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Coinbase Wants Wall Street to Resolve Its Bitcoin Trust Issues

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

#61

Post by FLUX-YOU »

api wrote: post #54
FLUX-YOU wrote: post #34

Earlier quoted context omitted.

>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. Coinbase is insured by AON Insurance for their hot wallet balance. However, we won't know how Coinbase/AON will handle that until it happens. I believe any fiat balance is also insured by the FDIC, but I'm less sure about that. >2) The exchange…

There's a deeper problem. Bitcoin is very deflationary and strictly limited in supply. What happens if Coinbase cannot obtain replacement bitcoins at a price near what the insurance pays out? They can refund in fiat of course, but that's the point. If fiat didn't exist then this would be a potentially insurmountable problem if the theft were large enough. Now what happens if the thief panics or screws up and deletes…

>What happens if Coinbase cannot obtain replacement bitcoins at a price near what the insurance pays out?

People lose their bitcoins. It's as simple as that. That's a risk everyone should understand before buying.

They might be compensated in some other way, like fiat, and then the insurance company either picks up the bill or goes under. Then it's just business as usual as far as bankruptcy goes.

So yes, you have every reason to be wary of exchange solvency because of how new they are and how little support is provided to them by government and law enforcement compared to the banks. Every investor should understand that as critically as they understand how important their wallets are.

>This whole system is just not ready for prime time.

Yeah, it's one big experiment. I'm sure these problems were encountered before in economic history, but it seems like they are repeating a bunch of blunders within a short time frame, which to me, smells of manipulation (Satoshi probably didn't invent it to just manipulate people)

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

#62

Post by dkersten »

conanbatt wrote: post #36
btczillionaire wrote: post #29

I'm sure you all have very insightful comments about why bitcoin is in a bubble and will fail. Meanwhile, I ignored your comments years ago and I'm very, very comfortably retired now. But please, do go on with your smart insightful comments.

It can be both a bubble and make lots of people rich... Also wtf with this comment. Who are you answering to

All bubbles make someone rich.

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

#63

Post by 659087 »

btczillionaire wrote: post #60
659087 wrote: post #58

Earlier quoted context omitted.

Solid trolling.

It's hard not to gloat when you got rich by going against people who were so wrong for so long and still won't admit it.

Gloating is a strong indicator of insecurity.

Why do you need validation from randoms on the internet so badly?

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

#64

Post by daxorid »

FLUX-YOU wrote: post #49
JackFr wrote: post #23

> In traditional finance, custody banks like State Street Corp. hold securities, keep records and provide other services for investment advisers. A lack of similar offerings in the cryptocurrency world has kept many institutions on the sidelines. >Coinbase has offered a solution: crypto custodial services, slated to roll out next year. Called Coinbase Custody, it'll be available to investors with at least $10 million…

Cryptocurrency is just going to converge on existing financial ecosystems and regulation. Blockchain can't fight sovereignty.

Monero and ZCash are attempting to do exactly that.

Yes, obviously nonrepudiable ledger schemes are natural allies with governments. But not all cryptocurrencies are the same.

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

#65

Post by jon_smark »

lawlessone wrote: post #13

I want coinbase to resolve its segwit issues.

Indeed. Considering the volume of transactions going to and from Coinbase, their adoption of Segwit would go a long way towards alleviating the current mempool situation, which would bring lower fees for everyone.

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

#66

Post by btczillionaire »

659087 wrote: post #63
btczillionaire wrote: post #60

Earlier quoted context omitted.

It's hard not to gloat when you got rich by going against people who were so wrong for so long and still won't admit it.

Gloating is a strong indicator of insecurity. Why do you need validation from randoms on the internet so badly?

Boy, you sure got me now. You really are smart!

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

#67

Post by graedus »

api wrote: post #54
FLUX-YOU wrote: post #34

Earlier quoted context omitted.

>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. Coinbase is insured by AON Insurance for their hot wallet balance. However, we won't know how Coinbase/AON will handle that until it happens. I believe any fiat balance is also insured by the FDIC, but I'm less sure about that. >2) The exchange…

There's a deeper problem. Bitcoin is very deflationary and strictly limited in supply. What happens if Coinbase cannot obtain replacement bitcoins at a price near what the insurance pays out? They can refund in fiat of course, but that's the point. If fiat didn't exist then this would be a potentially insurmountable problem if the theft were large enough. Now what happens if the thief panics or screws up and deletes…

> a really smart thief with enough money behind them might not even need to steal any Bitcoins. They could just destroy cold wallet keys in a very stealthy way and profit from the appreciation of coins they hold elsewhere.

This is a cool idea but I'm not sure it works (or I don't understand it correctly). In order to reduce the supply enough to appreciably increase the value of the remaining coins, you'd need to freeze/destroy a lot of keys, or keys to wallets with large holdings. If the owners of those keys start reporting their losses and the news spreads, people could start to lose confidence in bitcoin itself and move to other assets, reducing demand.

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

#68

Post by ISL »

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. Counterparty risk cannot be eliminated, only reduced. The only counterparty with zero risk is a government, which can print more currency if supply is insufficient, devaluing everyone else's currency.

2. Exchanges do go down, the only question is how often. If the exchange does go down, you want the exchange to say, "We're doing our best, but volume has exceeded our capacity. We'll be up as soon as we can." The alternative is to continue to accept trades and pretend that everything is okay. Honesty is good.

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

#69

Post by dmoy »

babuskov wrote: post #42
chollida1 wrote: post #27

Earlier quoted context omitted.

Good question, I can see why you are confused. Coinbase right now acts in two ways. 1) as an exchange who allows you to trade on it. 2) as a prime broker who holds your coins. In this capacity they are just like Goldman Sachs who can function as a prime broker for hedge funds. (a prime broker is like a bank who holds your securities for you). So in this case Goldman is relevant as they do the same function that coinb…

> Does that help clear up the confusion? No, it adds. > So in this case Goldman is relevant as they do the same function that coinbase does with respect to holding securities on behalf of a client. Then why did you write in your other message that Goldman Sachs has got nothing to do with this discussion? It seems to me that you are confused. Please decide whether you think the Goldman Sachs is relevant or not before…

Which other message? Now I'm confused. I saw gp say that a hedge fund failing or something has nothing to do with the discussion, but not that GS has nothing to do with the discussion.

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

#70

Post by ultraluminous »

ISL wrote: post #68
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. Counterparty risk cannot be eliminated, only reduced. The only counterparty with zero risk is a government, which can print more currency if supply is insufficient, devaluing everyone else's currency. 2. Exchanges do go down, the only question is how often. If the exchange does go down, you want the exchange to say, "We're doing our best, but volume has exceeded our capacity. We'll be up as soon as we can." The al…

This is childish and disingenuous. Yes, counterparty party risk can only be reduced. And only mathematical constants can actually be absolute. However for practical people operating in the real world there's an infinite difference between 20% risk and 0.005% risk. Infinite.

Same with your comment about exchanges - yes the NYSE and NASDAQ can go down. Once or twice a year. For 20 minutes. Coinbase (and Gemini and GDAX and Kraken and everyone) are going down for about x5 times that in any given week. Which is not a "a small qualitative difference". It's an infinite difference.

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