
Coinbase Crosses 650,000 Users - danielpal
http://blog.coinbase.com/post/70403865643/coinbase-crosses-650-000-users
======
cjensen
Speaking as someone who knows a lot about economics, I think PT Barnum put it
best...[1]

Economics is very clear in predicting how this will end up. Bitcoins have no
intrinsic value and therefore the long-term price will be precisely zero. Each
generation has its tulips [2]; each generation claims that the persistence in
tulip price means that there is permanent intrinsic value; each generation is
disappointed [3].

The only thing interesting about bitcoins is that this provides an opportunity
to watch a bubble: observe the justifications people make, observe how nay-
sayers appear to be wrong, and watch the progression.

[1]
[http://en.wikipedia.org/wiki/There%27s_a_sucker_born_every_m...](http://en.wikipedia.org/wiki/There%27s_a_sucker_born_every_minute)

[2]
[http://en.wikipedia.org/wiki/Tulip_mania](http://en.wikipedia.org/wiki/Tulip_mania)

[3]
[http://en.wikipedia.org/wiki/Extraordinary_Popular_Delusions...](http://en.wikipedia.org/wiki/Extraordinary_Popular_Delusions_and_the_Madness_of_Crowds)

~~~
erikpukinskis
I don't think "intrinsic value" is a term in economics. It's a term in
investing.

Economics is far from clear about predicting how Bitcoin will end up. The
professional economics world has yet to seriously weigh in about Bitcoin. I
just searched the top 10 journals on this list:
[http://faculty.maxwell.syr.edu/whorrace/journals.htm](http://faculty.maxwell.syr.edu/whorrace/journals.htm)
and none of them appear to have anything published about Bitcoin.

That said, Bitcoin does have "intrinsic value" as a payment processor. Think
about PayPal. There's two kinds of value in PayPal. First, they have their
deposits, which are denominated in various different currencies, and which are
backed by various governments and insured. Then there are the people, the
servers, the contracts, the buildings, all the other stuff that's necessary
for those deposits to actually move around the globe. Ebay didn't buy PayPal's
deposits, which aren't really PayPal's, they belong to their customers, eBay
bought PayPal's assets.

Think of Bitcoin like that stuff... a distributed payment processing company.
It just as reliable as PayPal, except no one can ever freeze your account, and
you can only transfer Bitcoins. PayPal was worth $1.5 billion to eBay, so
that's a reference for your "intrinsic valuation" that you're working on.

You might be thinking "well PayPal wouldn't be useful if it could only
transfer Bitcoins and the value of Bitcoin is $0 so there's a chicken and egg
problem!" Except I don't see a scenario where Bitcoin goes to $0. Let's
imagine Bitcoin crashes all the way down to $0.01. Bitcoin is still useful if
you're trying to get money to your grandma in Cuba, or to pay your Latvian web
development contractor. Maybe it's extremely volatile, but that's OK because
you otherwise have no way to get your money where it needs to go, and you're
only going to keep it in Bitcoins for a few days. You buy some Bitcoins, send
where they're going, and the other side cashes them out.

Now why is this relevant? Well, if during those 4 days, there was $1,000,000
worth of money that people were trying to send this way, then there need to be
at least $1m worth of Bitcoins to "float" those transactions. Essentially
those people all show up on Monday being like "we don't care how much it costs
because we're selling them again in three days, we just need $1m worth of
Bitcoins to send to our grandma/contractor/etc". Therefore the "value" of
Bitcoin goes up to at least $0.05 ($1m/21m).

This is just one of Bitcoin's many "intrinsic" values. It is the "payment
processor of last resort" for everyone who falls through the cracks of Western
Union/Paypal/etc. This creates a floor below which Bitcoin is unlikely to
fall.

~~~
differentView
Why should I use Bitcoin as oppose to other digital currencies to send money
to my grandma?

~~~
jedi_stannis
There is no central controlling authority you need to trust to not seize your
digital currency.

~~~
wdewind
Which has not traditionally been an issue when "sending money to grandma."

~~~
zanny
Suddenly, your grandmother does not live in the same country as you.

Have fun sending money to grandma.

~~~
wdewind
Ok educate me, because I really don't know (my grandmothers both lived in the
US): what's wrong with Western Union or PayPal for this purpose?

In many ways this simply moves the problem (overall complication) from a
private sector solution much closer to a government solution because it means
exchanging bitcoin for real currency will be intensely regulated and have its
own fees associated with it.

And maybe someday bitcoin will be worth some monetary value other than the
currencies you can exchange it for, but we are not near that.

~~~
sillysaurus2
_what 's wrong with Western Union?_

Speaking from experience: Western Union is _awful_. Absolutely horrible. They
basically stole $50 from me after their representative typo'd a number and
then didn't have the authority to fix it, and then I was asked to prove my
transaction by faxing them a receipt which I hadn't kept, therefore losing my
$50. Avoid them at all costs.

~~~
venus
I am having difficulty picturing this situation.

The form you filled out when you sent the money had carbon copies, which are
retained. If data from the form was mis-typed later, they should be able to
check their copy, or you might be able to retrieve a copy from the outlet or
receiver or something.

I assure you that no-one in WU is trying to steal $50 from you. Mistakes
happen, but there is a paper trail, so if you really care, escalate. They
operate under the supervision of your country's financial regulator, whom they
are deathly afraid of, and are hardly going to risk their banking license
pilfering fifty bucks.

~~~
sillysaurus2
The $50 was not worth spending literally hours on the phone with them trying
to get the issue resolved. The point is that bitcoin has real value as a
painless money transfer mechanism.

~~~
venus
>Speaking from experience: Western Union is awful. Absolutely horrible. They
basically stole $50 from me > Avoid them at all costs.

The point is that you wrote a very damning indictment of a company, accusing
them of theft, and I pointed out they could probably fix your issue if you
actually cared, even without the receipt. You then admitted you couldn't be
bothered going through the process.

So what you wrote was basically a load of crap. But hey, bitcoin!

~~~
sillysaurus2
I was so goddamn pissed off that the phone rep, who could barely speak
English, had typo'd my number, which I had been very, very careful to say
slowly, and to repeat back to him twice, and then be asked to _prove_ myself
by _faxing a physical piece of paper_ in order to get my money back, after a
total time investment of > 3 hours, after taking into account driving to the
store, waiting on hold, etc, that my mindset was very much "fuck this shit."
So whatever you say, man. I didn't accuse them of theft. I accused them of
being so excruciatingly awful that recovering the $50 was not worth spending
more hours of my life dealing with phone reps who could not understand what I
was saying.

~~~
venus
Fair enough. That does sound pretty annoying, I'd probably be pissed off
myself! Anyway, your later comments put your original comment into better
perspective, so thanks for replying.

~~~
sillysaurus2
Ah, sorry I wasn't very clear. =)

~~~
waps
I probably missed something obvious here. But what happens if you mistype a
bitcoin address (or worse : someone intercepts your mail and gives a different
address).

------
pg
Incidentally, Coinbase's graph has an almost misleadingly modest aspect ratio.
If you want to compare their growth to other growth graphs you've seen,
compress it by at least half horizontally.

~~~
markkat
pg, if a reasonably intelligent person asked you to describe bitcoin, how
would you do it? -if you'd humor me

I ask, because IMO much of the debate about bitcoin consists of people
conflating and abusing definitions and talking past each other. As you are
obviously interested in it, I wonder what you see, and perhaps what interests
you most about it.

~~~
pg
I would not be the one to ask. I don't understand the details of the protocol.
All I could describe is the general idea of a cryptocurrency.

~~~
markkat
Ok. Thanks for the response.

In some sense I suppose that actually answers my question.

------
richardlblair
Congrats. Now, deal with the guy who gave you 35k and in return you gave him
_nothing_.

[https://news.ycombinator.com/item?id=6929705](https://news.ycombinator.com/item?id=6929705)

~~~
blhack
They did. Before you even posted this.

~~~
MichaelGG
Their "dealing" with it was "oops, we rebooted a server and forgot to make
sure transactions were run, here's $50 and enjoy your delayed trade".

After screwing up that badly they should have cancelled the order. Instead,
they delivered coins paid for at $800+ at today's prices (~$500). I would be
surprised, if BTC had jumped to $5000, if they'd have honored the $800 buy
price.

The $50 credit is just inane, too. It's more of an insult to offer $50 than to
offer no $ and a good apology. I'm not sure how they came to that decision.

Given their funding, they should have immediately taken full responsibility
(let's be clear: a financial company's transactions didn't run cause they
rebooted something...) and then offered to complete at the original price, or
cancel the transaction - truly make the buyer whole. It'd be totally fine for
them to do so, because if they fix their stuff, they won't need to worry about
"jobs not running". So in this case, even giving the guy a 10% bonus would
engender goodwill, as well as show the world they are _serious_ about handling
transactions.

I'll resist any snide remarks about Coinbase using MongoDB.

Edit: It seems after further consideration, they decided to give him today's
price since it was their mistake.

------
chollida1
Note the title is a bit misleading. They say 650,000 users but the next
sentence they state

> "we crossed more than 650,000 consumer Bitcoin wallets"

I'm not familiar with their service but I have 20 or so wallets that I've
accumulated over the past 20 months, so I'm guessing its entirely possible for
a single user to have multiple wallets, infact its so common that I'd label it
the norm.

I wonder what percentage of their users, and wallets hold any bitcoins?

~~~
modeless
You have 20 Coinbase wallets? Unlike regular bitcoin wallets, there's no
reason to have more than one Coinbase wallet. A Coinbase wallet can have an
unlimited number of Bitcoin addresses and it is generally tied to a real name
with a bank account and/or credit card for purchasing and selling bitcoins.

~~~
loceng
Probably to avoid people associating ownership to one person as easily?

~~~
modeless
If you're worried about the association of your wallet with your identity,
then almost all of Coinbase's services are off limits to you. There would be
little reason to create a Coinbase account.

------
reillyse
Kudos for a stunningly misleading graph. The manipulation of numbers is
impressive.

Whats wrong with it? Bitcoin to USD has dropped by 50% in the last few days.
By taking a "monthly average" and graphing that they've been able to hide this
discrepancy.

However there is no legitimate reason to graph the "monthly average" instead
of just the price. It's a line graph so it can deal with a range of numbers
quite well. In fact the graph has a total of 6 data points for the BTC to USD
line, the whiff of BS is strong on this one.

------
will_brown
Could someone visit coinbase's career page and confirm that the Apply buttons
are not working. [https://coinbase.com/careers](https://coinbase.com/careers)

Coinbase has one of the more interesting legal positions I have come across in
a long time (registration/licensing/compliance work) and I know I will be
kicking myself a year from now if I did not make every effort.

~~~
superprime
They work, but they are "mailto:" links.

------
slg
Congrats to them, but could a graph be more disingenuous than the one used
there that shows Bitcoin prices?

~~~
samolang
At least it's labeled that the BTC-USD price is the daily average for the
month.

~~~
fuddle
Explains the timing of the blog post, the graph would look very different next
month.

------
znowi
3.2% of seniors over 65 years old. I hope to be as engaged with innovation and
have an early adopter spirit when I'm that old :)

------
TheBiv
So the piece about more women was a little bit weird. It appears that as the
broader market (made up of ~50% women) begins to use your product, you
experience your demographic skew towards the broader markets' average
demographic. Breathtaking.

~~~
jeremyrwelch
I think they are trying to illustrate a move towards more mass-market appeal
and reach. Depending on which data source you look at, females account for
anywhere from 70 to 90+% of consumer purchase decisions in the US. If Coinbase
wants to move from being the cryptocurrency enthusiast and tech speculator's
toy to actually seeing significant product/service spend in Bitcoins with
merchants, increasing their female userbase could definitely help.

------
minimax
Do you actually have to wire up a bank account in order to create a coinbase
account? How many coinbase accounts actually have any money in them?

~~~
smtddr
No money is actually in the coinbase account. It only stores Bitcoin. If you
sell bitcoin, the USD balance will immediate be ACH'ed directly to the bank
info you have set up.[1] Otherwise, I guess you won't be able to use the sell
feature(?). BTC-e.com is different; you can sell all your coins and have a USD
balance[2].

You can create a Coinbase account without banking info. But after you've
created it, I'm not sure what good it would be to you. I guess you could just
use it to manage your bitcoins and have one place to check. But the real
service coinbase provides is transforming BTC to USD and vice-versa. If you're
not going to enter your banking info to use that feature, you might as well
generate a pub/priv key at bitaddress.org and just make sure you don't lose
the private key.

1\. [http://i.imgur.com/LMowl3F.png](http://i.imgur.com/LMowl3F.png)

2\. [http://i.imgur.com/3K1JPgR.png](http://i.imgur.com/3K1JPgR.png)

------
ziyan
Can you please send a search and rescue for your support team? It has been
days and there has been no sign of of them any where.

------
konaseer
i too signed up in coinbase end of november ,carried away by the hype( before
the crash that is)! but thankfully didnt buy any BTC. there may be others like
me.

