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Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

fortune.com

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Re: Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

#121

Post by kerkeslager »

The problem both sides are trying to solve is that the system as a whole cannot handle the volume of transactions. Before the split, bitcoin handled 7 transactions per second, while Visa handles 50,000 transactions per second (I'm worrying these numbers from memory, so they might be wildly inaccurate).

Bitcoin Cash solves this with a larger block size. This is admittedly a short-term solution.

Bitcoin main, on the other hand, is moving toward SegWit, which introduces third-party middlemen. Service providers like Coinbase want this, because they get to be the middlemen.

But critically, SegWit breaks the only long-term advantage Bitcoin currently has over Visa. SegWit isn't decentralized. Bitcoin with SegWit still isn't as fast as Visa, so if you don't need decentralization then you should just use Visa. The only people who benefit from bitcoin with SegWit are the middlemen.

Decentralization is bitcoin's core value proposition. If you give that up to solve the scaling problem, you're throwing the baby out with the bathwater.

I don't know the long term solution to bitcoin's scaling problem, but I do know that I'm not interested in a centralized cryptocurrency.

Re: Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

#122

Post by undersuit »

barkingcat wrote: post #73

Haha why is there "fiduciary" duty when Coinbase is not a bank, not a security agency, and not any type of share that people bought into (ie customers are not shareholder). Coinbase can do anything they want! Also, I suggest it's people's own fault for storing their bitcoins at a place that does not give access to their own private keys. This fork has been a long time coming. Everyone and their mother was warned to k…

>place that does not give access to their own private keys.

IIRC there is an option to have a wallet with Coinbase where you do control the private keys, that said I don't know how they were affected by the split.

Re: Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

#123

Post by tytso »

anthonybsd wrote: post #72
alekratz wrote: post #54

Earlier quoted context omitted.

Yeah, that's how I feel about this. It's not coinbase's responsibility to act as a host to all cryptocurrencies. The article states, > An activist group, which claims Coinbase's decision is akin to a brokerage withholding new shares from its investors, ... which is not at all what it's like. Coinbase isn't the only source to buy/sell BCC. I think it's ridiculous that a company could be sued because they don't offer a…

>which is not at all what it's like. Coinbase isn't the only source to buy/sell BCC. I think it's ridiculous that a company could be sued because they don't offer a new service. As it happens, it's slightly more complicated than what you make it out to be. It's not a question of them simply not offering to support the new service. You see, when you hold your bitcoins inside Coinbase they have a private address of you…

When you hold your bitcoins inside Coinbase, they aren't part of "your" wallet. Coinbase works like a bank. When you deposit $100, they don't mark those bills as being yours. Instead they are commingled with everyone else and the bank gives you a promise that when you ask for your $100, you'll get your $100 back. Not that if you gave them a $100 bill, you'll get back that exact same bill. Coinbase works exactly the same way. This means that you can transfer Bitcoins between two Coinbase accounts (a) instantly, and (b) without incurring any transaction fees --- because such a transfer doesn't actually go through the blockchain.

BTW, Coinbase and other similar companies claim to be a full reserve bank, but unless there's an audit, there is no way to tell from external observation that they aren't playing a Mt. Gox game of being a fractional reserve bank without bothering to tell their customers.

So how does this relate to BCC/BCH? Since each Bitcoin customer doesn't have their BTC in a separate wallet, in order for Coinbase to support BCH, or any other random fork of Bitcoin that might take place in the future, they would have to track when your BTC was credited to your account, and then create a separate BCH account to track the BCH. Then if you ask to withdraw your BCH in USD, just as you are entitled to do with BTC held in a Coinbase account, Coinbase would have to find an exchange that supports BCH, and sell some number of BCH on your behalf.

Coinbase has elected not to do this, and gave all of their customers ample notice that if they wanted to participate in the BCH experiment, they would have to ask Coinbase to transfer their BTC into their own private wallet. (I'm not a lawyer, but I'm sure the fact that they did give notice is going to be something that will be mentioned as part of their defense if and when a lawsuit is actually filed.) When I withdrew all of my BTC from Coinbase last week, the transaction which Coinbase executed to transfer "my" BTC into my own wallet had "change" that went back to a Coinbase private key. That's another clear indication that "my" BTC were not held in a separate wallet, but rather commingled with other Coinbase customers' accounts.

Re: Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

#124

Post by pera »

lawn wrote: post #95
pera wrote: post #62

From the class-action lawsuit website "FAQ": > Coinbase allowed users to withdraw BTC prior to the hard fork > The process of transferring Bitcoin can be complex and potentially very risky even for experienced users. Additionally, creation of a new account or wallet on a different exchange is often a lengthy and difficult process. While Coinbase did suggest to users that they could move their BTC to a different walle…

> Third, "Bitcoin Cash" is an altcoin, and anyone can create a similar fork from the Bitcoin blockchain, should Coinbase support them all?? Good luck creating a fork with currently 20% of the value of Bitcoin.

Non sequitur, but anyways: I could hard-fork the blockchain any day and sell each mined altcoin to myself to then sue Coinbase for not supporting my fork. How that makes any sense?

Re: Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

#125

Post by yebyen »

MichaelGG wrote: post #79
yebyen wrote: post #35

Earlier quoted context omitted.

It doesn't make anything infeasible today. But if you think both Bitcoin and Bitcoin Cash are going to be around in 20 years, and you want to support both, now you've just added 800% to your annual storage growth rate. (Assuming that BCC always mines full blocks, which I will admit seems unlikely) I have to be honest, I was keeping a cold wallet with some ~1-2 BTC in it until the price reached record high territory i…

What was your goal in downloading the entire chain versus using a light client? Or why didn't you just download the last few blocks plus UTXOs? Either way you need a trust anchor, so starting from something recent makes sense if you don't want to wait days to verify the entire chain. And if you need to view specific blocks or transactions, use an online viewer or download that specific block and check the hash of the…

I had a wallet.dat from a regular Core client, full node. I wasn't able to find a client that seemed to be able to import that wallet.dat. If you know a way to handle that, great! I don't know if I'd trust some arbitrary client to still be around and maintained when I need to retrieve my funds from the latest version of the block chain. I'm marginally afraid of what will happen if the person maintaining Electrum died, or disappeared, and protocol changes made a need for some mandatory code updates. Because the appearance to me is that private keys may be technically portable, but wallets are basically not transferrable between different clients.

I have a 14TB array that I bought with those Bitcoin I cashed in. It was cheap. But the next time I want to sync the whole chain, I'm really sure I'm gonna have to use it...

Thanks for your comments though, I will look up UTXO as it's another one I have not heard of before!

Re: Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

#126

Post by jmilloy »

vocatus_gate wrote: post #115
jmilloy wrote: post #86

I don't really follow these cryptocurrencies very closely. I assume that Coinbase is sitting on keys/wallets that own Bitcoin belonging to their customers, which would mean that they are now also sitting on keys/wallets that own Bitcoin Cash. So could Coinbase short (some of) that Bitcoin Cash by selling it on other exchanges? I read this statement from Coinbase: "If this decision were to change in the future and Coi…

You're more or less correct. Coinbase is sitting on the keys to customer wallets/funds. When the fork happened, those keys work both on the original Bitcoin network and the new "Bitcoin Cash" network. Which, apparently turned out to have substantial value (currently trading ~$650). Coinbase made a colossal mistake in outright ignoring BCC and will likely get sued (and lose) because of it. If I had 10 BTC on CB and mi…

If CB can't easily allow customers to withdraw the BCC, they probably can't easily exchange the BCC themselves either? (I recognize that people not being able to withdraw the coins at all is an issue, just curious also about the ability of CB to speculate in the interim).

Re: Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

#127

Post by m-p-3 »

To be fair, as long as you do not have the private key to your wallet, you do not have complete control.

Whoever kept their bitcoin in a Coinbase wallet and wanted to use Bitcoin Cash, it was their responsibility to move them to a wallet they fully control in advance to the fork.

Re: Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

#128

Post by fauigerzigerk »

downandout wrote: post #59
gtrubetskoy wrote: post #34

What I think all the press isn't making very clear is that to the best of my understanding for every Bitcoin you own, you get a Bitcoin Cash coin. There is no "conversion", it is free money for all BTC holders. Everyone who owned BTC, now owns BTC+BCC. Of course if your BTC is not real, but is held by an exchange such as Coinbase, how you get your BCC isn't at all clear.

This, I believe, is the basis of the unjust enrichment claim. Coinbase technically owns the BTC in its wallets, and you can bet even though they aren't supporting it, they are receiving the associated BCC. They just aren't passing it on to the beneficial owners (their clients).

Would that not only become relevant if BCC were to become more valuable (say in USD) than BTC? As of now, Coinbase is sitting on the fence basically (just like everyone else who holds their own private key and hasn't made a transaction since the fork). They can decide to use their (users') coins on either blockchain but not on both.

So what Coinbase has is similar to a call option on BCC.

Re: Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

#129

Post by bitJericho »

smlsugarlumps wrote: post #55
bitJericho wrote: post #38

Earlier quoted context omitted.

Perhaps you would like to switch to my exchange? http://bitcoinsexchange.itmustbetrue.com

I don't trust a site named bitcoin sex change

You can trust it. Its homepage has 3 columns full of text.

Re: Bitcoin Cash Soars to $700, Coinbase Customers Threaten to Sue

#130

Post by runeks »

makomk wrote: post #33
jstanley wrote: post #2

Meanwhile, it's 12 hours since Bitcoin Cash actually mined a block. The only reason the price is so high is because people can't make transactions to send their BCH to exchanges. EDIT: My mistake. Originally said 20 hours. It's only 12.

Even if they could make transactions, the exchanges aren't accepting deposits of BCH. The only exception I'm aware of is ViaBTC and apparently they want 20 confirmations (about a week at current hashrate, I think). The BCH market cap that's quoted in this article is rather misleading because nearly all of those coins simply cannot be sold on exchanges currently. Regarding the question in the replies: when the fork ha…

Wait a minute, what? How can Kraken claim to have a BCH/BTC market if you can’t deposit BCH and sell them?
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