
Coinbase raises $100M Series D led by IVP - dsugarman
https://blog.coinbase.com/coinbase-raises-100m-series-d-led-by-ivp-f5f25cb51019
======
stanmancan
I'm pretty naive on the subject of Bitcoin so I might be missing something
here, but can someone explain to me how it's used right now? Aside from
treating BTC like a stock that is. The value of it fluctuates so much that
actually buying/accepting it seems incredibly risky. The price can go down
just as fast as it goes up.

As a someone looking make purchases with BTC; if the value of a BTC is going
up, why would I use it to buy anything? It's gone up $700 in the last week; up
$200 in the last 24 hours alone. I'd feel incredible silly spending bitcoin in
a growth phase.

As someone looking to accept BTC for purchases, how do I do so with confidence
that when I accepted $3400 today that by the time I cash out it's not worth
$2700?

My confusion really comes from the buying/selling of legal goods; I can see
the risk being worth it if you're operating outside the law. But really; if
I'm selling something then there's a pretty good chance I'm buying my supplies
with a fiat currency. I have hard and set costs I need to cover. If I accept
BTC, there's a chance that when it's all said and done the BTC isn't worth
what I paid and now I'm losing money.

Are businesses just expected to accept that risk? If so, how many businesses
are actually willing to accept that risk? Or do we have to wait for the price
to settle down before seeing more widespread adoption?

~~~
skizm
Bitcoin purists will say that, eventually, there is no "cash out" phase. 1 BTC
= 1 BTC and who cares about what the dollar equivalent happens to be. Once
everything is in BTC you will never exchange it for dollars.

Do you spend dollars today wondering if tomorrow the Euro will be worth more
or less? No, so why would you care what the dollar equivalent to a BTC is when
everything you buy is priced in BTC?

This is long term obviously. The reason the price is "high" now is because
there is a finite amount. ~21 million BTC is the max that can ever exist at
once. So, theoretically if you replaced the world's currencies with BTC,
having a single BTC would make you incredibly wealthy.

~~~
mrisoli
Can you elaborate on how that is going to happen? Not trying to flame, I can
see a world where people use BTC for everything, but I am confused at how that
will happen with current valuation.

BTC is worth thousands of dollars, so if everyone starts using BTC will people
pay irrational fractions of BTC for bread and milk at the supermarket? will
there be some adjustment? How will other entities handle conversion and
exchange? Will the general population have some compulsatory event to
liquidate their own bank accounts into BTC funds?

Could this change asset valuation worldwide(Real estate, investment funds,
etc)? If no government entity mediates currency value and printing can they
tax your earnings if companies pay through some decentralized medium? What
happens when nobody is paying taxes?

How about other cryptocurrencies, is there some kind of zero-sum game race to
the top going on? Can they co-exist in the long term purist scenario?

Some of these questions are probably extremely stupid as I have little
financial and economics knowledge and I am almost illiterate when it comes to
Bitcoin, and I don't know how it works for the average joe if this purist
scenario becomes true.

~~~
skizm
I'm not an expert on BTC or anything. In fact I'm not even long on BTC. I
don't think it will work in the long term. That said I'm just answering
questions as I understand them:

> BTC is worth thousands of dollars, so if everyone starts using BTC will
> people pay irrational fractions of BTC for bread and milk at the
> supermarket? will there be some adjustment?

The block chain supports values as small as 0.00000001 BTC (called a Satoshi).
More terms will be coined as more common denominations eventually are used to
buy things.

> How will other entities handle conversion and exchange? Will the general
> population have some compulsatory event to liquidate their own bank accounts
> into BTC funds?

There will be no single event, over time people will simply not use their
local currency any more in favor of BTC. Slowly, over time, the population
will lose trust in fiat and gain trust in BTC. This may occur over decades or
more.

> Could this change asset valuation worldwide(Real estate, investment funds,
> etc)? If no government entity mediates currency value and printing can they
> tax your earnings if companies pay through some decentralized medium? What
> happens when nobody is paying taxes?

I'm not sure about these. Right now if you sell things for BTC I'm pretty sure
you have to pay taxes on the "fair market value" of the BTC, which I have no
idea what that would be (maybe the average price at the time of the payment?).
I assume people long on BTC are hoping laws will adapt by the point when it is
widely accepted.

> How about other cryptocurrencies, is there some kind of zero-sum game race
> to the top going on? Can they co-exist in the long term purist scenario?

I mean, a cryptocurrency is only as valuable as the trust people have in it.
So all the same rules/theories apply to other cryptos the same as BTC. BTC
just happens to be the most popular at the moment, and therefore has the
highest market cap (not even sure if this term applies).

~~~
nosuchthing

      >There will be no single event, over time people will simply 
      not use their local currency any more in favor of BTC. 
      Slowly, over time, the population will lose trust in fiat 
      and gain trust in BTC. This may occur over decades or more.
    

The BTC network processes about 3 transactions per second. Bitcoin advocates
will tell you this doesn't matter, or it can be improved with a future fork -
which by then why not just make a newly designed protocol/altcoin network
entirely ?

(Consider: is what they're telling you based on their current investments that
they'll sell off after you've bought in? Now think of what happens when a
hedge fund, or other early adopter who has acquired several thousand coins or
if there's whales who've traded their way to now own %10 of the coin supply in
the network. What happens if they divest and crash the 'value' of this coin
'investment'?)

The great thing about cryptocoins is you can create an improved protocol and
if it's better then previous protocols, the users will migrate.

There's a lot of misinformation flying around because people are trying to
spam their investments into their cryptocoin service networks which they've
bought into (or engineered a marketing pump and dump scam, i.e. premined ICOs
like antshares) in hopes that they can later sell at excessively inflated
prices because of some arbitrarily limited "supply" which a programmer just
typed into the software running their network.

------
anilshanbhag
Coinbase makes a killing with their fees. The spread between the buy and sell
prices on coinbase are 1-1.2%. On top, their bank transfer charges are
proportional to amount transferred instead of standard flat fee. I wonder why
they need another $100M !

For people who want to buy, I would recommend Kraken - they have much higher
volume and sane pricing. There are others too like Bitfinex, Poloneix, etc.

~~~
fpgaminer
It's important to note that Coinbase also operates an exchange, GDAX, that
anyone can get access to. The fees for limit orders on GDAX are currently 0%,
and there are no transaction fees for withdrawal (at least on USD->Bank
account or BTC withdrawals). I'm not sure if GDAX has any deposit fees.

Buying/selling directly on Coinbase is merely for convenience, and obviously
you're going to pay for that convenience. I'm glad that Coinbase offers that
option, because there are a lot of people for whom the fees are worth the ease
of use.

But if you're one of those people for whom the fees aren't worth it, and you
want to get your hands dirty, by all means use GDAX and pay no fees at all.

~~~
solotronics
the fees for market making orders is 0% other orders is about 0.25% (better if
you are trading more). market making is when you place an order that is not
instantaneously filled.

------
Meekro
Even in the bitcoin community, I think many people don't realize just how big
Coinbase is. I have a paid Alexa account, so I can grab traffic data to for
any website. Let me show you how Coinbase compares to several other sites you
guys might be familiar with:

    
    
      coinbase.com - 4.8 million monthly unique visitors from the US
      4chan.org - 5.3 million
      chase.com - 47 million
    

So Coinbase is almost as big as 4chan, and is 1/10 the site of Chase.

Let me repeat that again: The largest bitcoin exchange has 1/10 of the traffic
of the biggest general banking site in the world.

That is huge.

------
ryanSrich
Hopefully they spend all $100mm on support. I've never experienced such bad
support.

~~~
joering2
At this point me and many of friends with Coinbase account came to conclusion
that there is NONE. I don't believe a single person works in customer support.

I also heard that it is such a big issue that some California attorney is
advertising heavily in top 5 states to gather traction for a class-action
lawsuit regarding this problem. Unfortunately I haven't stumbled upon his
advertisement yet, but wouldn't be surprised if judge will give it a green
light.

~~~
trjordan
According to LinkedIn, they have 7 people who work in support.

At a company of ~200 people, that's not an unreasonable number to have. It
feels mean to say they have none.

~~~
ryanSrich
You know what I find mean? Getting locked out of my GDAX account for no
apparent reason for months on end while ETH rises and I have no way of doing
anything because I can't access my USD or ETH. Not one single word from
support until one day I get a random message that directs me to an article
that I've already read 10 times and is of no help.

------
jefe_
Definitely late to the game, but finally bought bitcoin this week. I've
followed bitcoin since ~2010, but it's volatility and financial constraints
had prevented any real action. Here are some notes if there are any other
holdouts out there: I used Coinbase and Gemini. It was surprisingly difficult
to get money into these places, which was a bit frustrating, but in the same
sense reassuring that they are playing by the rules. I actually setup on
Gemini because Coinbase kept cancelling orders on my debit card (Schwab), and
I was able to setup wire transfer with Gemini, and then transfer that to
Coinbase to fund the GDAX account. I set out Saturday morning to buy bitcoin
and didn't ultimately have any until Monday afternoon when the wire transfer
reached Gemini (standard account for ACH transfer is now approved on both
platforms, Gemini took 2 days, Coinbase 4). Coinbase has a nice app to monitor
accounts and price charts, but it doesn't seem to link to GDAX (their
exchange), so you can't get a unified view of holdings in one spot. Gemini
doesn't have an app, but has a web application which is annoyingly secure. It
remembers a device for 24 hours, after which it requires 2 Factor SMS
verification. Security is great, but it's a bit annoying when all you want to
do is check account value once a day. Gemini trading volume seemed a bit low,
and their API didn't offer any compelling features over GDAX, which is why
I've transferred from Gemini to Coinbase (took about 1.5 hours to go through)
and then GDAX (Coinbase to GDAX is instantaneous). Both offer websocket feeds
and the APIs are well documented. The C# GDAX sample application was last
updated in 2015 interestingly, but it still has many useful pieces. Another
bonus for GDAX is their fee structure, which is simpler (and cheaper) than
Gemini's, maker orders are 0% fees. I've always been intrigued by automated
trading systems, but the barriers to entry are so high in the stock markets
(data, platforms, high fees, account minimums, day trading rules), to the
point where you can't really just 'try it out.' 6 days into this adventure and
I'm maintaining my own order book and programmatically making trades with tiny
amounts of money. Next step is to work on strategy.

~~~
shpongled
I have actually already created a C# Gemini API wrapper[0], if you are
interested. Along with a GUI for it [1]. Both are open-source.

I used my library to write an automated trading system that's running on
Gemini (not open source, obviously). I like Gemini much more than it's
competitors.

[0] [https://github.com/lazear/Gemini](https://github.com/lazear/Gemini)

[1] [https://github.com/lazear/Libra](https://github.com/lazear/Libra)

~~~
jefe_
Awesome, thank you for sharing, I will check it out!

------
45h34jh53k4j
Coinbase is positioning themselves to be the first legit cryptobank. Fidelity
now feeds their customer portfolio data (on BTC, LTC and ETH holdings) from
their user cold storage holdings at coinbase.

Its extremely risky to hold client keys that hold money. Making a CryptoBank
is like making a regular bank on hard mode.

~~~
fpgaminer
> Making a CryptoBank is like making a regular bank on hard mode.

Back in "the old days" bank security was based around metal vaults and guns.
That I would also consider doing banking on hard mode.

Coinbase just needs good specialist engineers and a good insurance policy. Not
much different from a traditional bank.

At least Coinbase has an advantage over traditional banks. Good engineers
would probably rather work at Coinbase where they get to play with cool
Bitcoin tech, rather than a stuffy old banking system which still limits
passwords to 8 characters...

~~~
45h34jh53k4j
Insurance on cryptocurrency holdings? might be hard to find a provider that
would accept that level of risk and volatility. Would the premiums increase
with the value of the BTC?

What if there just isn't enough bitcoin in circulation to cover the loss
(there is a 21 million cap on BTC).

Bank robberies don't usually leave the bank with nothing :-) Exchange gets
rolled, it might not even afford the claim.

Agree about advantage as being a great place to work vs traditional banks.
They will attract better talent for sure.

~~~
fpgaminer
> What if there just isn't enough bitcoin in circulation to cover the loss
> (there is a 21 million cap on BTC).

It's being defacto established that when a cryptobank gets robbed, the funds
are repaid to customers using local currency, not BTC, priced at the time of
the loss.

So, from the underwriter's perspective, it's just insuring whatever total USD
value Coinbase currently holds, with consideration given to Coinbase's ability
to prevent theft. Not any different from a bank insuring itself against loss
due to cybertheft.

~~~
dajohnson89
FDIC makes this analogy a tad more difficult, afaik.

~~~
fpgaminer
How so? FDIC doesn't cover theft.

------
Torai
Why does Coinbase need another $100M when it's making tons of money with its
fees?

~~~
wastedhours
Raise when you don't need it. VCs are desperate to part with cash ("use it or
lose it"), and Coinbase probably has the best chance (after perhaps Stripe and
Braintree) of becoming the de facto home for the crypto payment/trading
industry.

~~~
zjaffee
Even so, a 1.6 billion dollar valuation of coinbase is certainly very high.
Assuming that over the course of the long term they are comparable to
something like intercontinental exchange (the owner of NYSE/EURONEXT, and
controller of the clearing house for 50% of the worlds oil futures/derivative
products).

The total market cap of coins traded on their platform would need to be
magnitudes larger to justify this valuation unless they can somehow either
continue to justify their high fees amidst competition, or they would need to
totally monopolize all future cryptocurrency banking, something that could
certainly involve large amounts of competition in the future as well.

~~~
base698
By deduction they make about a million USD in fees a day. A startup making
real cash along with huge growth potential. Seems valid.

------
ruok0101
Maybe now they can spare a human to respond to my 4 attempts to get my account
unlocked?

------
zebnyc
Can anyone who has been investing in digital currency provide some
alternatives to Coinbase vis-a-vis fees?

If I am plunking down $65k, then that is almost $1k in fees. In comparison, if
I buy stocks, I pay around $7 in commission. I know that it is not a direct
comparison cause there is currency conversion fees involved.

Are there any better alternatives? How do you guys invest to avoid fees?

Thanks

~~~
pmorici
If you are investing that kind of cash you should be using Coinbase's GDAX
exchange not their brokerage service. If you place limit orders on GDAX with
the "post only" option checked you will be able to buy coins with zero fees.

Other exchanges have similar fee structures so if you don't want to pay the 1%
brokerage fee you really need to learn how to use limit orders regardless of
what exchange you ultimately use.

------
lesiva
So I'm late to the digital currency game. What are the regular use cases for
digital currency? Who accepts it? Is it mostly for person-to-person trading?

~~~
aphextron
As a nitpick the proper term is "cryptocurrency", not "digital currency". A
cryptocurrency does not necessarily have to be stored or generated digitally.

~~~
lesiva
Makes sense. Coinbase's website is plastered with the term "digital currency"
so that seemed the safest to use since I'm not too familiar with that market
:)

~~~
discombobulate
They do that for their benefit, & for the benefit of their regulator
bedfellows (I think). The SEC, for example, dare not mutter the word 'crypto',
confirming that Bitcoin et al do actually exist!

------
vadym909
Unrelated, but it still blows my mind- that the creator of this cryptosystem
thats now worth $50B is still unknown.

He has to have been lived somewhere, gone to school somewhere, studied, worked
somewhere, left some track somewhere about who he was.

~~~
keypusher
Dave Kleiman - Look him up. It's actually all a kind of sad and sordid story.
The myth is far better than the reality.

~~~
sillysaurus3
I think that story was largely debunked. It even turned into a dicey situation
for gwern, though I respect his commitment to chasing down a lead.

------
corford
Can anyone recommend a decent exchange that supports deposits and withdrawals
from a UK GBP bank account without needing to do a SEPA or SWIFT transfer?

Neither Kraken nor Bitstamp do :(

~~~
jamies888888
I can't find one either. I've decided the best option is
depositing/withdrawing using localbitcoins.com, then transferring in/out of
there to your preferred platforms.

~~~
corford
Yeah, it's infuriating. I'm hoping Revolut enables bitcoin on their platform
soon. Until then, will check out localbitcoins.com, thanks.

------
josh2600
Seems like a no-brainer for IVP. It seems like coinbase is exceptionally well
positioned to harvest a big chuck of the institutional money that's about to
hit crypto.

------
qhwudbebd
Does this means they'll be arsed to reply to customer support queries more
rapidly in future? Say a 1-2 month turnaround instead of 2-4?

------
cft
With this trading frenzy on gdax and on coinbase itself, why do they need
round D? They are charging hefty fees on coinbase, and some fees on gdax too.
It's "pure play" , there's no fixed real world expenses

------
asciimo
It's nice to see that, until this comment, CTRL-F yields nothing for "ponzi"
or "scam." "pyramid scheme" and "drugs" are still making appearances, though.

------
ringaroundthetx
So that's why they refunded everyone after they got taken advantage of in the
flash crash.

Maintaining confidence had greater consequences than not.

All about those user numbers, or attracting other people attempting to exploit
the same glitch. Pretty efficient market in that regard.

------
koolba
Why not do a Coinbase tier2 not-stock-but-we'll-pretend-it's-stock ICO?

Could raise even more money with zero actual equity dilution.

------
aresant
Edit - Moved to comment I was trying to address -

~~~
jorvi
> Crypto could become the "people's" wealth vault, and undercut nations
> ability to tax & control markets by truly privatizing wealth. All it takes
> is MOST of us to decide.

You say that like its an admirable goal we should strive for. Taxes built the
roads and bridges you drive on, the crystal-clean water that flows from your
tap, the lines that your internet runs over, and the (admittedly glacial)
bureaucracy that prevents your city, municipality, province and country from
descending into unorganised chaos.

~~~
ringaroundthetx
Roads, bridges and schools were built before national governments began
passively levying taxes on income. this is a 100 year old concept.

Taxes on capital gains are a 70 year old concept.

Just recognize the amorality of it. It can only be billed as a "duty" for
"roads and schools" when pandering to the lower classes who have no choice in
the matter, while recognizing those classes have the numbers to get you in
office. But "taxes" are not an absolute on the concept of how a government can
fund itself. Governments have to balance the consequences of how they attempt
to raise revenues, by being competitive amongst other countries, as their
ecosystems primarily rely on attracting or incentivizing investment.

------
tryingagainbro
They have been doing this since 2012 when Bitcoin was essentially free...I
guess they took the money just in case.

------
justinzollars
Great news! I'm very bullish on digital currencies.

~~~
discombobulate
*Crypto currencies.

Without cryptography, we may fall into 1984 -- or something like that.
Cryptography grants us privacy.

------
phaed
That money would have had better upside if invested in bitcoin directly.

~~~
jshevek
Are you saying that the investors would get a better return on their
investment if they had instead simply purchased bitcoins?

That claim seems to require the ability to know the future. Bitcoin may
eventually be superseded by a superior alt coin, and disappear into history.

~~~
sudoscript
> That claim seems to require the ability to know the future.

One could say startup investing does too.

~~~
jshevek
Startup investing requires willingness to take risks with an unknown future.

~~~
syrrim
So does investing all your money in bitcoin.

------
kolbe
How in the bloody hell does Coinbase not fund its own operations with
profit??? I figured they made over a $100m every quarter.

~~~
richardknop
Do we have any source on what is their revenue? I sincerely doubt they are
making 100 million in profit every quarter. I would be surprised if they were
actually profitable.

~~~
vocatus_gate
With the fees they charge, and the volume on the exchange, I don't see how
they _couldn 't_ be making a profit? Of course I'm not a business guy, might
be something I'm not thinking of.

~~~
richardknop
If they were making profit, I'd assume they would make a press release. They
would want the business world know.

~~~
pmorici
Privately owned profitable businesses don't usually go trumpeting to the world
how wildly profitable they are. That is just inviting competition. Kind of
dumb.

------
discombobulate
I don't think coinbase are going to add Monero. It's too much like cypherpunk
money.

------
FozzworthSE
lots of people have used it to buy drugs

~~~
mbloom1915
lots of people have used cash to buy drugs...

