortunately most people do not know enough to do that. I wrote a blog post about it if you're interested. http://diegobasch.com/do-you-know-enough-to-securely-own-bit...

> Nothing False. Theft is against the law. Bitcoins don't magically avoid being subject to existing law. The owners are known and subject to US jurisdiction, you have legal recourse through the courts should they try and steal your funds.

> The owners are known and subject to US jurisdiction

Assuming they don't just leave the country

Re: A Major Coinbase Milestone: 1 Million Consumer Wallets

#39

Post by pavanky » Thu, Feb 27, 2014, 7:00 PM UTC

gnaritas wrote: post #31

diego wrote: post #28

Earlier quoted context omitted.

Nothing, so most people should use Coinbase the same way they use a grocery store: buy what they need and take it somewhere else. Unfortunately most people do not know enough to do that. I wrote a blog post about it if you're interested. http://diegobasch.com/do-you-know-enough-to-securely-own-bit...

> Nothing False. Theft is against the law. Bitcoins don't magically avoid being subject to existing law. The owners are known and subject to US jurisdiction, you have legal recourse through the courts should they try and steal your funds.

How do you probe you lost something that is not tied to your identity ?

Re: A Major Coinbase Milestone: 1 Million Consumer Wallets

#40

Post by diego » Thu, Feb 27, 2014, 7:01 PM UTC

gnaritas wrote: post #31

diego wrote: post #28

Earlier quoted context omitted.

Nothing, so most people should use Coinbase the same way they use a grocery store: buy what they need and take it somewhere else. Unfortunately most people do not know enough to do that. I wrote a blog post about it if you're interested. http://diegobasch.com/do-you-know-enough-to-securely-own-bit...

> Nothing False. Theft is against the law. Bitcoins don't magically avoid being subject to existing law. The owners are known and subject to US jurisdiction, you have legal recourse through the courts should they try and steal your funds.

The law doesn't prevent you from committing crimes. It certainly did not prevent Mt. Gox from making bitcoins disappear.

If that happens and you need to go to court, good luck proving that an exchange stole your coins. We haven't even seen Mt. Gox play out yet. Suppose they actually stole everyone's coins. Can someone prove it wasn't a hacker or a software bug? Time will tell.