
Coinbase Wants Wall Street to Resolve Its Bitcoin Trust Issues - Vannatter
https://www.bloomberg.com/news/articles/2017-12-15/coinbase-wants-wall-street-to-resolve-its-bitcoin-trust-issues
======
H99189
Coinbase should solve it's coinbase trust issue. I bought a small amount of
litecoin almost 2 weeks ago, i'm well past my "delivery by" date, my funds
left my bank account over 10 days ago, yet I still don't have my coins in my
account.

~~~
carc
To counter anecdote with anecdote, I've had no issues with coinbase and have
found them pleasant to use. That includes transferring to
gdax/selling/withdrawing, etc.

~~~
dahdum
I've never had a single problem with Coinbase either. Most complaints seem to
be from brand new signups getting delayed, people failing the AML/KYC checks.

My USD withdrawals always show up in my bank account 2 days later.

~~~
H99189
My account is over 3 months old. They took my money and successfully gave me
my tiny bit of ETH and BTC, but for some reason my litecoin transaction is
stuck in the ether.

~~~
dahdum
That's annoying then, maybe the run up in LTC triggered a new tier of
verification or they really are that far behind. I'm sure you'll get it
eventually but if you're looking to flip it now you can't yet.

If you're not buying with the intent to hold, I recommend depositing USD to
their exchange GDAX. Fees are lower and you can sell/withdraw immediately.

------
empath75
Until the situation with bitfinex pumping billions of unbacked tether into the
ecosystem is resolved, doing anything involving bitcoin right now is insane.

They’ve released almost $200 million worth of tether in the last _day_.

~~~
meritt
My theory on tether is their goal is to absorb as much downward (selling)
pressure as possible on the BTC/USD market and encourage only upward movement
of BTC (equally applies to any other crypto)

1) Someone who wants to sell $1M USD of BTC may be happy to take $1M USDT
instead for legal/tax purposes. This transaction would have zero impact on the
BTC/USD price.

2) Tether receives $1M worth of BTC they can slowly disperse back into the
market via their own exchange (since Bitfinex owns Tether) in a controlled
manner that doesn't push the price down.

3) With USD in hand they can either put it into their reserves (assuming we
trust them) or they could also use the cash to further eliminate any selling
pressure on the exchange (with a large buy order "wall") or even generate
upward pressure.

4) BTC price becomes stable or only moves upward and attracts more outside
money and speculation. Repeat the cycle.

~~~
ufo
> Someone who wants to sell $1M USD of BTC may be happy to take $1M USDT
> instead for legal/tax purposes.

This sounds extremely foolish. Why would anyone intentionally wish to hold
such a large amount of a token that all evidence points towards being actually
worthless? (Tethers can only be used to purchase cryptocoins in Bitfinex,
which is most likely insolvent -- it is not possible to redeem them for USD).

> 4) BTC price becomes stable or only moves upward and attracts more outside
> money and speculation. Repeat the cycle.

I think this is the most likely explanation for Bitfinex's behavior. They know
that there will inevitably be a bank run when Bitcoin's prices show a sign of
going down and that will unravel the scam they have been running so at this
point the only thing they can do is continue to push up the price at all
costs.

~~~
659087
> This sounds extremely foolish. Why would anyone intentionally wish to hold
> such a large amount of a token that all evidence points towards being
> actually worthless

Yep. Which makes the "institutional investors are handing Bitfinex hundreds of
millions of real dollars in exchange for Tether" claims people are pushing
even more ridiculous.

------
erentz
I’m confused by this bit:

> “But first, Coinbase...needs to legitimize itself -- and bring in
> revenue...”

Like it doesn’t have revenue? It’s daily volumes of BTC are around 30k.
Sometimes _a lot_ more. Plus ETH. Plus LTC. They must be making at least a
million per day in trading fees. They’re a money printing machine at this
point.

~~~
adamnagel
On Dec 9, LTC's creator posted that GDAX/Coinbase made $2MM in fees on LTC
alone that day:
[https://twitter.com/SatoshiLite/status/939476331397390336](https://twitter.com/SatoshiLite/status/939476331397390336)

------
lechiffre10
Their website is often down, can't properly scale up and they expect trust? If
you're Canadian, you can buy but can't sell cryptos, that's a red flag
anywhere regarding investments.

------
guiomie
It's interesting the negativity I read about Coinbase in this thread. Makes me
wonder if those who do complain tried other exchanges? I've tried Kraken (down
much more often), Bittrex (worst trading UI ever), CAvirtex (they are
shutdown) ... Coinbase/ GDAX I have had a much better experience. If you want
a fast money wire, pay the price for same day processing (30$), I always do
and it usually takes a 2 hours.

~~~
FanaHOVA
The fact that other exchanges are worse doesn't make Coinbase any better
though, that's the problem. It'd be interesting to see what % of coins is held
by them. While I don't really care about Coinbase per se, I think that it
could hurt the public perception of the whole crypto ecosystem if something
went wrong and people were locked out of their accounts, lost funds, etc.

------
JustAnotherPat
Coinbase has been one of the more poorly constructed sites I've used in the
past couple years. I don't just mean the inability to handle volume.

I saw it riddled with HTML errors, there were buttons that didn't do anything,
I got (html) responses that were false, which I only knew was the case because
I looked directly at the API response.

I remember I 'sold' some litecoin on Coinbase that never sold. Took me to a
couple days just to know it wasn't going to mysteriously disappear.

I find the fact that they want to add new coins even though they haven't
solved any of their current issues very alarming.

~~~
jboggan
I remember the problem they had a few years ago using MongoDB to do their
financial transactions, people reported lots of double and triple withdrawals.

------
chollida1
__EDIT __

Yuck, this blew up and I think alot of people took it the wrong way. I think
Coinbase is great, and I 'm sure everyone who works there is awesome and
terrific at their job.

Anyone who has worked on any half way successful project knows just how hard
both uptime and security are and I'm in no way upset at Coinbase for having
growth issues.

I've done this for years and might not even get an interview with them.
They'll be fine, they're just learning how to deal with alot of hard issues
all at once.

The question was posed, what do you need to do to get institutional money and
I answered.

To clarify...

Coinbase , atleast from a hedge funds perspective has 2 tasks.

1) prime broker or custodian, from this perspective you just can't be hacked
and loose anyone's bitcoins.

Not sure how a hedge fund would tell its clients that they lost any amount of
their funds due to an exchange being hacked, this is just so foreign to the
way the markets currently work. I don't think the funds clients would be too
accepting of a loss of any amount due to this.

2) as an exchange, This is probably easy for people to understand. When the
volume picks up that's when you make your money. If Volume causes the exchange
to go down, you can't make money.

Again this is very rare for most markets now to go down to volume and when it
does it doesn't really matter too much because the concept of having your
shares with an exchange doesn't really make sense in the equities market.

You'd just start trading at another exchange and none of your shares are
actually held with the exchange, nor do you need to send shares to an exchange
to trade, you just trade and settle at the end of the day.

 __EDIT END __

I 'll preface this by saying, what I'm asking for is hard, very hard, but
being a grown up is hard..... You can't just ask people to invest billions of
other peoples money and then claim "best efforts" if your exchange crashes
under load.

Well what institutional investors want is pretty simple to understand, though
very hard to implement.

1) No counterparty risk. Everyone can get hacked, but coinbase being hacked
shouldn't every, under any circumstances result in me loosing any bitcoin they
hold on my behalf.

A hedge fund can't just go to their clients and say sorry, lost all our money,
coinbase got hacked, the hedge fund itself and its principles would be sued
into oblivion.

I mean if the Nasdaq, NYSE or prime broker ever got hacked, no one would
expect to suddenly loose all their shares, or cash held with their prime
broker.

2) The exchange can't go down, like at all. Once a year for 5 minutes is fine,
or every day at midnight for 10 minutes is fine, but during regular trading
hours you can't just throw your hand up and say "hey, best efforts here there
just alot of volume right now, we'll be up in a few minutes"

Hedge funds make their money on volatility, which means the more volatile and
busy the exchange is the more they'll want to trade. Going down when times are
busy is just can't happen.

~~~
FLUX-YOU
>1) No counterparty risk. Everyone can get hacked, but coinbase being hacked
shouldn't every, under any circumstances result in me loosing any bitcoin they
hold on my behalf.

Coinbase is insured by AON Insurance for their hot wallet balance. However, we
won't know how Coinbase/AON will handle that until it happens.

I believe any fiat balance is also insured by the FDIC, but I'm less sure
about that.

>2) The exchange can't go down, like at all.

Yep. Crypto trades 24/7\. It's really surprising they don't have regular
planned downtime to address this.

~~~
api
There's a deeper problem. Bitcoin is very deflationary and strictly limited in
supply. What happens if Coinbase cannot obtain replacement bitcoins at a price
near what the insurance pays out?

They can refund in fiat of course, but that's the point. If fiat didn't exist
then this would be a potentially insurmountable problem if the theft were
large enough.

Now what happens if the thief panics or screws up and deletes their keys.
Those Bitcoins are now lost forever. The money supply just went down
permanently.

... or ... a really smart thief with enough money behind them might not even
need to steal any Bitcoins. They could just destroy cold wallet keys in a very
stealthy way and profit from the appreciation of coins they hold elsewhere.

This whole system is just not ready for prime time.

~~~
FLUX-YOU
>What happens if Coinbase cannot obtain replacement bitcoins at a price near
what the insurance pays out?

People lose their bitcoins. It's as simple as that. That's a risk everyone
should understand before buying.

They might be compensated in some other way, like fiat, and then the insurance
company either picks up the bill or goes under. Then it's just business as
usual as far as bankruptcy goes.

So yes, you have every reason to be wary of exchange solvency because of how
new they are and how little support is provided to them by government and law
enforcement compared to the banks. Every investor should understand that as
critically as they understand how important their wallets are.

>This whole system is just not ready for prime time.

Yeah, it's one big experiment. I'm sure these problems were encountered before
in economic history, but it seems like they are repeating a bunch of blunders
within a short time frame, which to me, smells of manipulation (Satoshi
probably didn't invent it to just manipulate people)

~~~
sudouser
> They might be compensated in some other way Like how Mt Gox returnedt
> peoples coins...

/s

------
simonebrunozzi
It is not easy to build a company/service like Coinbase; having said that, I
think that Coinbase in its current state is slightly better than a joke,
starting from their customer support.

~~~
cheapsteak
Contacted their support 13 days ago about my account somehow being restricted
(can't buy or sell). Not a peep besides the automated response. 13 days and
counting...

Wonder if anyone has an outstanding ticket being ignored that's longer than
that

~~~
williw
Don't expect to get an answer. I had an issue as well, hasn't been resolved
after 3 months. Their phone support is even a bigger joke. 2 hours of waiting
and no answer then they just hang you up. GDAX (owned by Coinbase) is the
same, I wasn't able to download the statements because login was suspended for
some reason.

------
creeble
I like this article, "Bitcoin is none of the things it was supposed to be":

[https://theoutline.com/post/2592/bitcoin-is-none-of-the-
thin...](https://theoutline.com/post/2592/bitcoin-is-none-of-the-things-it-
was-supposed-to-be)

Bitcoin can't operate as a currency without having exchanges between it and
other currencies, and those exchanges strip all the benefits of bitcoin.

Edit: show title of article.

~~~
nextstep
A few years ago, it was easy to say "well, all the issues are at the BTC <->
USD (or other fiat currency) boundaries". But today's bitcoin is nearly
unusable even just within the confines of the bitcoin network. For small
amount of bitcoin (less then $15) it is incredible impractical to make a
single transaction. Fees are around $5 and often much higher, with
confirmation times sometimes reaching 6+ hours.

Maybe there is hope with Bitcoin Cash (BCH), because it can piggyback on the
existing bitcoin integration infrastructure. Or maybe Ethereum or Monero or
some other altcoin will take the place of Bitcoin. But more and more, it's
looking like the original cryptocurrency has failed to innovate and solve
fundamental scaling issues and it's first-mover advantage won't last. If these
altcoins can scale better than bitcoin, they only need to match bitcoin's
integrations with the existing financial system to win.

------
lawlessone
I want coinbase to resolve its segwit issues.

~~~
jon_smark
Indeed. Considering the volume of transactions going to and from Coinbase,
their adoption of Segwit would go a long way towards alleviating the current
mempool situation, which would bring lower fees for everyone.

------
gwbas1c
A good currency is fungible: It has a stable value and allows rapid exchange.
Bitcoin does not meet these basic requirements. So many people forget that the
original paper clearly states that Bitcoin is an experiment.

~~~
once_inc
> So many people forget that the original paper clearly states that Bitcoin is
> an experiment.

Where exactly in the white paper does it state this? I've just looked it up,
and don't see any reference to Bitcoin being an experiment.

~~~
gwbas1c
The beginning

------
shroom
This may be a stupid question but I dont understand every aspect of bitcoin so
bear with me.

Is Bitcoin access coupled with one private key or multiple?

Say someone has 10 bitcoin on their computer and a private key so its only
accessible from that computer. That computer holds a lot of value. If the
computer gets stolen theyve stolen all the bitcoins with it? Given that the
secret to the private key can be broken at some point in the future.

Or is there a way for the user to claim back his/ger bitcoin by creating a new
key with same secret?

~~~
colemannugent
The private key is the secret. Someone who steals it does not have to break
anything.

In this case it is similar to a physical lock on a safe: if you lose the key
to the safe you just have to accept that you no longer can access the contents
of the safe.

You can have wallets that are protected by multiple keys, but there is not a
whole lot of wallet software that does this in an easy to use way right now.

~~~
smokeyj
[https://copay.io/](https://copay.io/)

An open source wallet by bitpay with good support for multi-sig transactions.

------
JackFr
> In traditional finance, custody banks like State Street Corp. hold
> securities, keep records and provide other services for investment advisers.
> A lack of similar offerings in the cryptocurrency world has kept many
> institutions on the sidelines.

>Coinbase has offered a solution: crypto custodial services, slated to roll
out next year. Called Coinbase Custody, it'll be available to investors with
at least $10 million in deposits.

Honestly, WTF?

~~~
blhack
What about this is WTF?

Please explain, in detail, how somebody with $10M in BTC should store it.

~~~
nostrademons
I think the WTF is that the original point of cryptocurrency was that it was
supposed to be _decentralized_ , with no big institutions that you must trust.
Coinbase Custody is essentially reinventing the exact institutions that
bitcoin was supposed to cut out of the loop.

You're supposed to store $10M in BTC on the blockchain, which - after all -
records ownership of every bitcoin ever mined. And keep access to it in a
paper wallet; control of those $10M lies in access to a private key, so if you
keep the key secret, nobody can access them (like with Satoshi's $40B or so in
Bitcoin).

That people don't seem to want to do this is perhaps a lesson in human nature
that crypto-anarchists and other aficionados of "trustless completely-
distributed systems" should perhaps heed. This same dynamic comes up over and
over again, from open-source to the Internet to P2P and now to cryptocurrency.

~~~
FabHK
Very well put. It is sort of funny, isn't it.

Bitcoin maximalist: "Bitcoin, no need to trust evil centralised institutions!"

Actual Bitcoin users: "Oh, hey, could you take care of my Bitcoin balance for
me, please? And you have password recovery, right?"

~~~
shanusmagnus
What I think is sort of funny is that you've just described two poles, but
seemingly can't grasp the infinite gradient in between those poles where
people with different risk tolerances and security requirements can exist.

~~~
ultraluminous
What he's describing is that the overwhelmingly vast majority of people (who
are supposed to replace fiat with ctypto in the future) reside on one end of
the pole. The end with all the real-life, non-ideologically-constrained
usability.

~~~
shanusmagnus
This is akin to assuming that internet users are a bunch of neckbeards and
grad students who like to muck about configuring routers, just because that
was where it started.

Who knows what will wind up being the dominant use case in the future, or who
will be the dominant user population. Maybe the ones who drive early adoption,
and who govern the philosophical and technical direction, will turn into a
tiny faction of stakeholders in the end, but maybe they continue to dominate
technical development because they are the best stewards of the idea. Or maybe
they're overthrown and it turns into something else, run by small business
owners. Or the governments of third world countries.

The point is that nobody knows how it will shake out. Acting like the current
state of things is somehow 'wrong' is arrogant and historically uninformed.

------
dimillian
I think most of you don't realise at what scale Coinbase work. You just have
to watch the trade history on GDAX for a few seconds to understand the sheer
volume of what is actually happening. The GDAX web socket is very very robust.
It's very rarely down for me, and have not been down at all since they did
whatever upgrade/maintenance they had to a few days ago.

~~~
callmeed
Do you realise the scale at which wall street/nasdaq/nyse all work? Have you
ever looked at trading volume in large brokerage tools like TD Ameritrade.
GDAX isn't there.

I think the point most people here are making is–this is the big leagues and
if you want to be taken seriously, suspending trading mid-day is unacceptable
(happened this week).

Nothing to do with web sockets IMO.

------
beatboxrevival
I've been trying to log into my account for over 3 weeks with no response from
Coinbase. They need to handle their own support issue better if they want
consumer trust.

~~~
mv4
In my case, I sent some ETH to "my" ETH wallet at Coinbase, received an email
from Coinbase alerting me of the incoming transfer, and then - nothing, that
ETH is nowhere to be found except on the blockchain (it's not showing in my
ETH Coinbase account, and it's not shown under transactions).

Frankly, this (misplacing a transaction) is more concerning to me than delays
or verification issues. Losing a transfer like that puts their whole
transactional integrity into question.

Again, delays (something showing as "pending", etc) I could live with,
considering their recent spike in usage. But, when a transaction is simply
missing, while the ones before and after it are showing in Coinbase, is scary.

I agree with you that they need to handle their support much much better. The
bulk of their cases (judging by the publicly visible mentions of
@CoinbaseSupport on Twitter) can be handled by simply explaining the situation
and telling people to wait. There are only 5 or 6 issue types that can be
categorized and routed programmatically even. Instead, they are currently only
responding to 0.5% (not a typo) of Support requests on Twitter (not counting
DMs). I think that may be the lowest response rate I've ever seen from a
company, especially a tech one.

------
artur_makly
their ID system had not worked for MONTHs.
[https://status.coinbase.com/](https://status.coinbase.com/) i cant buy or
sell while traveling outside the USA.

~~~
temp987654
Why do you use the worst service available? There are way better players in
this market than Coinbase imo.

~~~
artur_makly
who do u recommend? i need to connect a US bank account but i dont have a US
cel or US driver's iD...just a US Passport. everyone seems to ask for a
Driver's ID or Cel.

------
justifier
what is coinbase's stance on the future of cryptographic hash functions?

are they just trying to cash in as much as possible, like many of the
investors, before the math is settled

or do they publicly state that they believe.. meaning without proof.. that
p!=np?

are they resting their future, and the futures of all of their users.. and
here apparently the economy writ large.. on faith?

------
idibidiart
Coinbase.Gov

------
btczillionaire
I'm sure you all have very insightful comments about why bitcoin is in a
bubble and will fail.

Meanwhile, I ignored your comments years ago and I'm very, very comfortably
retired now.

But please, do go on with your smart insightful comments.

~~~
mancerayder
Most of the comments here aren't about Bitcoin being in a bubble and falling,
they're about Coinbase and varying aspects of their growing pains (security,
scalability, lack of insurance and so forth).

Maybe becoming very, very comfortably retired as a bazillionaire has a
deleterious effect on reading and attention.

------
659087
The Bitcoin "community" seems to try very hard to prevent that from happening,
even if you ignore all of the shady activity various exchanges are engaged in.

~~~
659087
Do the downvoters care to explain themselves instead of just trying to bury my
post? Do you guys think the constant forks, obvious coordinated market
manipulation, constantly changing story about what Bitcoin is supposed to be,
and general obnoxiousness and ridiculous behavior of the majority of Bitcoin
cultists makes Bitcoin look good to outsiders?

As someone who has been involved with and supportive of Bitcoin for several
years (I started mining in 2011), the fact that it's impossible to point out
any of the negative aspects of Bitcoin and the community surrounding it
without just being downvoted or accused of "not holding any Bitcoin and being
jealous" is starting to become incredibly tiresome. Denying the negative
aspects of this sector is just going to encourage those negatives to continue.
You guys are your own worst enemy.

I know a number of people who won't touch Bitcoin with a 500ft pole because of
this shit. These are people with large sums of money that could be flowing
into the sector, who are being chased away by the stupidity and shysterish
behavior of the Bitcoin community and shady exchanges.

------
socrates1998
1) Wallstreet is pretty corrupt, so getting them to help you with trust issues
is odd to me. I get that Wallstreet has "legitimacy credentials", so that you
will get more old money and institutions investing in you if they saw it's
safe.

I completely disagree with that. Wallstreet and big banks have lost trillions
of dollars investing in "Safe" stuff before.

2) Coinbase needs to make sure they deliver what they say they can deliver. No
hacking. No delivery issues. Minor to none technical issues.

That's how you build trust long term. Honestly, Wallstreet won't matter if
your goal is to be around in 10 or 20 years.

3) This brings me to my last point, if you really are trying to do this thing
long term, why would even care about Wallstreet? Asking them for help just
screams to me, "We want to make a shit ton of money right now before
everything falls apart"

I am seriously worried about the large exchanges ability to handle the amount
and size of the transactions. Especially the growth.

~~~
lucozade
> why would even care about Wallstreet?

> I am seriously worried about the large exchanges ability to handle the
> amount and size of the transactions.

One approach to solving hard problems is to enlist the help of people who have
a great deal of experience in solving the same hard problems.

You don't have to, of course. It's possible that having a table tennis table
is sufficient to help one muddle on through.

But it sounds like Coinbase are taking a more pragmatic path. In the
circumstances, that's probably prudent. Unfortunate but prudent.

