
Coinbase (YC S12) seeks to bring Bitcoin to the masses - barmstrong
https://coinbase.com/
======
tokenadult
A while ago I wrote that perhaps the greatest contribution the Bitcoin
experiment will make to humankind is to teach you and me and our neighbors
more about the realities of economics. And now I will add that the Bitcoin
experiment will also contribute to greater understanding of attack surfaces
and online crime. Many of the ideas about how to mine Bitcoins, store
Bitcoins, and trade with Bitcoins as a medium of exchange illustrate both the
strengths and weaknesses of any other medium of exchange in a world full of
human beings. Seeing the discussion of Bitcoins here on Hacker News reminds me
of early discussions in the 1990s of online payment systems such as PayPal,
and the arguments beforehand that PayPal wouldn't have to invest a lot of time
and effort (as it eventually did) building defenses against theft and fraud.
If a weakness in a system is attached to a lot of money, the way to bet is to
bet that someone will go looking for that weakness, even if you haven't
thought of it.

~~~
joe_the_user
I'd start from the other direction.

The newness of this stuff is overrated. The bitcoin phenomenon isn't
ultimately different from phenomena described by Mackey:
[http://en.wikipedia.org/wiki/Extraordinary_Popular_Delusions...](http://en.wikipedia.org/wiki/Extraordinary_Popular_Delusions_and_the_Madness_of_Crowds)

As we know, each new version of speculative excess has the slogan "it's
different this time". And each one _is_ different, in some way. And you can
extract various interesting particular lessons from all these newnesses - I'm
sure after 2008, someone's written a deep, interesting article on the failure
of the Gaussian copula‎ but really, you didn't need to understand the heat
equation and Ito's Formula to know that synthetic bonds were a problem in 2006
(I'd recommend the enlightening discussions of Doug Noland of Prudent.com from
that time).

But it is important to not allow ourselves to let the details of these
situations distract us from the psychological dynamics which ultimately has
carried all these phenomena. This psychological dynamic allows a slightly
stretching of numerous points to add up to the concrete mistakes one point can
point out later as "what went wrong". And these "what went wrong then"
arguments are themselves dangerous since they general are coupled with "so
this time, the different thing we are doing is..." and so forth.

Essentially, understanding magician's tricks are great. But never let yourself
be fooled by the belief that you know all the tricks.

And I writing with the assumption that bitcoins aren't a "medium of exchange"
in any meaningful way - for example, I could directly my car for something
else valuablle far more easily than I could directly trade bitcoins and cars
aren't a very meaningful medium of exchange today. This is the position that I
believe most serious economists take, Nobel Prize winner Paul Krugman being on
record here (not that I think this is really a left-right question).

~~~
nandemo
> for example, I could directly my car for something else valuable far more
> easily than I could directly trade bitcoins and cars aren't a very
> meaningful medium of exchange today.

Are you sure about that? Bitcoins are easily divisible, a car isn't. Yes, you
can take your car apart but the sum of the parts is worth much less than the
whole car. Bitcoins can be easily transported and even transferred
internationally. Exporting a car incurs a lot of overhead in transport fees
and taxes. Even selling a car to someone on the other side of a large country
might end up being too expensive.

No matter what you think of bitcoin, it should be compared to existing
national currencies, gold, etc. I like the concept of bitcoin, but I believe
that even risky currencies like those of (say) Mexico, Turkey, etc are a
better bet than bitcoin.

~~~
lsc
>Yes, you can take your car apart but the sum of the parts is worth much less
than the whole car

The opposite, actually, is true. It's not very intuitive, but yeah; I've got a
'96 Nissan maxima with unrepaired body damage and what sounds like a
suspension problem that I've gotta get rid of. If I wanted to sell it fast? I
think I'd have a hard time getting four hundred bucks for it. (I mean, if I
drove it into a car buying business and wanted to walk away with cash) But,
the salvage yard where it would end up? I bet they'd make that much back
selling all the windows and tires... then what they'd get for the other parts
would be gravy.

I think the key to understanding this is that selling a car all at once is way
less effort than selling each part individually. Sales takes effort and we're
only measuring value within the context of a sale.

(nothing to do with bitcoin; I just think that this is an interesting way to
point out that the way we measure value ends up giving us some non-intuitive
answers to how much a thing is worth.

------
trotsky

      1. Start centralized bitcoin depository.
      2. Fail to provide any loss protection.
      3. "get hacked"
      4. Profit.

~~~
DrJokepu
While I'm not a big fan of BitCoin, I don't think this is a very good
argument. You could use the same argument for banks and "get robbed". Why
doesn't this happen to banks?

~~~
cbsmith
I going to pretend you are actually serious about this. Let's make a strawman
that actually makes it easier to suggest that this is "the same as banks".

Let's pretend for a minute that we're dealing with a non-FDIC insured bank
(like some of the original online banks), with none of the regulatory controls
that obviously provide a lot of protections.

Let's pretend for a minute that the bank stupidly keeps all of its holdings as
cash that are held on site at the bank. It doesn't use notes or other
securities for transactions, only cash. Let's pretend that the bank also self-
insures those holdings (which basically means no insurance).

Okay, so I compromise the bank's security, take every bit of cash. I disappear
to some island in the Pacific with every last cent.

How badly is the bank screwed? How badly are the customers of the bank
screwed?

Actually, not that badly. I only wiped out the bank's reserves. That means
both the bank and its customers have a short term liquidity problem, but not
necessarily a significant asset problem.

A regulated bank would have 10% of all deposits in its reserves. Unregulated
banks often have far less, but let's pretend it is 10%. The bank loses 10% of
its value. If it can stay solvent, then nobody loses any money, but it might
take a few days before people can make withdrawals (which could cause a bank
run, but that's a whole different problem). If the bank _can't_ stay solvent,
it goes bankrupt, and depositors become creditors. It'll take a while to
resolve the legal process, so liquidity is killed, but when it all ends,
depositors are going to get back something close to 90% of their money back.

The key thing is that the bank lends out most of the money it takes in. Even
if you rob the bank of all its cash, the bulk of the "assets" of the bank are
all the IOU's from lendees, which is value that is really hard to "steal",
because lendees tend to only pay their lender, and then tend to do so in
installments over a great deal of time.

THIS IS WRONG: Hacking Coinbase would be more akin to hacking say Visa, and
redirecting all payments to you instead of the intended merchant.... if Visa's
transactions were all cash based, instead of credit based... and Visa was
unregulated... and even then it is kind of different because Visa is a middle
man between two banks...

 _UPDATED_ : Okay, I just read they are actually storing the bitcoins in the
cloud, rather than just exchange the coins between the two parties.... So
actually, it's not like hacking Visa, unless Visa didn't reconcile their
transactions with its customers for extended periods of time and held all of
the float as cash.

~~~
DrJokepu
So what you're saying is that banks are more stable because only a small
portion of their assets are kept as reserve? In that case, what's stopping
bitcoin "depositories" such as this converting the bulk of their assets to
something else as well?

~~~
cube13
They can't do that because there is nowhere really safe to put the BTC. They
cannot loan it out because nobody needs that much BTC, and it's unwise to
invest it in USD or anything else because the currency's fickleness compared
to USD(you could lose a lot of money, or possibly make some).

The problem is that the current Bitcoin "banks" aren't really banks. They're
more akin to socks under a mattress than a bank.

At a very basic macro economist level, banks have two functions:

1\. They are a place for clients to place their money. To incentiveize this
behavior, they pay those clients interest on the money in their accounts to
keep it there.

2\. They take that money and give out loans to people, and charge interest
over the time it takes to repay the loan.

In a healthy economy, the two feed each other. Broadly speaking, the
circulation of currency works like this: People/businesses take out loans.
That money is used to buy things (houses, cars, short term equipment expenses,
etc.). The businesses that are paid for the goods/services pay their
employees, who put the money into the bank. Note that even in this situation,
banks aren't entirely necessary, because people could just buy stuff, which
goes to employers, who pay employees, who buy stuff...

Bitcoin does not have either economy yet. Right now, it's used just to buy
things, with BTC being converted to a "real" currency(USD, Euro, etc.) on both
ends. So it's really just a single directional currency. So, right now, if I
wanted to operate a Bitcoin bank, I'd have to convert it to USD or some other
currency, and keep it totally separate from my liquid BTC wallets to mitigate
the risk of getting hacked and the wallets getting stolen. Unfortunately,
that's incredibly risky, because I would then have to deal with the exchange
rate between BTC and USD.

~~~
zanny
That isn't necessarily the fault of BTC banks though. Let us be honest here -
if we (the viewing public of HN) collectively wanted to put in every effort to
supplant flat currencies for BTC so nobody can print it anymore, all of us
combined would not have the financial assets required to sway the supermassive
giants of the world like Walmart, Amazon, Google, Apple, the big 3 car
manufacturers, realtors, and more importantly than anything else, the stock
markets to start trading in BTC would take the financial efforts of pretty
much the entirety of the top 400 wealthiest Americans.

The markets are more resistant to currency shift than enterprises are to
getting off XP and IE6. BTC will always fail because everyone is to lazy to
get rid of the dollar as the reserve currency.

~~~
white_devil
> BTC will always fail because everyone is to lazy to get rid of the dollar as
> the reserve currency.

All it takes is enough _people_ using it.

------
steve8918
It looks nice, but I don't see anything addressing safety and security. How
does this service guarantee that any money you transfer to them will be kept
safe? Also, do they guarantee that if a break-in occurs like the Bitcoinica
disaster, that users' monies will be returned?

~~~
barmstrong
Yep - sorry we should really add a page on that. We're storing wallets in the
cloud so this is an important concern. Private keys are encrypted in the
database. bcrypted passwords. We also offer two factor authentication for your
logins: [http://blog.coinbase.com/post/25677574019/coinbase-now-
offer...](http://blog.coinbase.com/post/25677574019/coinbase-now-offers-two-
factor-authentication)

We'll start keeping a majority of funds in cold storage as deposits grow
(we're still in beta at the moment). And I think you're right a firm policy on
this would be needed about loss of funds and what is covered. I'm interested
in the idea of getting insurance through Lloyds of London or something along
those lines, but haven't pursued it yet (we've just been building the
prototype).

I worked on fraud prevention at Airbnb previously and we had lots of money
flowing through the site and stored with us, so I'm familiar with best
practices around this. I also have a healthy respect for what can go wrong,
and I think as we grow we'll go through regular security audits (and much more
scrutiny as we pursue licensing as a money transmitter). You certainly
shouldn't trust us on face value though, it's something we'll have to earn
over many years.

~~~
mrb
_"Private keys are encrypted in the database"_

Please encrypt the private keys with a key K derived from the users'
passwords. When a user logs in, your server-side code can compute K and access
the bitcoins. When a user logs out, the server should forget K, erase it from
RAM, thus leaving the bitcoins securely encrypted on-disk. Not even an
attacker getting access to your infrastructure, not even you(!), could steal
the bitcoins when the user is not logged in.

Not a single online wallet service actually does it this way, the right way,
_sigh_... This mechanism could have prevented numerous thefts: MtGox,
MyBitcoin, Bitcoinica, etc.

~~~
daave
How do you deal with the user forgetting their password in this case?

~~~
mrb
Two possibilities:

For power users, if they forget their pw, they lose their coins. Period.
That's the option I would use, as someone who never lost an important pw
thanks to my use of redundant password safes.

For other users, when creating an account, coinbase.com could email them a
"key recovery" file (or mail them a physical QR code), with instructions to
keep it permanently stored in a safe place. This key recovery file would be K
encrypted with a unique IV and a key known by coinbase.com, who would not keep
a copy of the key recovery file. This would satisfy all my requirements:
coinbase.com would be unable to steal/access the users coins, and an attacker
merely getting access to the key recovery file would be unable to do anything
with it.

------
Kilimanjaro
First rule of financial apps: if you're going to deal with money you should
own your servers. The cloud is not an option.

Second rule: Hire a security expert and a thief. The former to keep you safe
and the latter to break in before the real ones so the expert can fix the
holes.

Btw, I like the service.

~~~
Estragon
I hear AWS is certified for credit card processing. Is that not the case?

~~~
wccrawford
[http://aws.amazon.com/security/pci-dss-level-1-compliance-
fa...](http://aws.amazon.com/security/pci-dss-level-1-compliance-faqs/)

Apparently they are now, yes. Last I checked they weren't and were saying
their cloud services were inherently uncertifiable, due to the architecture.

~~~
rdl
Yeah, they changed PCI DSS 2.0 to allow virtual servers, specifically to let
Amazon Web Services pass. PCI DSS 1.0 wouldn't work. (level 1 compliance PCI
DSS 2.0 from the most trusting/forgiving QSA available, i.e. a pretty fucking
low bar)

The PCI firms I know probably would not have passed them.

------
rmc
_"Widespread Adoption"_ _About $2 million a day (USD) is already being
transacted in bitcoin. It's quickly becoming an international currency of the
world._

Er... bit of a stretch

~~~
rbn
Exactly what I thought. I wonder how much money is transacted in WoW, Second
Life and other large mmorpgs.

~~~
Retric
WoW gold is a multi bullion dollar economy with daily transactions worth
around around 10-100 times what BitCoin is currently doing depending on how
and what you count.

------
fromhet
So, this is essentially yet another cloud-based bitcoin wallet?

Also, how will you comfort your customers when you get hacked and their funds
are gone? That is not a hypothetical thing to ask, but very real and has
happened before in the cloud-wallet bussiness.

Anyone who wants to get started with bitcoin, I suggest using the client
Electrum. Written in python, light, quick and secure.

------
smalter
It's very cool to see that after posting looking for a co-founder to get into
YC, it looks like Brian has gotten into YC as a solo founder and by the looks
of it, is doing great.

I sent his previous post looking for a co-founder to friends because Brian
looked seriously formidable. Best of luck to him.

------
res0nat0r
Any technical details on how wallets are protected? I think we've seen how
previous bitcoin websites have fared on HN, it would be cool to know some of
the details on how the BTC are going to be protected so that the problems of
the past don't happen again.

~~~
barmstrong
Yep - sorry we should really add a page on that. We're storing wallets in the
cloud so this is an important concern. Private keys are encrypted in the
database. bcrypted passwords. We also offer two factor authentication for your
logins: [http://blog.coinbase.com/post/25677574019/coinbase-now-
offer...](http://blog.coinbase.com/post/25677574019/coinbase-now-offers-two-
factor-authentication)

We'll start keeping a majority of funds in cold storage as deposits grow
(we're still in beta at the moment). I worked on fraud prevention at Airbnb
previously and we had lots of money flowing through the site and stored with
us, so I'm familiar with best practices around this. I also have a healthy
respect for what can go wrong, and I think as we grow we'll go through regular
security audits (and much more scrutiny as we pursue licensing as a money
transmitter). You certainly shouldn't trust us on face value though, it's
something we'll have to earn over many years.

------
GigabyteCoin
Since you auto-focus on the email address input field... it erases the default
text that reads "Your Email" so it is initially quite confusing to know what
you should enter.

I had to click on the page to de-select the input, see that it said "Your
Email", and then enter my email.

The way it is now, it looks like you might simply want two passwords.

~~~
Cushman
Looks like Mozilla clears placeholders on focus, while Chrome and Safari clear
on the first input. In Internet Explorer they don't show up at all...

~~~
barmstrong
Good to know - you can guess which browsers we've been testing with. Sounds
like a we'll need to do a js placeholder solution or change the page.

~~~
dfc
Barmstrong,

I asked the following downthread but I'm afraid its going to get buried in the
muck:

 _"Zero Transaction Fees"_???

Are you refunding the bitcoin transaction fees that are builtin to the
protocol[1]? If you are going to eat that cost you should say so, it seems
like a good marketing point.

[1] <https://en.bitcoin.it/wiki/Transaction_fees>

~~~
barmstrong
Good question, and sorry I just saw this.

So we aren't including any bitcoin transaction fees by default. If you try to
send a transaction below 0.01 it will never get confirmed without the fee, so
we added this user interface improvement a few days ago which gives the option
of including the fee if people want to:

[http://blog.coinbase.com/post/26452774981/confirming-
small-t...](http://blog.coinbase.com/post/26452774981/confirming-small-
transactions)

Coinbase will make money more like an exchange down the road, 0.5% to convert
money into our out of bitcoin, but once you have your money in bitcoin there
are no transaction fees (it mentions this on the homepage, but admittedly it's
still a bit confusing). I wish there was a better way to distinguish between
an exchange fee and transaction fee (to the average consumer these may be the
same thing, I'm not sure).

In general, I would like to abstract out the idea of btc fees to the average
user (I think it's an unnecessary complication for someone new to bitcoin). It
would be much easier to just say "no fees" - this is simple and shows a clear
benefit of using bitcoin. If you have to explain to people that "sometimes
there are fees, but they are a lot lower, etc" it loses some of it's punch.
Right now we can do zero fees and transactions still get confirmed. In the
future we may be able to do it by eating the cost and have this be a cost of
doing business, but that is a decision for later.

Hope it helps.

------
thechut
I think that this could be the hero that Bitcoin needs. If they make it super
simple / super clean they could revolutionize Bitcoin.

To the creators, have you considered adding a USD (or other currency) funding
option? Since getting the Bitcoins is probably the biggest obstacle for most
everyday consumers.

~~~
sage_joch
If that's true it could be a good time to speculate/gamble a bit. I'm tempted
to throw $500 or so at it, for the chance of another bubble.

------
pat2man
I like the idea, kind of a PayPal for Bitcoin. My issues would be the usual: I
don't trust a new service with my bitcoins, don't know anything about their
policy for data loss, etc. The about page and support pages don't really
instill any confidence. If I knew I could trust them it would seem like a
great service.

------
dfc
_"Zero Transaction Fees"_???

Are you refunding the bitcoin transaction fees that are builtin to the
protocol[1]? If you are going to eat that cost you should say so, it seems
like a good marketing point.

[1] <https://en.bitcoin.it/wiki/Transaction_fees>

~~~
AdmiralBeotch
Transaction fees are optional.

Currently, if you do not include a transaction fee, your transaction will get
confirmed, but the first confirmation could take longer for a miner to pick it
up - but it is very likely to still get confirmed.

As transactions per second increase and load is placed on the memory pool,
those fee-less transactions may get lost and need to be resubmitted.

~~~
dfc
_"As of 10 June 2012, minimum transaction fees on the original Bitcoin client
are:

Accept a transaction for inclusion in a block: 0.0005 BTC

Relay a transaction to other Bitcoin hosts: 0.0001 BTC

A transaction can be sent without fees if both of these conditions are met:

It is smaller than 10 (SI) kilobytes (10.000 bytes).

All outputs are 0.01 BTC or larger."_[1]

Put another way as bitcoin grows fee-less transactions will become rare...

[1] <https://en.bitcoin.it/wiki/Transaction_fees>

~~~
rictic
At the current exchange rate then any transaction below ~$0.06 might have a
transaction fee of a fraction of a cent. Simple fix? Don't support incredibly
small transactions, (or at least don't support large numbers of very small
transactions).

[Assuming that point to point transactions that aren't doing complicated
contract logic are always less than 10kB.]

~~~
dfc
I'm not trying to find fault in theoir business model; it was a genuine
question...

------
makmanalp
1) How do you make a profit? 2) How do I convert to "real money"? If I can't,
why should the average joe be interested in this at all? Power users can use
mtgox already. 3) How do you plan to keep it legal? As I understand, there is
no legal precedent about new currencies and the law is not favorable.

------
astrofinch
Lots of startups have tried to popularize Bitcoin. What's different about this
one?

~~~
kylebrown
This is a Ycombinator startup founded by a former AirBnB employee.

------
infinitivium
What advantages does this service provide over bitcoin itself? My suggestion
would be to make this very clear, and definitely make sure it is explained on
the About page.

~~~
base698
My guess is that you can send bitcoins to people who don't give a shit about
it or know how to use the client and they can in turn pay for things with the
coins you sent. I'm thinking of sending my dad a couple just to see if he can
figure it out. :)

------
mtgx
Is this a YCombinator start-up? I see PG's name there.

~~~
haasted
According to the About page (<https://coinbase.com/about#>), yes.

The AllThingsD article linked from the page mentions that the company is part
of the current Y Combinator class.

------
wmf
Have they been hacked yet? It's a rite of passage.

------
gersh
If I want to sell something, how can I get my Bitcoins converted to cash,
safely and reliably? I don't trust MtGox, and I don't want to long-term forex
risk exposure. Is there someone who could settle Bitcoin to USD, daily in San
Francisco?

~~~
pnathan
A _reliable_ BTC<->USD exchange is going to be a key requirement for any
meaningfully large BTC adoption.

A year ago, when I was looking around, there was none. I have no real qualms
about dropping a few bucks into BTC, but I have to be confident that I can
exchange it for the ability to pay my bills.

~~~
wmf
And yet such an exchange will inevitably charge fees that are higher than
credit cards, which hinders adoption.

------
paulsutter
The best way to find out if bitcoin is a viable platform is for someone to
forge ahead with mainstream oriented services like this. We'll all learn a ton
from what happens.

Payments is a great starting point for a mainstream bitcoin serice. The user
isn't going out too far on a limb to use the service because it's just a
payment. This could increase the chance of adoption, and lessen the impact of
something going wrong in the early days.

I'm really impressed with folks trying to make a service like this work. I
find any opinionated naysaying to be really boring. Can't wait to see how it
turns out. Hope there is enough traction to put it all to a real test.

------
sown
Will there be an API? It looks neat!

It's one of those ambitious projects, that, even if failure is in the future,
it's still a worthwhile project.

------
Difwif
I've toyed with the idea of a Bitcoin bank for a while now. Since I don't seem
to be making much progress here's the final piece that I think this is missing
and would really let this take off. Offer a way for your customers to spend
their Bitcoins using plastic through a payment processor. The cheap startup
version way of offering this would be to partner with a bank to offer your
customers prepaid debit cards. On your website they would have two accounts,
one with the funds avaible on the card and the other with your Bitcoin wallet.
When they want to transfer funds make a market trade on behalf of them and put
the money on their cards. Obviously in the long run the ideal setup would be
to become a licensed money transmitter which can be ridiculously expensive in
some states, and yes you need the license in each state you do business in.
This is what Paypal has. As a licensed financial institution you now have the
ability to offer your own debit/credit cards and you could theoretically make
market trades from your customers bitcoin wallets as soon as you receive
transaction requests.

Obviously this doesn't flow with the spirit of Bitcoin and why it was designed
but I think it's what will be necessary for it to start gaining wide spread
use.

------
cs702
What's the pitch to the masses? "We make Bitcoin easy to use... and all you
lose is anonymity and decentralization?"

~~~
icebraining
You can't lose what you never had; the "masses" won't use the Bitcoin client
and manage keys themselves anyway.

~~~
cs702
icebraining: decentralization and optional anonymity are key selling points of
Bitcoin; without these two features, it looks _a lot_ like existing payment
systems.

~~~
icebraining
I know, my point is that those selling points are irrelevant to the masses,
because to take advantage of them you need to run the Bitcoin client and
manage your own keys, which most people won't do. So they can't "lose"
anything.

Now, as for why would you use a system like this instead of one based on
conventional currencies, well, don't ask me!

------
jaybill
I'm not sure why, but I find the term "for the masses" horribly insulting and
elitist. It instantly turns me off on whatever it is you're talking about and
tells me absolutely nothing about the product other than you think your target
market is a mass of people that aren't as smart as you.

------
jpwagner
How is a user protected from a transaction history subpoena?

~~~
arihelgason
BTC transactions are all public in the blockchain so they're not as anonymous
as many think.

But as for preventing your identity from being linked to your BTC wallet?
There's probably no way to prevent that if the service provider is under US
jurisdiction.

~~~
AdmiralBeotch
You can certainly be fully anonymous with bitcoin but care must be taken...
Mainly, you need to isolate your change to an identity wallet - a wallet used
for specific purpose under a dedicated pseudonym. Identity of the pseudonym is
protected by plausible deniability - "I bought those coins on MTGOX, but I
sold some of them to some guy for cash on the street corner, that purchase
wasn't me"

The more hops through a wallet (which can be created dozens of times), adds
more plausible deniability and separation to any purchase.

~~~
arihelgason
Good point. And if you sign up to Coinbase anonymously and acquire BTC
reasonably anonymously any data that gets subpoenaed is worthless.

------
karamazov
This looks great - I can't wait until you can start ordering from eBay and
Amazon with bitcoin.

~~~
elliottcarlson
You can already redeem bitcoins for Amazon giftcards through various services,
for example: <http://coincard.ndrix.com/>

------
Dn_Ab
So the profit mechanism is through taking a percentage of bank transfers. So
not going after banks.

Also did you mean shopping card or shopping cart? I can't resolve either from
context and shopping card is not commonly used.

------
mdonahoe
Storing individual wallets in the cloud is better than have a single
institution-wide account that holds everyone's money like MtGox did/does. With
the latter, you need to roll your own secure transaction system to keep track
of balances. The former uses bitcoins existing transaction record keeping,
allowing the devs to focus on the already hard problem of secure
authentication.

Still, centralizing a decentralized system is like trying to tame a wild
animal. I can be done, but expect to get bit.

------
alexanderh
Any bitcoin related website that has you "choose a password" and not a
Passphrase, and perhaps mandatory 2 stage authentication, is just asking for
it.

------
known
Does Bitcoin solve <https://en.wikipedia.org/wiki/Triffin_dilemma>

~~~
white_devil
Is Bitcoin a national currency (or an international reserve currency for that
matter)?

~~~
white_devil
(To whoever downvoted this, the questions were meant to be rhetorical)

------
brittohalloran
Is it that Bootstrap makes every website look amazing or is it that people who
build amazing looking websites tend to use Bootstrap?

~~~
zethraeus
It's that they all look similar and you like the look. You also might be
looking at websites built more by hackers than by web designers. Bootstrap is
great for visually clean rapid development, but that comes at the cost of
individuality.

Props to Coinbase for changing the looming black top bar anyway.

~~~
tcwc
It's a theme from <http://bootswatch.com/>. I wish more sites used one of
those, completely agree with you on the black top bar.

------
alister
The 2-minute video on their home page takes the right approach. It does _not_
try to explain the lofty ideals of Bitcoin. It never mentions scary concepts
like free banking, lack of government regulation, and crypto. It uses the word
"anonymous" only once. That's the way to convince the public: a cheery talk
about tangible benefits!

------
shughes
I think Brian dated my sister back at Rice.. haha. So strange to stumble upon
him here. Anyway, impressive startup resume. I'm familiar with a lot of his
projects, but never connected the dots.

Too bad my comment contributes nothing to the post and it's gonna go to the
bottom. Oh well..

------
jc123
Is coinbase using aws or heroku and down right now? Seeing an application
error on coinbase.com...

------
buhokok
Currently getting a 500 error when trying to create a password with special
characters.

With all the password hash leaks going on these days, am I the only one
paranoid enough to create a long, random password?

------
richiezc
Congrats Brian! I remember when you told me about your idea at startup school.
Heard you had left Airbnb and I suspected it was for this.

------
rubyfan
... and their site looks just like Github.

------
UK-AlasGou
Is bitcoin still deflationary?

~~~
AdmiralBeotch
It will experience an inflation rate for the next 140 years or so. It is
currently expanding at 50 BTC per 10 minutes. In december it will cut to 25
BTC per 10 minutes, half each 4 years after that.

Bitcoins have already been destroyed to the tune of about 80,000 BTC from disk
failures, lack of backups, and forgotten keys. We will already never reach 21
million bitcoins in circulation.

~~~
UK-AlasGou
I think a digital currency is a lost opportunity, you could make the system
self adjusting to a set target, very accurately.

~~~
w-ll
That's what Bitcoin does. The protocol can't know if funds are destroyed...
because they cant be. They are actually just sitting in unreachable wallets.

~~~
stevedekorte
Right, though all wallets are reachable/stealable with sufficient compute
power. This is partially why it's always a good idea to split up your holdings
into many wallets.

------
allaun1
I decided to see what they had to say to a question I had. This is the
responses they gave! :3 How do you see yourself combating the rapid
fluctuation of price vs value when dealing with merchants?

Brian Armstrong: good question

Brian Armstrong: two thoughts on that

Brian Armstrong: one would be an automatic withdrawal rule they could setup

Brian Armstrong: so it just gets converted automatically when it arrives and
deposits once a day or something

Brian Armstrong: the other is that i think the exchange rate volatility is
largely a short term problem, volatility decreases as volume of transactions
increases

Brian Armstrong: so if you believe btc volume of transactions will be much
higher in 5 years, then exchange rate volatility will be much lower

→Makes sense, Saw the site mentioned on hacker news, so that means you'll
probally mentioned on slashdot at some point

→^.^

Brian Armstrong: at least that is my guess :)

Brian Armstrong: hope so

Brian Armstrong: maybe I should submit it?

Brian Armstrong: haven't slashdotted in a few years

→heh, you could try, though slashdot seems to be consolidated to a few power
submitters lately, might try reddit?

→<http://www.reddit.com/r/bitcoin> would be a start?

→<http://news.ycombinator.com/item?id=4177605> that's the article mentioning
you btw

Brian Armstrong: already submitted :)

Brian Armstrong:
[http://www.reddit.com/r/Bitcoin/comments/vswkw/silicon_valle...](http://www.reddit.com/r/Bitcoin/comments/vswkw/silicon_valley_investors_back_coinbasecom_seeking/)

→Where bitcoin could REALLY take off is CPU usage cycles

→Since bitcoin is fractional

Brian Armstrong: oh yeah, tiny amounts

→Instead of charging pennies per cycle, you could specify exact amounts per
clock

→so instead of 1 penny per second

→.00001 per clock or whatever is the better value

→It'd be alot more precise

→It must be interesting to start a company like this. Are you / your company
registered in the united states? And if so, How do you feel about their
reaction to bitcoin?

Brian Armstrong: yep that'd be interesting for sure

Brian Armstrong: we're incorporated in delaware (U.S.)

Brian Armstrong: based in california

Brian Armstrong: we have the backing of really good investors who want to see
innovation happen

Brian Armstrong: as long as we pursue licensing as a money transmitter (same
as facebook credits, paypal, etc) i think we'll be ok

Brian Armstrong: it will def be controversial though

→I wonder how mt.gox handles it

Brian Armstrong: they are incorporated outside the U.S. (Japan I believe)

→ _nods_

→Well, If it's ok with you, i'll post this to the hacker news article and see
what kind of discussions it generates? Only with your permission of course!
=^.^=

Brian Armstrong: sure, that'd be fine with us!

------
notjustanymike
Twitter Bootstrap is homogenizing the entire web! This place used to be cool,
man. What happened?!

~~~
mcmire
Well, at least they've made some modifications to it so that it looks good.

------
feydr
are you a single founder?

------
vessenes
Congrats!

------
drivebyacct2
How is this different than MtGox? I don't trust MtGox, but at least they've
made mistakes and have spoken publicly about how they've fixed those mistakes.

On the other hand, are these guys storing my wallet safely? How about my
balance (please god, don't store it as a float)? How about my password? If
they're not launching with two-factor auth I won't even give it a chance (and
likely ever, honestly).

I've gotten progressively more and more pessimistic about these sorts of sites
even though I like the idea of BitCoin as a currency. If security isn't
heavily discussed and visible (2FA, do it!) at the launch, it will be hard for
me to take this seriously.

~~~
esbwhat
What's wrong with storing it as a float? I'm not saying you're wrong, I just
genuinely don't know. If you could explain/point me to relevant literature I'd
be grateful.

~~~
drivebyacct2
Quick Google, sorry it's easier than me offering an incomplete explanation:
[http://stackoverflow.com/questions/3730019/why-not-use-
doubl...](http://stackoverflow.com/questions/3730019/why-not-use-double-or-
float-to-represent-currency)

And I really don't mean to pick on you, but that this isn't better known is
why I worry when I see random sites popup offering financial services.

~~~
esbwhat
That's okay. I don't think I'm really representative anyway, as I'm not a
professional/schooled programmer. Thanks for the link, I did try googling it
myself but I didn't think to use the word "currency" so I just got a bunch of
irrelevant results.

