
Coinbase is exploring the addition of new currencies - toufiqbarhamov
https://techcrunch.com/2018/12/07/coinbase-dabbles-in-shitcoins/
======
muhneesh
Let's call a spade a spade.

This market is a bust, and there's no value-driven economic model to justify
cryptos collectively being worth $50B-$100B.

With any startup, there is an expected future value of the company discounted
back to the present. It then just becomes a risk-weighted probability question
of whether that startup will achieve that expected future value in the
expected timeframe.

Conversely, the valuations of the crypto market are driven mostly by momentum
and prayers. It's ultimately a case study of what happens when you mix
unsophisticated investors, no regulation, frictionless market entry, memes as
an investment philosophy ("HODL") and the psychological highs of winning a lot
of money. It's gambling, not investing.

In terms of Coinbase - sure, they're selling pickaxes during a gold rush, but
gold rushes end and the pickaxe salesmen go out of business too.

~~~
Moodles
Indeed Warren Buffet made a similar point: if you buy a farm, you're buying
the land, the potential to grow crops that people actually consume, etc.
whereas cryptocurrency doesn't really have a purpose except as a store of
value. It's not a productive asset; it doesn't produce anything. It is a bit
like buying gold.

[https://www.youtube.com/watch?v=LtITDtZPYEw](https://www.youtube.com/watch?v=LtITDtZPYEw)

~~~
CPLX
It’s nothing like buying gold. Gold is widely considered to be beautiful, and
was considered a store of very high value in many cultures that were
completely isolated from each other, and human desire for it has remained
consistent for literally thousands of years.

Astonishingly, crypto even less defensible.

~~~
DanBlake
Golds value comes entirely from the fact that we as a society give it value.

The beauty line doesnt work, because then platinum shouldnt have any serious
value despite its rarity (it just looks like silver basically)

The industrial value is laughable, but read comments below/above to debate
that more at length.

The scarcity line doesn't work, because you have elements like bismuth which
are also (Arguably) more beautiful than gold
[https://66.media.tumblr.com/61ce390242a79a767772d4b2027eb902...](https://66.media.tumblr.com/61ce390242a79a767772d4b2027eb902/tumblr_miukex8tDs1qam8b5o1_1280.jpg)
but command prices far less despite being .025 vs .0031 on the PPM abundance
on earth. Or even look at ruthenium which has a similar look to platinum and
is even rarer than gold. Did I mention it also goes for about 400 an ounce?
Quite a savings over gold.

The only thing that makes sense is that we as a collective have decided gold
has value of X.

~~~
autokad
> "Golds value comes entirely from the fact that we as a society give it
> value."

thats true for anything. that includes currencies, what you get paid, the
value of a hockey card, the value of a car, the value of a banana, etc. sure,
if society doesn't want to pay you anything for 'it', you can do with it what
you want, like eat the banana (before it becomes worthless to anyone).

I am not a gold bug, i personally dont think its a great investment. its not a
hedge against a declining market, and its difficult to own in large
quantities. however; statements like 'its only valued because people give it
value' are not very informative. everything is valued that way. everything.

also, the industrial value of gold is not laughable. its negligible because we
have plenty of gold to meet industrial needs. but its not laughable, its in
your smart phone, its in your desktop / laptop, etc.

~~~
thinkloop
> that includes currencies

Currencies have value because entities with monopolies on force (countries)
give them special legal status to be used conveniently as means of exchange.
This is one of the hurdles for Bitcoin, and was a big source of debate in
2016-2018. Every time you spend Bitcoin you have to keep track of the avg.
acquisition cost and resulting realized capital gains for every transaction to
be able to declare the appropriate gains or losses on your taxes at year-end.
A heavy burden for a "currency".

> statements like 'its only valued because people give it value' are not very
> informative

If you go to first principles, sure, everything is an illusion. But gold,
crypto, and other "stores of value" derive their value in fundamentally
different ways than everything else. Our existing models and body of knowledge
do not apply to them. This is worth investigating. All other things are
consumed in some way or another, and the rate at which they are consumed,
relative to their supply, determines their price. The consumption of gold
relative to its supply is much too low to justify its price using the same
models.

------
TazeTSchnitzel
“Coinbase Abandons Cautious Approach” seems a bit hyperbolic as a title. In
fact, it sounds like they're still being cautious. They aren't saying they
will list a ton of new “currencies”, they just listed a number they might want
to explore, and they are going to take their time deciding which are
reasonable:

> Coinbase recently revamped its policy on new token listings. [… Coinbase]
> now goes public with its intention to “explore” the potential to list new
> assets in order to lower the impact of a listing. It also doesn’t guarantee
> which, if any, will make it through and be listed.

> “Adding new assets requires significant exploratory work from both a
> technical and compliance standpoint, and we cannot guarantee that all the
> assets we are evaluating will ultimately be listed for trading,” the company
> said.

~~~
ec109685
“It makes sense that any company out there who has a cap table… should have
their own token”

That doesn’t seem long term cautious…

~~~
pmorici
It's the end game for sure. The whole ICO utility token thing we've seen over
the past couple years has just been an intermediary step while companies
navigate the regulations.

The idea is that stock certificates, and the Depository Trust Company will be
replaced by block chain tokens and dividends would be paid directly to the
holder on the block chain. When he says it makes sense for everyone with a cap
table to have their own token that is what he is talking about he isn't
suggesting that every company in the world should jump on the ICO bandwagon.

There are a bunch of companies pursuing this right now Coinbase is one, that's
why they bought a broker dealer. Overstock / tZero is another.

~~~
arcticbull
Or it could be replaced by Carta, and it is.

------
shiado
If you ever want a fun simple math problem. Calculate how much hashing power
you need to accumulate in order to 51% attack some of the lesser quality
cryptocurrencies. It is very feasible for the right actor.

~~~
markovbot
And if you don't want to bother doing the math, go to
[https://www.crypto51.app/](https://www.crypto51.app/)

~~~
shiado
Interesting site. Only thing I would change would be to find the attack cost
based on block time. Ethereum has a block time of 15 seconds whereas Bitcoin
has a block time of 10 minutes. This changes the amount of damage that can be
done in a given amount of time.

~~~
xur17
I welcome pull requests [0]! :)

[0]
[https://github.com/tdickman/crypto51](https://github.com/tdickman/crypto51)

~~~
shshhdhs
Nice! I didn't realize you were on HN, I've sent your site to friends before.
I'm curious -- has your traffic increased or decreased lately (due to the
bust)? Do you track your traffic or graph it at all?

~~~
xur17
I track it via Google Analytics -> here's a screenshot of the last few months
[0]. Traffic has been pretty steady over time with a few spikes from Hacker
News or Twitter mentions. I believe the most recent spike in traffic is
related to the 51% attack against Vertcoin [1].

[0] [https://i.imgur.com/UwFrpgs.png](https://i.imgur.com/UwFrpgs.png)

[1] [https://bitcoinist.com/vertcoin-vtc-51-attack-100k-double-
sp...](https://bitcoinist.com/vertcoin-vtc-51-attack-100k-double-spend/)

------
apo
Many coin projects hope for a Coinbase listing as a way to boost exchange
rate. Broader markets mean more liquidity, which in turn means more investor
interest.

I'd like to offer a counterpoint: that Coinbase listing is likely to kill the
tokens that get listed.

Shitcoin speculators are attracted to volatility, not technical merit. The
wilder the swings, the more engaged they become. By adding liqudiity to a
token, Coinbase dampens volatility. Projects must then compete on technical
merit, which means most will fade away as new tokens not listed on Coinbase
emerge.

Second, shitcoin speculators trade with the understanding that they can evade
taxes by trading on unregulated exchanges. By muscling out competitors,
Coinbase will drive middle tier exchanges out of business. Given its strict
guidelines around AML/KYC, Coinbase will make it very difficult for
speculators to conceal their tax liabilities. This in turn will drive out most
speculators who will see little advantage of cryptocurrency over traditional
forex or penny stocks.

Bottom line, this move will not increase demand for trading more mature
tokens, but dry it up. Speculation will instead take place on thinly traded,
unregulated exchanges.

~~~
mihaifm
Interesting point of view, although crypto market has proven irrational most
of the time. But indeed liquidity tends to bring the price closer to the real
value, which is much lower than the current traded value for most of these
tokens.

------
rhegart
Crypto may have its usage but the coins themselves aren’t worth very much and
the market does not value them very much. Why? Only maybe 3% of crypto buyers
understand the technology, understand the boom/bust cycles, and essentially
understand what exactly it is they are buying. The other 97% are irrational
actors. They are common people who hopped onto the craze after the wild media
frenzy, heard from their colleagues about a magic coin that exponentially
increases in value, poor and lower middle class from other countries who
really don’t understand it, and the tech pseudo crypto literate community who
repeat the similar phrases: the technology is legit, but some coins are
overvalued, alt coins are useless but etherum and btc are useful, crypto is
like the dot com bubble and a few coins will survive and turn into the next
tech behemoths. I belong to this latter group though my ego might think
otherwise.

In my eyes the valuation is due to the volatility from the 97% of irrational
actors, many who pump and dump, and the big players who can do sketch actions
with little oversight. This is not an investment class I feel confident in
purchasing if it’s almost completely irrational. I am at the mercy of others
and chaos and long term these factors will likely converge to a significant
loss for me. The one hope being that there comes to be significant value
unknown to us now but comes in the future.

------
2bitencryption
Maybe previously they could survive off BTC alone, and it benefited them to
focus on the healthiest currency, but now BTC isn't doing too hot, so they
feel the need to cast a wider net so they can get a head-start on the next
craze, should it come?

~~~
polyomino
Bitcoin is doing much better than all those other scams. Coinbase has lost its
credibility in the crypto space long ago, not much risk for them to go all in
at this point.

~~~
luke0016
Who is the main alternative to Coinbase when it comes to Bitcoin? (I've used
Coinbase in the past, and would like to know for the future...)

~~~
polyomino
There are several options depending on where you are geographically. Bittrex
and Gemini are exchanges that’re also big in the USA.

------
mihaifm
The recent market crash is partly the exchanges’ fault. Listing every possible
coin out there exposes people to unfinished and shady products. Just looking
at that list things like Storj and Tezos, or even Eos and Cardano are very
questionable choices.

No one seems to take a stance against this garbage. While Coinbase is
currently more selective, with this type of move they’d probably join the rest
of the pack.

Also I’m not sure why they don’t include Nano in that list, which is one of
the few cryptocurrencies that can actually be used as a currency.

~~~
elliekelly
Even highly regulated exchanges don't vet for quality like you're suggesting.
Exchanges merely set disclosure requirements so investors can make their own
informed decision but even that only goes so far. Herbalife is on NYSE and
Tesla on NASDAQ, for example.

~~~
arcticbull
Tesla is an actual car company making actual fun awesome cars. Dentacoin is...
a coin for dentists to...

~~~
elliekelly
Don't get me wrong: Tesla the _technology_ is awesome. The veracity of Tesla's
financial disclosures[1], on the other hand, leave much to be desired.

[1] [https://www.reuters.com/article/us-tesla-sec/u-s-
securities-...](https://www.reuters.com/article/us-tesla-sec/u-s-securities-
regulator-subpoenas-tesla-on-model-3-production-estimates-idUSKCN1N71QY)

------
jf-
I wonder, how low does crypto need to fall before coinbase becomes non-viable?

~~~
rotskoff
It's an interesting and complicated question, but it seems like the coinbase
business model should be pretty dramatically affected by the massive sell-off.
First, as prices go lower, the average value of a transaction is (probably)
declining, so the money they make on fees is (probably) going down as well.
Second, as the market looks worse and worse, the number of people casually
entering or trading is likely declining too. The have a lot of correlated risk
with the decline.

~~~
gfodor
The impact of the variables you mention can't be assessed without
understanding the internals of their business. For example, if they have a lot
of fixed or hard-to-change operating costs (like headcount) that have been
taken on that now assume a certain amount of transaction volume, you may be
right. But if they have just had their average revenue per employee spike over
the last 18 months (after all, ETH is trading where it was in May last year)
then what we just went through was more of a windfall-laden anomaly for their
business to accrue a rainy day fund not necessarily something they were
dependent upon.

In any case, given the volatility of crypto and the survivorship of Coinbase
vs all other exchanges, it'd be surprising to me if they didn't manage their
business in a way that assumed a 10X cut in price could happen at any time.

~~~
mcfunley
Greg would it really surprise you if a tech startup turned out to have done
something stupid

~~~
gfodor
Haha no not in general, but at this point Coinbase has survived some pretty
severe market swings, so if you ask me with no additional info (of which I
have basically none on Coinbase) I'd assume they at least have some
institutional awareness that a 90% drop in all the coins they offer is _not_
perceived to be an "INF sigma" event. (Which it probably was perceived as for
a vast number of the know-nothing ICO schemes)

------
whoisninja
they're doing so so that their same investors who have investments in these
garbage tokens, can off load them - and leave retail people holding those bags
full of non-sense.

Ethereum and 1000 other coins have simply created too much hype first and then
bad reputation for the original cryptocurrency i.e. Bitcoin. There are people
who think Ethereum is Bitcoin 2.0 but they don't understand that Bitcoin is
built with the strongest fundamentals.

First of before making guesses, if you really want to know about this industry
- try the applications, try to play with it (even if you put $10) - run full
nodes, try wallets, try sending transactions. Trust me it is fun and you
understand the basics then.

Secondly, separate out the financial markets side from the technology and it's
potential itself. Even gold use-case initiated at some point in history. Not
everyone started thinking of gold as store of value, so initially it price
must have fluctuated quite a bit as well.

Third, try to understand how Bitcoin actually works - what is proof of work
and why it is such an innovative idea to implement a decentralized network. I
mean this is a very large network with almost 100% uptime, close to 10 years
of history, storing Billions of dollars of worth of value and that people have
moved 100s of millions of dollars worth Bitcoin with very little tx cost and
time. I mean this alone requires a lot of credit as technology - no one needs
an affirmation from someone like Jamie Dimon to know it is valuable or not -
he doesn't know, no one does at this point. Statistically speaking, most
experiments fail so it is a risk-averse position for someone in that position
to say it will fail IMO. But opinions don't matter. Rome was not built in a
day. Even the central banks and modern banks were not built in a day. Whatever
these cryptocurrencies can replace or improve, let them take their due course
or even if they fail. People are too much stuck on the financial market side
of it, it is important to bootstrap it and take it mainstream but what
happened in 2017 was a unsustainable and hack-ish way of bringing hype to this
industry.

Please read if you're really interested : book:Bitcoin standard, please read
works of Nick Szabo, read upon origins of digital money and cypherpunks behind
Bitcoin

~~~
whoisninja
I should also mention that biggest technical debate to understand right now is
scaling in this space for most part. Smart contracts is not that big of deal
at the moment IMO. These are all open-source developments, adding proven
features from one to other is always going to happen over time.

For scaling - you need to read understand a bit about pros and cons of on-
chain scaling(ex. bigger block sizes,proof of stake, sharding etc.) and off-
chain scaling (ex. layer2/lightning).

You might be surprised to learn that Bitcoin might be the only one or at least
one of a couple that has/have the right fundamentals in terms of technology,
which of course can still fail.

~~~
whoisninja
Finally, lightning network seems to be having a good growth at the moment, if
it holds up for another year or two - i think Bitcoin will be in a very sound
position for adoption in places where it is most needed. Financial markets
will def react accordingly at that point. Until then I think it will cycles of
busts/capitulation with speculators and wall-streeters.

~~~
wereHamster
Lightning development is taking much longer than I had hoped. There are still
some serious issues with the implementations. But what I miss most is focus on
UX. If we ever hope for wide-spread adoption we need to start to focus on
regular users: Offer nicely designed wallets, good UX, teach new users about
how LN works during onboarding etc. The current generation of LN-wallets is
poorly designed and often confusing, even knowledgeable about how lightning
works. I was however positively surprised by
[https://lightningjoule.com/](https://lightningjoule.com/), it is going in the
right direction (even though it's not a full wallet, just a UI for lnd).

------
jdlyga
The crypto market is going bust. Quick! Toss in everything you can!

~~~
system2
It is already busted.

------
perseusprime11
They seem to be in a rush to make as much commission as possible before the
bust.

~~~
sekai
Coinbase was founded in 2012, I'm sure they will be fine.

------
booleandilemma
Bitcoin is losing its luster isn’t it? They’re thinking it’s time to
diversify.

~~~
jgh
diversify into what exactly? The entire cryptocurrency ecosystem seems highly
correlated. Take a look at coinmarketcap.com, the charts are essentially the
same for nearly all the listed coins.

~~~
dehrmann
They're trying to take more slices of a shrinking pie, hoping to capture
enough of the long-term cryptocurrency market share to justify their current
size and valuation. It's also a really good time to muscle-out some of the
weaker players.

------
Animats
Strange timing. Most of the cryptocurrencies other than Bitcoin look terrible
right now. Why get into the lower-tier ones?

~~~
solveit
Why not? If the market goes through another boom-bust cycle, Coinbase is at
the forefront and makes bank. If this really is the end, they're fucked
anyway.

------
ToFab123
Many comments here about investing in crypto is same as gambling. So what if
it is? (and it is in my opinion). I buy a little bit of crypto each month and
are just leaving them for a couple of years to see what happens. Why? Because
the odds in the crypto lottery is better than any other lottery that I know
of.

~~~
timr
The difference is, investing is nothing like a lottery. When you invest,
you're putting money to productive economic use. There is some chance of loss,
but that chance doesn't define the investment.

When you gamble, you're putting money on a random number.

Bitcoin is "meant" to be a currency, so it's really neither thing. But people
are definitely gambling on its price fluctuations (just as people gamble with
stocks, bonds, real estate, and other commodities).

------
jboggan
That's quite the url TechCrunch chose for the story.

------
mathattack
Is this Coinbase throwing a Hail Mary on the way down?

What happens to the wallets if they go under? Is it hard to disentangle the
coins?

~~~
elliekelly
It doesn't look like it would be easy. From their FAQ[1]:

>U.S. Customers - Coinbase stores all customer fiat currency (government-
issued currency) in, custodial bank accounts, or in U.S. Treasuries.

>Non-U.S. Customers - Coinbase stores all customer fiat currency (government-
issued currency) in segregated, custodial bank accounts.

You'll notice the non-U.S. customer cash is held in _segregated_ , custodial
bank accounts while the U.S. customer cash is held in custodial bank accounts
and U.S. Treasuries. This leads me to believe the corporate cash is co-mingled
with cash that's earmarked as belonging to investors.

That might not sound like a problem but if Coinbase goes under then creditors
will stake a claim against the _entire_ account. The best case scenario there
would be that Coinbase keeps meticulous records and a bankruptcy court would
return client funds in a few years.

[1][https://support.coinbase.com/customer/portal/articles/166237...](https://support.coinbase.com/customer/portal/articles/1662379-how-
is-coinbase-insured-)

~~~
mathattack
That is if there are funds, no? I’m surprised they can do this. Is it because
US laws are more lax or vague on crypto?

~~~
elliekelly
You're correct, that's all assuming they don't "accidentally" spend customer
funds on corporate expenses which is obviously fairly easy to do when all of
the funds are in the same account.

I'm honestly a bit surprised this hasn't come up with regulators yet. Even
under current U.S. law I'm not sure how Coinbase can take custody of client
funds without being either an OCC chartered bank or an SEC (or NFA) registered
broker. Coinbase is absolutely functioning as a bank and there's a pretty
strong argument they're operating as a forex broker.

Banks and broker-dealers have strict rules around segregation of client funds
_and_ securities for the exact purpose of protecting customers' ability to
promptly access their funds/assets in the event the custodian goes under.

------
KasianFranks
More emotionally charged anti-crypto commentary that will not age well. If
you've ever spent time as a quant, you'd know everything about crypto is about
it being a trading vehicle with global public market exposure. Capital is
raised from the capital markets and if it swells, ride it.

------
StavrosK
How come they don't list Monero? They added a bunch of less popular coins, I
wonder what's going on with that.

~~~
CryptoPunk
All the ones listed are ERC20 tokens on Ethereum. Maybe Ethereum's much
greater security against a 51% attack was a factor in the decision.

------
simonebrunozzi
In an ideal world, initiatives like this one would be properly regulated to
protect consumers from exploitation.

I don't know if Coinbase is to blame or not; certainly, lots of people will
lose money in the crypto game. They might deserve it (because of greed!), but
still...

~~~
cft
In an ideal world, people are free to buy and sell what they want. You feel
patronizing to the people who need to be "regulated", but I feel that people
should have their own agency.

~~~
chasing
In an ideal world everyone would be perfectly informed, no one would ever runs
scams, all food and medicine would always be safe no matter what, and cars and
weapons would only affect the people who purchased them.

~~~
CryptoPunk
No one ever argued that in a free society, no one would get scammed. The
argument is that freedom is worth its inconveniences.

~~~
cft
HN thinks it doesn't.

------
exitcode00
Seems odd they didn't include Dash

------
ineedasername
seems like with the collapse of crypto prices they see no room for growth in
the near future except to open the flood gates to any coin with even a bit of
value. It seems kind of desperate, but is there a downside in this for them?
Apart from their own infrastructure costs to implement.

------
throwaway487552
This is an agony. An attempt to support falling volume.

------
crb002
Google, Microsoft, and AWS together have enough spare compute to 51% even
BitCoin.

~~~
shoshino
No they don't.

~~~
CharlesW
> _No they don 't._

Can I ask how you came to that answer?

[https://www.crypto51.app/](https://www.crypto51.app/) says a one-hour 51%
attack on Bitcoin would cost only $237K as I type this, which doesn't seem
like much for tech behemoths (much less nation-states).

~~~
ars
He said compute, you responded with money.

You are not comparing the same things.

Specifically: Bitcoin is done on specialized ASICs, while the tech companies
have general purpose CPUs.

------
Hydraulix989
Desperate times call for desperate measures

------
nivexous
And yet they don't support Bitcoin SV, the only coin that's still Bitcoin (the
idea) at this point, and gives their company its name. How ironic.

