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Coinbase Wants Wall Street to Resolve Its Bitcoin Trust Issues

bloomberg.com

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Re: Coinbase Wants Wall Street to Resolve Its Bitcoin Trust Issues

#11

Post by chollida1 »

brndnmtthws wrote: post #7
chollida1 wrote: post #6

Earlier quoted context omitted.

> I don't know what reality you operate in, but hedge funds don't provide anywhere close to those types of guarantees. Strange comment, I think I've confused you. All this was about exchanges and what hedge funds expect from them, not guarantees about what hedge funds provide. And you are right, exchanges do go down, and its news when they do because they are so good at what they do that its very rare. > I don't know…

Hedge funds do a better job of hiding their failures than something which operates on a public ledger, because everything is done behind closed doors. Furthermore, hedge funds are very good at finding creative ways to lose money, and they have great liberty in doing so. The reporting requirements for hedge funds are relatively lax compared to, say, an index fund.

I agree with everything you've just said.

And yet, it has absolutely nothing to do with what we are talking about:)

Which is what exchanges need to do to get institutional investors;)

Re: Coinbase Wants Wall Street to Resolve Its Bitcoin Trust Issues

#14

Post by nihonde »

chollida1 wrote: post #2

EDIT Yuck, this blew up and I think alot of people took it the wrong way. I think Coinbase is great, and I'm sure everyone who works there is awesome and terrific at their job. Anyone who has worked on any half way successful project knows just how hard both uptime and security are and I'm in no way upset at Coinbase for having growth issues. I've done this for years and might not even get an interview with them. The…

You’re very literally recreating, step by step, the current centralized, trust-based system that cryptocurrencies are seeking to remedy. If you need someone to trust, you’re doing it wrong.

Re: Coinbase Wants Wall Street to Resolve Its Bitcoin Trust Issues

#15

Post by wyldfire »

qaq wrote: post #9
chollida1 wrote: post #2

EDIT Yuck, this blew up and I think alot of people took it the wrong way. I think Coinbase is great, and I'm sure everyone who works there is awesome and terrific at their job. Anyone who has worked on any half way successful project knows just how hard both uptime and security are and I'm in no way upset at Coinbase for having growth issues. I've done this for years and might not even get an interview with them. The…

No counterparty risk - and what instrument exactly has this amazing property?

Atomic swaps?

Re: Coinbase Wants Wall Street to Resolve Its Bitcoin Trust Issues

#17

Post by ryanmarsh »

H99189 wrote: post #8

Coinbase should solve it's coinbase trust issue. I bought a small amount of litecoin almost 2 weeks ago, i'm well past my "delivery by" date, my funds left my bank account over 10 days ago, yet I still don't have my coins in my account.

Same. Coinbase are in over their heads. There is so much room for competition here.

At times I’ve been unable to access my accounts or have transactions complete in a reasonable amount of time. Coinbase closed my account without notice with no explanation other than a mention of their desire to comply with FinCEN. I never got an answer from them as-to what I did “wrong”. I sure as hell wasnt selling heroin or babies on Silk Road. Imagine if Wells Fargo closed an account without notice or explanation after a customer had a few normal deposits and withdrawals. deep rolls eyes

Re: Coinbase Wants Wall Street to Resolve Its Bitcoin Trust Issues

#18

Post by creeble »

I like this article, "Bitcoin is none of the things it was supposed to be":

https://theoutline.com/post/2592/bitcoin-is-none-of-the-thin...

Bitcoin can't operate as a currency without having exchanges between it and other currencies, and those exchanges strip all the benefits of bitcoin.

Edit: show title of article.

Re: Coinbase Wants Wall Street to Resolve Its Bitcoin Trust Issues

#19

Post by babuskov »

chollida1 wrote: post #6
brndnmtthws wrote: post #4

Earlier quoted context omitted.

I don't know what reality you operate in, but hedge funds don't provide anywhere close to those types of guarantees. Exchanges do indeed go down, and when they do they shrug their shoulders and say "woops". Source: I work for a hedge fund.

> I don't know what reality you operate in, but hedge funds don't provide anywhere close to those types of guarantees. Strange comment, I think I've confused you. All this was about exchanges and what hedge funds expect from them, not guarantees about what hedge funds provide. And you are right, exchanges do go down, and its news when they do because they are so good at what they do that its very rare. > I don't know…

> When was the last time you heard of Goldman Sachs begin hacked

Goldman Sachs is not an exchange.

> it has absolutely nothing to do with what we are talking about:)

Exactly. You are confusing others by giving GS as an example, while we're talking about exchanges.

Re: Coinbase Wants Wall Street to Resolve Its Bitcoin Trust Issues

#20

Post by warbiscuit »

chollida1 wrote: post #2

EDIT Yuck, this blew up and I think alot of people took it the wrong way. I think Coinbase is great, and I'm sure everyone who works there is awesome and terrific at their job. Anyone who has worked on any half way successful project knows just how hard both uptime and security are and I'm in no way upset at Coinbase for having growth issues. I've done this for years and might not even get an interview with them. The…

1) No counterparty risk. Everyone can get hacked, but coinbase being hacked shouldn't every, under any circumstances result in me loosing any bitcoin they hold on my behalf.

This point may prove to be very sticky.

It might be solvable with smart contracts... consider ethereum's https://www.etherdelta.com, which operates as an auditable smart contract. Your money literally can't be stolen without your private key; even when it's held in escrow by the contract. (Of course, a bug in the contract code could let someone get through; but that's all out in the open, so easier to check for).

I could see something like that being done, with the individual trade data being signed, but held off-chain until the user wanted to make a transfer (then ALL signed movements related to them could be consolidated on the chain).

---

Short of that, a centralized exchange is gonna run into the fundamental issue that cryptocurrencies have value because of a few properties; Chief among them being that they can be moved atomically, and with non-repudiation. Those two alone make theft a LOT easier to get away with once achieved.

Being able to walk back such thefts would require general consensus of the network. For most coins, the majority of participants would see that as a fatal weakening of the protocol's guarantees, and drop out. The highest profile rollback I can think of was ETH's june 2017 DAO incident. Even that proved rather controversial: though the market voted in favor in the end, it was a messy out-of-band solution, which may not work again.

---

Conversely, some lesser coins such as NAV actually formalized "consensus voting" on such out-of-band issues as part of their network protocol. I could potentially see that being used as a final band-aid, though "tyranny of the majority" issues would seriously need solving. NAV uses proof-of-stake, though, which certainly helps keep their voting in the "put your money where your mouth is" territory.

All in all, I think there are potentially some trustless and "semi-trustless consensus" methods that could solve this issue in revolutionary ways. But none of them are tested... Coinbase may just have to get themselves massively insured using traditional methods, at least for a few more years as the tech expands.

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