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A Major Coinbase Milestone: 1 Million Consumer Wallets

blog.coinbase.com

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Re: A Major Coinbase Milestone: 1 Million Consumer Wallets

#51

Post by jmulho »

baddox wrote: post #35
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 wi…

> they should be able to make a lot more money by conducting their business legitimately and continually...

You're not the first person to make this point. It is not necessarily true. What if the amount they could run off with is huge and their margins are tiny, or they are losing money?

Re: A Major Coinbase Milestone: 1 Million Consumer Wallets

#52

Post by ojr »

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…

enough with this fear, uncertainty and doubt, Mt Gox should not be placed in the same sentence as Coinbase, Coinbase is a lot more transparent...

Re: A Major Coinbase Milestone: 1 Million Consumer Wallets

#53

Post by MichaelGG »

TacticalCoder wrote: post #26
joezydeco wrote: post #2

I realize it's all startup-y to pat yourself on the back about growth, but aren't you painting a target on your back for those that want to perform the next heist?

As I understand it if security is done correctly then "stealing bitcoins" amounts to breaking strong cryptography. At this point nothing indicates that the elliptic curves or the cryptographic hashes (SHA-256, RIPEMD-160) used in Bitcoin are at risk. Under the assumption that the crypto used in Bitcoin is safe, there's, for example, nothing an attacker can do to spend the coins in offline wallets. Not even a 50%+1 at…

Yeah, we'd hope they have some serious M-of-N key system in place to safeguard access to the wallets.

The biggest thing that gives me pause about Coinbase is their decision to use MongoDB. There may be a reason, but I certainly can't find one. Their use case is perfect for proper, old-fashioned, reliable RDBMS. They've also had a fair amount of customer service issues, including "we rebooted and our job queues didn't run anymore" problem where they tried to rip that guy off.

Even so, the security of the offline wallet is so important, you'd think their investors will have insisted on some auditing and third party implementation. Maybe some of the big wallets are even partially held by outside people.

Re: A Major Coinbase Milestone: 1 Million Consumer Wallets

#54

Post by lectrick »

thinkcomp wrote: post #3

That's one million consumer accounts with no FDIC insurance, no surety bonds, and no other backstop in the event of a problem. I'd love to see a Coinbase blog post about why Coinbase doesn't need to be licensed like every other MSB registered with FinCEN.

There's nothing stopping someone from insuring Bitcoins.

http://www.businessinsider.com/as-bitcoin-grows-in-popularit...

I have personally never understood the criticisms of new things of the form " doesn't provide the service that we've had for years with !" IT'S NEW AND DIFFERENT, GIVE IT A CHANCE.

Re: A Major Coinbase Milestone: 1 Million Consumer Wallets

#55

Post by dragonwriter »

JoshTriplett wrote: post #12
thinkcomp wrote: post #7

Earlier quoted context omitted.

Financial accounts. One person can have many bank accounts. I would guess they're using the word "wallet" to avoid regulatory scrutiny that might be applied to financial accounts. People might feel like "wallets" can get lost or stolen. "Accounts" shouldn't. These are accounts.

> People might feel like "wallets" can get lost or stolen. "Accounts" shouldn't. That's exactly why the term "wallet" should be used. This is cash, and should be treated accordingly and thought of accordingly. Terms like "wallet" help people develop a reasonable mental model that fits reality.

> That's exactly why the term "wallet" should be used. This is cash, and should be treated accordingly and thought of accordingly.

Cash held by someone else on your behalf is an account (even if it is physically stored in their wallet).

So, sure, bitcoins are in a sense analogous to physical cash, and bitcoin wallets are in a sense analogous to physical wallets full of cash -- but some third party business who keeps bitcoins in their own wallets and contracts with you to transmit them according to your instruction is providing you with an account, not a wallet.

Re: A Major Coinbase Milestone: 1 Million Consumer Wallets

#56

Post by sheetjs »

diego wrote: post #40
gnaritas wrote: post #31

Earlier quoted context omitted.

> 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.

The one good thing about coinbase is that they do react to outrage on HN. For example: https://news.ycombinator.com/item?id=6929705

Re: A Major Coinbase Milestone: 1 Million Consumer Wallets

#57

Post by k-mcgrady »

sheetjs wrote: post #56
diego wrote: post #40

Earlier quoted context omitted.

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.

The one good thing about coinbase is that they do react to outrage on HN. For example: https://news.ycombinator.com/item?id=6929705

The fact that public outrage is required to get their attention when dealing with such large amounts of money doesn't inspire confidence. Your example is a good example of bad customer service, not something good to credit them with.

Re: A Major Coinbase Milestone: 1 Million Consumer Wallets

#58

Post by devindotcom »

sillysaurus3 wrote: post #29
devindotcom wrote: post #25

Earlier quoted context omitted.

The promise of future profits amounting to more than what they would walk away with today, gained in a somewhat more respectable fashion. If they become the leading wallet in the world, they're sitting on a goose laying golden eggs. Doesn't make sense to slaughter it today for dinner. These guys are known — like the guys at Mt Gox. They're not anonymous, and they would run a real risk of bodily harm by such a public…

The promise of future profits amounting to more than what they would walk away with today That's exactly the same argument I used to justify why MtGox wouldn't shut down, almost word for word. It's the same argument I used to convince myself why they wouldn't shut down. They still shut down. They're not anonymous, and they would run a real risk of bodily harm by such a public crime. So we're relying on mob justice? A…

The jury's out on whether MtGox took the money and ran or lost the money and hid, right?

I'm not saying we should rely on mob justice. I'm saying that the risk of reprisal is a perfectly understandable reason not to commit certain crimes. These guys are public figures and would be easy targets for people who want to harrass or harm them, unlike for example a mask-wearing bank robber whom nobody can identify and who stole only the bank's money.

Re: A Major Coinbase Milestone: 1 Million Consumer Wallets

#59

Post by jonknee »

waterlesscloud wrote: post #43
singularityyy wrote: post #17

Earlier quoted context omitted.

No security is perfect of course, but Coinbase has over 98% of the funds in cold-storage. See: http://antonopoulos.com/2014/02/25/coinbase-review/

Gox claimed 95% of their coins were in cold storage. Unproven claims aren't worth much.

Technically that still appears accurate. The inaccurate portion was that they didn't have anywhere near the correct number of coins (cold or hot).

Re: A Major Coinbase Milestone: 1 Million Consumer Wallets

#60

Post by torbjorn »

baddox wrote: post #36
gnaritas wrote: post #31

Earlier quoted context omitted.

> 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.

The mistrust in Coinbase line of thinking seems similar to fear and paranoia about terrorism. Could a bad actor acquire and use agency to do something horrible like obtain a dirty bomb and set it off? Sure, it is possible. But at the same time it is very unlikely. People GENERALLY want to be good actors and make a positive impact on the world.

With Mt. Gox I am more inclined to think their problems stemmed incompetence rather than malevolence.

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