
Coinbase says buying and selling temporarily disabled amid price rout - smoser
https://www.cnbc.com/2017/12/22/coinbase-one-of-the-biggest-bitcoin-marketplaces-says-buying-and-selling-temporarily-disabled-amid-price-rout.html
======
blhack
There is something that feels extremely fishy to me about what has happened at
coinbase over the last few days.

For years I've told people to just store their coins on coinbase. I've been a
big fan of their "vaults", and I've been saying that they are the shining
beacon of legitimacy in this whole thing.

I honestly don't know that I still agree with that. This whole rollout of BCH
has made me honestly start questioning if I can trust coinbase anymore. I
expect stuff like this from sketchy exchanges like what btc-e was, but not
_coinbase_. That makes me really sad, since they were (still are, for now)
such an incredible success story.

I think there is going to be a lot of regulation coming and I'm not entirely
sure that that is a good thing. It makes me pause for the same reason I
wouldn't be sure that regulators telling me what webservers or programming
languages I'm allowed to use would be a good thing.

I really hope all of the "never keep anything on an exchange!" people aren't
proven right again by _coinbase_ of all people.

~~~
frgtpsswrdlame
You think it's fishy and you have no way to know if something is going on
behind the curtain at coinbase but you don't want regulation? Regulation is
what lets you peek behind the curtain and know that Coinbase is or isn't doing
something fishy.

~~~
slg
I can't help find it funny as the libertarian cryptocurrency fans slowly
realize why we have all these dang laws. There are plenty of financial
regulations that could use updates or tweaks, but an overwhelming majority are
put in place to protect people and try to ensure transactions are as fair as
possible. Cryptocurrencies too often throw the baby out with the bathwater.

~~~
munificent
The entire Bitcoin saga has been the most shining example of this classic
narrative:

1\. Technology people are presented with a social/cultural/government
situation that seems inelegant, irrational and overly complex.

2\. They decide to "solve" that problem using technology.

3\. Even with the new technology, it somehow appears everything is not
miraculously better.

4\. Technology people propose layering a few small social fixes on top of
their technology to address the "minor issues" left by their brilliant
technology.

5\. They fail to realize all of their kludgy human-level patches on top of the
technology are merely less-mature forms of the social structure they claimed
to have replaced in step 2. Now we have an even less elegant, more irrational,
more complex social institution, mixed with non-helpful technology.

6\. Now the problem is not fun to work on any more (too much squishy inelegant
human stuff), so they wander off to "solve" some other cultural malady.

~~~
oceanghost
There's a law of economics that, crashes occur when everyone who can remember
the reason we have laws to prevent them is dead.

~~~
Robotbeat
I think that's the Minsky Moment, basically that long periods of stable
investment growth lead to increased risk-taking, inflation of a bubble, and
eventually a crash.

------
dopamean
> "Investigating - All buys and sells have been temporarily disabled. We are
> working on a fix and apologize for any inconvenience," Coinbase said on its
> status website at 11:11 a.m., ET.

What exactly is broken that needs to be fixed? Is there just a ton of trading
volume and their system cant keep up ?

Edit:

I ask because the headline just says that prices are falling quickly and so
Coinbase halted trading. This sounds a lot like a circuit breaker but then you
read the article to find out something is actually broken.

I'm really curious to know what the symptoms are of whatever is broken. Are
trades taking too long to execute? Are people being fulfilled at prices
different than they were quoted? What is actually happening?

~~~
Klathmon
I have heard that since coinbase keeps all but 2% of their crypto assets in
"cold storage" (offline storage that requires a physical trip to somewhere to
spend), there are semi-frequent times where their "hot wallet" runs out of
money, and they need to go and retrieve it from cold storage in order to
continue.

Naturally this would happen when there are large spikes in usage (which happen
during swings in price) and people are trying to move cryptocurrencies out of
coinbase.

~~~
mancerayder
So the latency are people's feet rapidly shuffling to another physical
location?

That doesn't make a good story for the convenience and transfer speeds of some
of this technology.

It feels like they're protecting prices or their capital reserves?

------
thisisit
It seems Coinbase's go to strategy every time markets are volatile.

In case people are wondering why is this a recurring problem - this simply
perils of Market Making in a volatile market. As a market maker for customer
orders Coinbase needs to fulfill both sides. So to make money they buy from
customers at low price and sell back at a high price. So they are collecting
spread between bid and ask to make money.

But what happens if the market moves rapidly in one direction? They end up
selling low and buying high.

So, they need to reset the market making algorithm. Or shutdown the site for a
"fix", long enough that the volatility comes back in their range.

~~~
ethbro
I've wondered about this. Specifically, how can you make a market in a product
that has high violatility and fairly low trading frequency?

Seems like anyone doing so would inevitably get fleeced.

~~~
Blackthorn
> I've wondered about this. Specifically, how can you make a market in a
> product that has high violatility and fairly low trading frequency?

A large spread.

~~~
ethbro
Hmm. So are market makers only ever effecting instantaneous matches?

I was under the impression they often held some portion of the asset between
buy-sell or sell-buy in order to increase liquidity.

(Which would explain why they like HFT, as anything that boosts trade
frequency would decrease their exposure)

~~~
Blackthorn
They do hold underlying and have to hedge their risk in various ways. A large
spread helps a lot.

------
sowbug
Good opportunity for the old-timers who were daytrading in the 1990s to tell
their stories of Datek, E*Trade, Ameritrade, Schwab, etc., failing during peak
NASDAQ/NYSE markets.

You know who you are -- drinking coffee and staring at multiple monitors while
in your boxer shorts at home. 6:29am Pacific, watching Ron Insana and Maria
Bartiromo on CNBC...

This has all happened before. It will all happen again.

~~~
stygiansonic
As I’ve said before, watching cryptocurrency markets evolve is like watching
the entire history of financial markets being replayed as painful lessons are
relearned.

~~~
CamelCaseName
Is there anywhere I can get a full rundown of the modern evolution of finance?
I have a degree in it yet it all still send fragmented.

~~~
sowbug
I don't have an answer for you, but _Reminiscences of a Stock Operator_ is
required reading for anyone interested in the history of securities markets.
It's fictionalized autobiography of a legendary trader in the 1920s. It could
have been written yesterday or a thousand years ago.

[https://www.amazon.com/Reminiscences-Stock-Operator-Edwin-
Le...](https://www.amazon.com/Reminiscences-Stock-Operator-Edwin-
Lef%C3%A8vre/dp/0471770884)

------
NelsonMinar
Coinbase is the one exchange that's looked like a legitimate business. Between
insider trading and execution problems, it's pretty alarming. (Who am I
kidding? Clearly this is actually good for Bitcoin somehow.)

Worth noting Coinbase has two kinds of systems risk. There's the technical
risk of writing and running code correctly. And there's also the financial
risk of them making the market in Bitcoin. Both of those tasks have gotten a
whole lot harder recently as Bitcoin transactions have gotten slower and more
expensive. Turns out building a global currency with a global 7 transaction /
second limit may not be a good idea.

~~~
aviv
I think their biggest risk is a compromised/rogue employee.

------
egypturnash
BTC: peaked just shy of $20k, now in freefall to where it was around the
beginning of the month, maybe further.

BCH: peaked around "$4k" (if we ignore the $8k that Coinbase was briefly
showing in the first few hours of having it publicly available to trade
there), dropping back down towards the ~$1-1.5k it was at beforehand.

Pumped. Dumped. Done.

------
ramphastidae
I ignored all the warnings about Coinbase at my own peril.

I tried to move my coins out of the exchange about 48 hours ago (shortly
before the crash) but I made the mistake of purchasing a new phone about a
week ago and not switching over my 2FA keys in Google Authenticator.

They have an account recovery process in place but it takes "48-72 hours" to
complete. I had to re-submit my ID, which was confirmed as verified, but now I
just have to sit around and pray that they come through and the process is
completed over a holiday weekend.

Obviously partially my fault for not transferring my 2FA keys, but with all
the stories of customer service being unresponsive for weeks, I'm not holding
my breath.

~~~
cma
That actually seems like a good thing. You want caution over a user failing
2FA. If you lost your 2FA keys despite knowing their response times imagine
how bad it would have been if you mis-managed your wallet and just lost
everything entirely.

------
matwood
Regular markets have circuit breakers [1] that stop trading for a period of
time. Coinbase should just define and implement these to let their systems
catch up.

[1]
[https://en.wikipedia.org/wiki/Trading_curb](https://en.wikipedia.org/wiki/Trading_curb)

~~~
cma
Coinbase is unintentionally the circuitbreaker. It crashes every time there is
a lot of volatility.

~~~
sean_anandale
That is insane. Traders make money during periods of high volatility and
volume. Defined circuit breakers can be planned for, but unpredictable "lol
unavailable gtfo" is unacceptable for serious usage.

------
randomerr
Anyone remember this story from a few days ago? I think the insider trading
has hit it's dump phase.

Pump and Dump? Coinbase Suspends Bitcoin Cash, Investigates Insider Trading

[https://www.financemagnates.com/cryptocurrency/news/coinbase...](https://www.financemagnates.com/cryptocurrency/news/coinbase-
suspends-bitcoin-cash-investigate-insider-trading/)

------
smaili
Why is it they always seem to go down during times of sudden surges and dips?
It almost feels like they’re trying to control the market of their platform
rather than let it play out. It may indeed just be infrastructure but given
the company’s age and decent amount of funding they have now, can scaling
_really_ be at play here?

~~~
not_kurt_godel
> It almost feels like they’re trying to control the market of their platform
> rather than let it play out.

No, no, no, you see - that's the _free market_ at work. Can't you see that
everyone will simply pick another exchange and scammy practices like this will
be evolutionarily eliminated? /s

------
chollida1
Coinbase does a number of things that seem strange from a market perspective.
There doesn't appear to be an auction to open/close or restart.

Instead they seem to lock their markets and allow post only orders.

The other things this screams is that

1) stop loss orders are useless in volatile markets. I've harped on this alot
from the US Cash Equities side but it appears to be equally valid. YOu'll only
end up getting filled at te worst possible price and miss the inevitable
market rebound.

2) Coming from 1) Don't use leverage, you'll get your face ripped off one of
these days due to volatility and you'll be asked to submit more margin just
when you can least afford to and possibly be liquidated at the bottom.

~~~
dahdum
They lock, other than scaling issues, because of liquidity. Bitcoin cash
opened with a thin market and ran up to $9,500 in 4 minutes before they halted
the market. Was still trading at ~$3k elsewhere at the time.

An open/close or restart isn't needed because all assets are being heavily
traded elsewhere. If they switch to post only the arb bots will fill their
book over time.

Leverage _will_ rip your face off.

~~~
makomk
The Bitcoin Cash fiasco is a good demonstration why their approach to opening
markets doesn't work - if the correct market price at open is different from
the initial price people start placing orders around, no-one can place orders
on one side of the book for anywhere near market price, which means there
isn't enough liquidity at open, which causes chaos. Apparently they've given
up on opening the BCH-EUR and BCH-BTC markets altogether until January after
this looked like it was going to happen again with those.

------
psyc
I’m getting pretty tired of playing whack a mole with these wretched
exchanges. I recently left the dumpster fire at Kraken, only to sign up at,
yep, Coinbase. Oh well. On to Bitstamp or Gemini I suppose.

~~~
thinkmassive
You might want to give Binance a try. No affiliation, it just came recommended
to me from some successful traders I’ve met when the topic of reliable
exchanges came up.

~~~
alexanat
As a crypto trader Binance is where I do business.

Their PC app is phenomenal for the most part, doesn't lag out like a lot of
other exchange I've used.

------
snissn
Coin base has scaled too quickly they really should limit their user sign ups
until they can get their support queue under control

------
popz41
Move your coins over to GDAX, their sister company. When Coinbase halts
trading, GDAX is usually fine.

~~~
makomk
GDAX shut down trading a few minutes ago, unfortunately. Performance issues
with the REST API apparently. I think they've been seeing a lot of volume
these past few hours.

------
esaym
So if we shouldn't be leaving our coins on coinbase, where do we leave them? A
full wallet is not an option for many of us. I don't want to have to download
100's of gigs of data just to store my coins... I even tried to move from
bitcoin to etherum since I thought that wallet might be smaller. And it was,
but after leaving it running for 2 days it still had a ways to go and all the
IO it was doing was really trashing my SSD.

At that point I looked into hot wallets like jaxx. But then on /r/jaxx, there
were many people complaining about using jaxx only to have had their private
keys stolen. So at that point I just left everything on coinbase :/ Is there
any decent hot wallet out there or anything else?

~~~
mr_spothawk
order a Trezor and wait for it to arrive in February... until then, breath
deeply.

~~~
Fnoord
Ledger Nano S took ~4 days to arrive from France to The Netherlands. During
Black Friday mania. It has its pros and cons compared to Trezor so YMMV.

------
mancerayder
Dear Coinbase,

Why in the world do you keep signing up new customers if you don't have the
capacity to hold them?

All aboard, yet the ship sinks due to the passenger load.

That's both absurd and preventable.

~~~
mancerayder
AND cue the innumerable HN comments about how we need to feel sympathy for
startup 'growing pains.' Coinbase has people's cash, hard cash, and stored
value, it's not a software as a service startup that got wildly too popular.

It's not growing pains, it's greed and/or incompetence.

------
mv4
Secret of success: buy low, sell high.

Unless you are a Coinbase customer (because they will selective disable your
ability to act when prices move quickly). I've witnessed it at least a dozen
time personally, and stopped trading altogether.

Seriously though, the way Coinbase/GDAX has been acting recently can't be
attributed to scalability issues. These patterns seem to have a good dose of
human decision making in them.

------
mr_spothawk
It's so mind-bogglingly fucked... they're freezing the market exactly when the
clever investor would like to be buying.

~~~
earenndil
_Clever_?? Crypto is on its way _down_ right now. You go right ahead and buy,
but for everyone else I recommend you SELL.

~~~
adjkant
Ethereum:

\- June 13th: $380

\- July 17th: $185

\- August 31st: $389

\- December 16th: $700+

50% or more swings are all too common. I doubt this is the end. While I would
love to see the crash happen sooner than later, I think the percentage of
traders that would sell at the signs of a 25% drop or more is still too low.
You won't see the big crash until more of the general population is in. After
this crash, that still could be a ways off sadly as they back out only to
enter a few months later.

------
m3kw9
The issue with this type of circuit breaker is that there is really no
information to let people absorb and calm themselves. When you resume the
trade people will still be clueless on why prices moved that way and resume
their selling

------
sathackr
If you have USD in Coinbase that you'd like to buy with right now, you can use
your Coinbase account at GDAX and transfer USD instantly to GDAX.

Trades are working fine at GDAX.

Pretty sure GDAX is also owned by Coinbase.

I did it just now.

------
spraak
It's telling to me about the hype bubble that this article is coming from
CNBC.

------
Canada
Is coinbase suspending withdrawal to other wallets as well as trading?

------
peacelp
How is bitcoin supply finite, if it can hard fork?

~~~
danield9tqh
Like saying how is gold supply finite if you can break a piece of gold in
half. When Bitcoin forks the value is split between the two forks. If the
market cap of Bitcoin before the fork is $10 Billion, the combined market cap
of both sides of the fork afterwards will still be $10 Billion. There are
double the number of coins because of the fork but now each person who had one
coin has two and each coin is worth a fraction of what is was before. It's an
increase in supply but an increase that is perfectly distributed among the
previous holders.

~~~
alexanat
A better analogy in my mind is that Bitcoin can be gold coin, and a fork is
someone making cardboard coin, coloring them gold, and then calling it a type
of bitcoin.

Forks are completely separate from bitcoin and are worth nowhere near as much.

