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Coinbase: The Heart of the Bitcoin Frenzy (nytimes.com)
387 points by rahulshiv 6 days ago | hide | past | web | favorite | 346 comments





With the frenzy out there, Coinbase makes crypto currencies trading/investing/purchasing as robust and seemingly as safe as possible. This could be a signal, now that we have some reputable market players that crypto currencies are really just starting and there is a very high ceiling. Getting in before coinbase you had to mine your own (that party ended quickly - Butterfly Labs, cex.io for cloud mining etc) or be part of a sketchy exchange (mtgox, btc-e etc where funds were stolen or seized). Some of the rules such as 10k limits on buying/selling/transfers put a natural throttling on bitcoin that other markets don't have, since the buying is immense it should continue to go up for sometime due to this throttling and now reputable sources for buying into the market.

Side note: one of the absolute killer features of crypto currency markets is finally we have an always on market. Stock markets and exchanges still operate in the old days of the hours of the day in the country they are based in, crypto currency is an always on market which is nice because it eliminates the after hours/before open games that go on with stocks.


Based on my experience* over the past ~week, "robust" is not a word I'd use in the same sentence as "coinbase".

*In addition intermittent outages which prevented me from accessing their site, I sent some Satoshi from my local wallet to coinbase (10 days ago at time of writing) in order to unload some; transaction was marked "pending"; they've since sold the coins; customer support has stopped responding to my emails.


I ran into a problem using them, realized their customer support appears to have given up, and decided it was time to get my money out. That was this morning. As of now, the BTC transaction I initialized is reported as “complete” on my Coinbase account, which now has a balance of 0, and the transaction has not even registered on the blockchain. This is certainly not my definition of “robust.”

While coinbase & BTC seems to be doing well, I've anecdotally seen a bunch of people who can't get a response from coinbase support over long periods of time. Doesn't make relying on coinbase seem like a good idea.

My experience with coinbase was terrible. I bought roughly 10k of eth this past summer.

Eventuslly I was up 5000 I decided to sell 10k so I could let the rest freeride. When I went to sell coinbase told me they couldn't validate my identity and wouldn't let me sell.

Which is ridiculous. They had no problem taking 10k from me, but not the other way around?

At the very least they should have put some info somewhere telling me that before I bought any.

Nothing I did worked. It just kept telling me it couldn't validate and to try again in 24hr. I contacted support and eventually got a boiler plate email.

Eventually I opened a new account on another exchange, sent my eth there and sold it for btc which I sold for usd on localbtc.

Ended up a 2000 dollar loss because this whole process took like a week or so during which eth kept dropping.

My advice to anyone using cb would be to have a local wallet and working accounts on multiple exchanges. If I had done that I would have been okay.

However I still think that if my identity was no sufficiently validated to sell, they should have told me before I went to sell.


Other stories:

- https://news.ycombinator.com/item?id=6933360

- https://news.ycombinator.com/item?id=5427985

4 years ago they had a problem with customer service and the situation does not appear to have improved:

> When it takes a public outcry on HN for a company to do their job, I no longer deal with such a company. Simple as that. I don't care if you raised $25 million - if you can't treat your users fairly, you deserve neither.


>> When it takes a public outcry on HN for a company to do their job, I no longer deal with such a company. Simple as that. I don't care if you raised $25 million - if you can't treat your users fairly, you deserve neither.

I wonder if that applies to Google too, the most famous company for which you need to get on the HN frontpage to actually reach someone there.


How do you do customer service when you get 100K new users / day though?

That's easy - you outsource it to cheapest provider you can find, preferably to the other side of the planet.

You charge the customers sufficiently so that you can (and do) hire a customer service person for each X new customers.

... There is a lag between signing new customers and hiring competent customer service employees + training them. Just saying.

That's not what their VCs want them to do, unfortunately.

Coinbase is simply suffering from insane growth pains. I mean, come on, they are adding half a million new users per week! Of course support isn't going to be very responsive.

Funny how they are coping with signing up users just fine. Takes about 5 mins for somebody to check your ID and create an account. Support however seems not to be a priority to them.

Don't you think that part is automated?

How can you automate the checking of an ID?

Third party identity verification services use OCR and machine learning on scanned ID documents.

99% get an automatic Green flag. Only ~1% are manually reviewed.


Interesting. I'd assume that these methods are probably more effective than a manual review by your average person anyway, but there are certain areas where I would expect automation to be at least frowned upon.

    if (Math.random() > 0.2) { // rate of false accounts at last review was ~20% 
      return false;
    } else { 
      return true;
    }

    return Math.random() <= 0.2

> Funny how they are coping with signing up users just fine.

Not my experience - no luck getting ID verified yet.


You've got a point, and I tried to be understanding about the slow customer support response, but after a certain point the _growing pains_ excuse just does not pass muster. Coinbase has been around for years and their business model would seem to be dependent upon rapid adoption/growth of BTC/ETH/LTC. So, they knew this day would come and should have had processes in place to handle the influx (of traffic and related customer support requests). I just cannot _understand_ how a business could misplace $NON_TRIVIAL_AMOUNT_OF_BTC and then not respond to their customer's inquiries about it for _days_ at a time.

Don't accept new customers if you don't have the capacity to support them

From my experience that seems to be the case with pretty much all the exchanges and resellers lately.

UPDATE: My "pending" transaction was marked as "complete" and the coins appeared in my coinbase wallet this morning (almost 11 days after I initially moved the coins). I'm not necessarily chalking it up to this comment, but I suppose it's possible.

Fortune favored me this time around, but I don't know if I can trust coinbase again. If the price had dipped, I'd be out a bunch of money. (Just to be clear: they received the coins days ago, just didn't credit them to my wallet.) I wish there was an option to sell BTC directly from your local wallet, which would set a strike price and ensure that users don't get screwed if/when this sort of thing happens. (Note: This option may exist and I'm just not aware of it. I tried to log into coinbase just now to verify that ... but the site is down again.)


Coinbase isn't a trading platform. But they do own and operate one: gdax.com

Yeah exactly it's just a way to acquire initial crypto to move elsewhere for trading it's just a money exchange at it's core not the crypto equivalent of a day trader platform.

Same

As a heavy bitcoin/crypto trader, Coinbase and Gdax are one of the worst exchanges out there. Speaking strictly from a technical point of view. Not only their Front-End interface (Gdax) suffers from lag probably due to poor engineering but they also made terrible mistakes at the beginning.

One of them being a lost deposit. The address generated by the site was wrong and thus the deposit never credited. It took a couple months for support to get on this and refund the lost amount. This happened a couple years ago. So had it happened now I'm not sure if technical support will ever get back.

I also failed to contact their technical support about other issues (can't really remember) but there was no way to reach them. They don't have proper support, they just have monkeys that tries to save face on social media. Only.

The best exchange so far from a technical perspective is Bitfinex. It is surprising because it is quite shady. But it is a rock solid exchange; and it is magnificently engineered. No wonder it is the top exchange out there. And Finex has handled the recent surge much better than Gdax or any other exchange out there.


Wait you're suggesting one of the legally most robust changes out there (the one doing the most compliance) is actually slower than the shady, non-transparent exchange..??

Wow. Wonder why that might be


Because of bitcoin's origins in a largely an-cap community - and the continual anti-Government, pro-capitalist mindset in a significant part of the community as it stands now - there's not actually as much demand as there should be for "legal" exchanges etc. As a result, there's much more competition in the "shady" exchange space, less competition in the "legal" exchange space, and two things result: people occasionally lose a significant chunk of their life savings to shady exchanges, and legal exchanges don't have as much of a drive to be technically brilliant.

That's pretty insightful, actually. I mean, outside of Kraken (terrible), who are Coinbase's (legal/compliant) competitors? Basically no one.

This has nothing to do with compliance/legality. It has to do with engineering.

"magnificently engineered" - except for the fact that someone walked off with 120K btc.

Coinbase service is spotty but at least it has its security going for it, for now.


How about Bitrex?

The Bitfinex fiascos, of which there is a chain of suspicious events, could be circumstantial or truly something to be concerned about.


I've run into all sorts of bugs which made the site annoying to use.

1. My bank account has a 5000$ limit and my credit card has a 750$ limit. After spending 1000$ from the bank (which takes a week), I wanted a quick 50$ from my CC, but it said I was already past the 750$ limit.

2. When trying to recover an older account, the recovery keeps asking for my phone number but isn't sending me texts properly. If you say you lost your phone, you can submit id+selfie, but to get to that step, you need your phone??

3. If you reset Authy, it removes your Coinbase token, and tells you to contact their support. They're very slow as responding, and after a week, I was just told to use my phone number (which again, goes back to #2)...


I've run into multiple bugs on their website while using firefox... but it'll work fine in chrome.

Two I remember: The id+selfie didn't work in firefox. and they had a page that would calculate the max wrong in firefox. Sent an email about both. I don't think they responded to the first one; and on the second, they redesigned their site a bit to delete the page.. then sent me an email asking if I still had that problem (about 1-2 weeks later).

I don't think they test very thoroughly... and they definitely don't use firefox.


The limits are different for everyone and they go up as time goes on and you have successful transactions with them. To avoid waiting you can transfer USD into Coinbase ahead of time and then the buy will confirm instantly when you choose to do the transaction.

>2. When trying to recover an older account, the recovery keeps asking for my phone number but isn't sending me texts properly. If you say you lost your phone, you can submit id+selfie, but to get to that step, you need your phone??

I did this a week ago. They ask you for your current (= old) phone number and your new phone number, but you don't actually need access to your old phone number. You just need to enter it.


They don't accept passport as a valid government issued proof. It might be automated. Contacting support takes days.

You can transfer money to a usd wallet so that should make it easier to purchase if you need to.

And for those worried, the USD wallet is FDIC insured in the US.

Coinbase does give one the sense of security and ease of use. It does not seem sketchy, is American based, has KYC procedures, etc. If they lose coins or go under, a lot of "normal" people will lose money. Not sure what regulations might be passed in Congress if that happens, but the cryptocurrency Wild West would likely be over in America at that point.

I would guess they also have some kind of insurance. iirc one of the larger exchanges was hacked and lost millions, but the insurance paid out and made whole the users who lost coin. it's a dynamic market.

According to their website, the USD wallet is FDIC insured and they have insurance for the crypto.

Agreed. Maybe one day they will be so big that they are deemed "too big to fail" like the over-extended failed big banks and the bailouts/TARP of the Great Recession.

Sounds like a justification for seizing it. For safety and security. But the government wouldn't do that, would they?

If the government seized funds of Coinbase with how entrenched it is even now, there would be massive legal challenges. Ultimately that might be a good thing in terms of forfeiture reform. Coinbase (US company) is orders of magnitude different than btc-e or mtgox etc.


Nothing like that would happen today though as that was more a reaction to the Great Depression and the wealthy hoarding during times where cash was constrained.

Also, that was gold so who is to say that couldn't happen to gold today if it can happen to cryptocurrencies, any hoarding would be a target in another depression that bad much like things like offshoring might be or are in some case.

Why it won't happen today you can base off the reaction during the Great Recession, we bailed out failing banks with TARP that got us into this mess by over-extending leverage instead of consumers. The FDR order helped the economy and all people at the time over the wealthy.

FDR, if he was in charge during the Great Recession, probably would have made new banks and let them fail if that happened under him, a people's president. The SEC was also created during his admin which is arguably the best thing to ever happen to investing in the US, solid markets since Securities Act of 1933 and SEC inception, cryptocurrency will eventually be more closely regulated as it grows.


that crypto currencies are really just starting and there is a very high ceiling

Starting at what?

What is the value proposition that is actually in play here, for which there is some hard evidence of it's existence, other than a speculative frenzy?

It's a bit galling how many people this go 'round are just outright saying "yeah, it's a ponzi, come on guys hop on! there's a high ceiling! hope you get your chair when the music stops!"


If you think that some future economy will run on cryptocurrency (not totally far fetched IMO) and that currency will have network effects (I don't really see this yet, apart from deflation via speculation, which will stop eventually, it's not stable) then there's a possibility of a winner takes all outcome. But it's very easy to doubt any specific currency will be the final winner.

This is what I've always thought, to find a real footing there has to be some economy to which bitcoin/some cryptocurrency is the lingua franca, the closest we've seen in that regard is silk road, et al. and ransomware, if you want to call those economies.

But here's the problem with this idea as being some buoy for bitcoin/cryptocurrencies, once an economy of this sort develops with some semblance of structure, that market is going to seek out inefficiencies. First on the chopping block? A massively inefficient distributed currency system.

For this reason I think any sustainable use case of a bitcoin like system is necessarily rather niche, and rather 'seedy' or worse, ransomware, etc. But if all the bitcoin dreamers fade away, it becomes much easier to counteract the use of btc-like systems for ransomware extortions and the like.


Even in that case the price/market cap is getting absurd. The nominal market cap of Bitcoin is like 1/10th the US money supply (M1) and 1/20th the total gold supply. And people on these threads are still saying they think it has another 100x or more in it!

> What is the value proposition that is actually in play here,

Debt-fueled inflation resistant money. It is right in the statement in the genesis block detailing a bank bailout.

https://en.bitcoin.it/wiki/Genesis_block


for which there is some hard evidence of it's existence

Who is transacting monetarily in bitcoin? Why do they find it superior to other options? Is this a growing cohort?


It isn't momentary. It is decentralized savings.

The total long-term value of bitcoin ecosystem is the value of bitcoin as a transactional instrument.

There's a plausible justification to invest in bitcoin now if you believe that in future it'll have a large total capitalization because be used as valuable information of e.g. uncensorable pseudonymous transactions, and you'll be able to sell your bitcoins with profit to those people who'll want to use them for transacting.

However, it's not reasonable to state that the valuation is justified by it being used solely as a savings/investment vehicle; because what is the future exit for that investment? When a number savers in aggregate decide to withdraw their savings from the ecosystem at some point (which is inevitable, the global economy has cycles and at some point people will want that), to whom do they sell bitcoin? If there's a different use (as the one described above), then that's an exit that will set the total value of bitcoin at such an event; but if the only use case is "decentralized savings" then it's comparable to the "greater fool" motivation, you can sell/withdraw while there's someone else who wants to enter the product, but when the aggregate motion switches from saving to withdrawing, the value suddenly drops to zero - exactly the behavior that should be impossible in a good savings (as opposed to speculation) vehicle.


I like to think of bitcoin as the censorship resistant settlement layer on which payment networks/systems can and are being built (like lightning network, which just passed all tests). There are some pretty sweet video demos of lightning network/payment channels in action.

Don't forget that it's now possible to broadcast bitcoin transactions via satellite - without internet...


That could very well be the thing, and there's certain value in that, however IMHO that value is limited because:

1) the market value of a settlement system handling is much, much lower than that of a retail payment system with a comparable value (not number) of transactions. If the "payment of the future" is a side-chain that uses bitcoin as the settlement layer, then that side-chain will be the value creator and get almost all benefit of that value, not bitcoin. Offering payment services to consumers and businesses is a huge value proposition; offering settlement services to institutions or technological payment networks is a lot of value as well but there's less market lock-in and network effect so that's going to be much more commoditized and more vulnerable to competition with established channels.

A consumer is only going to use a few payment methods for convenience reasons; a sophisticated institution (no matter if it's a bank or simply a large corporation selling stuff) or a realistic payment network is easily going to use all possible ways to settle their debts with institution B and is going to route every transaction among the cheapest route possible for that deal. Currently bitcoin is order of magnitude too expensive compared to other real time gross settlement systems (e.g. Target2 starts with ~dollar per transaction and becomes cheaper with more volume), so only transactions that require censorship resistance would be settled through bitcoin and all others would not. Even if we're not talking about institutions but a purely technological solution, using bitcoin as the settlement layer is something that can and will be switched to a different layer if that's more attractive.

2) The properties of bitcoin (irrevocability, pseudonymity, censorship resistance) are benefits to many consumer use-cases and markets, but not particularly relevant to large-volume settlement systems. Anyone who has thousands or millions of payments to aggregate and route through a gross settlement system would generally prefer revocability (partners of payment networks explicitly designed revocability in the protocols they designed, because they wanted this feature); they don't care about pseudonymity because they're large enough that they can't hide, and they don't care about technological censorship resistance because they anyway can't advertise/sell their services if they violate that censorship - they're too large to hide, and they'd be visited by angry men with guns if they tried that. Settlement layer has an entirely different target audience than consumer payments, and that audience has entirely different needs - ones that Bitcoin doesn't fulfill particularly well.

I.e. bitcoin can be used to, for example, smuggle capital out of China avoiding capital controls, and there's value in that use-case; but if it's used as a settlement layer for a service or process smuggling capital out of China, then that wouldn't drive up/maintain the price of Bitcoin nearly as much, and having a censorship-resistant settlement layer doesn't enable you to offer censorship-resistant payments unless all your other money flow is also censorship-resistant.


There are lot of people that can't understand the use-case of bitcoin, and can't understand why it has value if it doesn't meet theirs, yes.

Which is the use-case of bitcoin in your opinion?

This was addressing the parent poster's proposal of a single, quite particular (and IMHO not in popular opinion) use-case of it purely as the settlement layer for other payment network(s); but there seems to be no consensus about the main use case, at the very least I see camps of 'value store', 'decentralized payments for the masses' and 'payments that can't be restricted' which already each have some conflicting requirements.


> Which is the use-case of bitcoin in your opinion?

Decentralized censorship and inflation resistant savings account.


Most foreign exchange and derivatives exchanges are on 23.5 hours a day, except weekends.

Only derivatives and forex. Stock is still office hours and out of regular hours (+-1 hour I think) is reserved for the big boys.

Bitcoin is more akin to a Forex or Gold than Stock,

Stock futures are 24 hours. I believe the vast majority of equity volume is in stock futures rather than stocks themselves. Institutional investors drive this volume

Your three statements are false.

On notional value bases, he is probably right but we all know how the derivative guys like to lever up and hide it all under layers of synthetic securities.

was recalling info for stock indices rather than individual stocks.

stock index futures are 23 hours: http://www.cmegroup.com/trading-hours.html#equityIndex

stock volume is larger than futures (347B global avg daily volume vs 280 in jan 2016, not sure about now), but futures larger than ETFs (280 vs 88)

youll have to convince me that institutional investors dont drive futures volume, cant find data offhand but wont give you benefit of the doubt on that one :)


Not sure of other countries or brokers but I cannot trade stock futures out of trading hours either on Nasdaq or NYSE

Nope. Investment banks are the main OTC for forex and they are shut weekends, as are major ECNs.

Something might be open that will change your money but there is no real liquidity on the weekend.

edit: do tell us hacker news instead of the downvotes...


You're getting downvoted because the comment you're disagreeing with literally says "except weekends".

It was changed. Also fx is down for less than 30 minutes.

"As as safe as possible" - are you out of your mind?!

Going out on a limb but I think OP probably meant that:

1) They take account verification seriously and leverage best practices around 2-factor auth etc even going so far as suggesting you NOT use simplified solutions like authy.

2) Your "hot wallet" balance is insured from internal breach / external hacking / etc. Good to note it's not insured from somebody stealing your account credentials from you directly.

3) They store 98% of their total crypto balance offline with a physical system designed to minimize losses or attack vectors.

EG their insurance - https://support.coinbase.com/customer/portal/articles/166237...


> They take account verification seriously

So seriously they blocked my entirely legitimate account from buying and refused to provide any explanation or recourse.


Same here

Safer than it was but your take also shows that it is just starting, people are still deterred by the risk. As it becomes safer the risk goes down and more enter. It is still the early days of crypto currencies for this reason.

The fear you have is real, but it is slowly getting better and with that more will enter. Just like investing in early companies, it is riskier now, but as it becomes safer, those risk takers are rewarded.

Funds were lost in mtgox, btc-e, many others and there is fraud abound (pre-SEC times or early), but coinbase and the coins they offer are currently safer than it was. As more players enter it will be safer still.


Serious, this. There is no recourse for recover in the event of securities fraud.

The original quote is about trading/buyin/selling crypto not real securities. Does any service offer fraud protection and/or make it safer than coinbase?

Yeah, it's called the Chicago Board Options Exchange and the Chicago Mercantile Exchange.

For many crypto enthusiasts this is a feature not a bug.

Yeah -- the fraudsters.

And merchants.

It's safe if you keep your money in coinbase.

Completely false. The number one rule of bitcoin is never store your bitcoin on an exchange.

https://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United...

https://en.wikipedia.org/wiki/Executive_Order_6102

You wait and see what happens when coinbase has 500 billion or a trillion dollars worth of hard currency on their platform, and the us dollar is three years into its slide. The temptation to raid that will be far too great.


For a large number of people, the likelihood of the us government stealing all of coinbase's money is far lower than the likelihood of them losing their key to their hardware wallet or whatever.

Let's just store all of our money with the government then, eh?

With a bank, yeah. Even as somebody who is savvy specifically in security I trust a bank to keep my savings safe more than I trust myself.

Threat models and risk balancing are important.


Banks are basically just retail fronts for the Federal Reserve anyway. And IRS has such tight hooks into the banking system...all they have to do is snap their fingers to freeze your account.

Bitcoin is no less safe than any other asset re: civil forfeiture. One might even make the argument that it is moreso because there aren't the established communication mechanisms that exist between law enforcement agencies and banks that allow them to hold funds as quickly as they do.

Per your other argument: a whole host of executive orders spanning 2 years, nearly 100 years ago, designed to work around the federal reserve ratio, doesn't hold much water.


How many hacks does it take for cryptocurrencies fads to think their money is secure despite the dozen+ that have happened so far...

How does the government seize bitcoins when you have memorized your private key? They cannot read your mind.

Here is more information about the topic :https://en.bitcoin.it/wiki/Brainwallet


Well I meant "safe" in the way that a Normie would think is safe. IE, similar security guarantees that a bank would provide.

Obviously, this makes no sense to a cryto enthusiast, because they care more about the stuff you talked about.

But the "average" zero knowledge person who freaks out about how Bitcoin is "unsafe" is usually talking about private key theft, or getting scammed by someone. These "unsafe" things aren't a problem on coinbase.


So not safe but just say it is.

It's safe if you trust coinbase. I trust coinbase, so I think it's safe.

"It's safe as long as i think it's safe." Gotcha.

You realize "safe" is a feeling, an emotional response. I have yet to see "safe" defined in some probabilistic way and that is what you would have to do to have it not just a feeling.

> I have yet to see "safe" defined in some probabilistic way

https://www.moodys.com/sites/products/DefaultResearch/200710...

Of course, when you start defining "safe" in a probabilistic way, you end up very quickly estimating the degree of safety instead of binary safe/not safe.


Correct. I'm sure its has been done, but the general public does not think about it that way.

Nice subtle joke(?) with that link to a Moody's March 2008 report on rating bonds given that rating agencies were probably the closest single thing you could point to as the fraud that caused the mortgage bubble and 2008 collapse. Yes, sometimes a feeling can be closer to the truth than a lot of complicated math done with wrong assumptions.


> general public does not think about it that way.

I agree that general public is utterly incapable of understanding basic concepts of probability. (See: Clinto had probability 52% of winning. Trump won -> Forecast was wrong. How stupid is that?) I just commented when you told you have not seen safe even defined in a probabilistic way.

> Yes, sometimes a feeling can be closer to the truth than a lot of complicated math done with wrong assumptions.

To me that is like a stopped clock is correct twice a day compared to a working clock that is just having wrong time all the time.

At least with the complicated math you are forced to spell out the assumptions and there is a chance you are able to recognize them before it is too late.


Hey you know what, you've shown a bias of me.

I come from a construction background (big stuff) and it hadn't occurred to me that people would not get my connotative understanding of 'safety'. For me, safety is about risk minimization. If you haven't considered actual risk when you investigate doing something that could hurt you, it isn't 'safe'.

So thanks for helping me recognize that.


I think it's subjective. I personally don't have much invested in Bitcoin and if I did I'd probably keep at least half of it in a personal wallet and half in Coinbase in case I wanted to cash out at any given moment and not lose everything. At least in my experience, transferring coins from personal wallet to Coinbase can take days. Just enough to lose everything when it hits the fan. Or maybe i'm just a catastrophist. :)

In my experience, Coinbase/GDAX becomes unavailable every time the cost of Bitcoin drops significantly in a really short period of time... it happened again this morning a little before 7am... Not sure if they are trying to control the drops or if their servers can't handle the load.

I was wondering the same thing about GDAX/Coinbase. I've been seeing "partial" outages both on their portal and their API side. Partial outages are the worst, as they only leave 'some' of the participants unable to act.

and here is another big drop now... and GDAX is down again...

For what it's worth, you can expose yourself to BTC in the futures market later this month. That's regulated to the same degree all commodity futures are regulated(which is "a lot"). Your profits(and losses) are guaranteed by the clearinghouse(not the exchange), which mitigates your exposure to another mtgox-ish/btc-e/yadoxi event.

In terms of "always on", the futures market is always on. You can trade softs, metals, currencies, bonds - you name it. The leverage available is 200:1, 50 times greater than the SEC's limit on security margins(eg the stock market). This means you can make(and lose) catastrophically larger amounts than you began with. Controlling your risk is no longer done by a broker limiting your leverage, it's done by you and involves methodical discipline.

The downside: you are trading against pros with deeper pockets and more experience than you could possibly imagine. You won't be out smarting, out trading, or getting "an edge" on anyone except the other retail players.


> Coinbase makes crypto currencies trading/investing/purchasing as robust and seemingly as safe as possible.

4 Years Ago: https://news.ycombinator.com/item?id=6929705


Four years ago a user had an issue that took over three days to rectify. Clearly the company is a scam.

Now it takes ten days. A 3x improvement!

Again, according to one user, who is also claiming to be transferring fractions of a penny.

Actually there was circle they were very similar to coinbase, I used them for a while. They decided to get out of Bitcoin for some reason and I have no idea why.

Circle still sells BTC, just (generally) not to consumers. It's addressed in _Giant Robots Smashing Into Other Giant Robots_ #250: http://giantrobots.fm/250

Pretty sure forex markets are 24/7

Yeah I guess currency exchanges / futures have always been 24/7 as there is always an open market somewhere in the world. Crypto currencies are close to that I guess.

I wonder if equity markets will one day move to always on, I hope they do.

With more investment options such as crypto currencies, I wonder if they will eventually do it to stay competitive to investment cash.

Nothing worse than pre-market and after hours shenanigans in equity markets, can't pull that in an always on market.


Not for retail trading and holidays can affect pairs.

Retail trading in Forex markets is miniscule. <4% in 2013.

Source: https://www.bis.org/publ/qtrpdf/r_qt1312z.htm


Forex trading happens 24/7 the world over

I have a ton of respect for Coinbase. It seems like their implied priorities are:

1) Security 1a) Compliance ... 57) Customer Service

While annoying, this was both sufficient and necessary for the business to date. Security is necessary for obvious reasons. Compliance is necessary because to be able to do business with US banks (card processing, ACH, wires...) they had to be aggressive about complying with US regulation. Which ultimately gives them an advantage on the customer service front relative to their competition for retail investors. And frankly, they aren't much worse than most online brokers.

These priorities were also sufficient. Amazon was competing against major incumbents and had to win on cost and service. By outcompeting an empty field on compliance, Coinbase has built a significant moat around US retail. They have relationships with Fidelity and USAA that signal legitimacy. They had cold storage while incumbents were/are still saying 'blockchain not Bitcoin'.

The critical question is how they manage customer service and communications going forward. Amazon, Facebook, and Google created monopolies based on a great user experience. Uber destroyed a thousand monopolies for the same reason. Coinbase is riding the coattails of Bitcoin's awesome UX, the warm fuzzies people get from making 10x on an investment. If and when there is a correction, their core business will hinge on how well they handle a large sell-off.


Agree with almost everything you've said, and unfortunately if past experience is anything to go by, they'll crash/go down during the next big price dip.

Maybe this is because of the immense increase in the number transactions during a dip? (really just guessing)

They are down right now

They have done a lot. However they were pushing too hard for the NY Segwit 2X agreement and complaining loudly of high fees. They still have not upgraded their software to support segwit addresses but still had the time to support the 2X fork. It seems very disingenuous and I wish I had a company that supported what I believe in to recommend for new users.

It is ridiculous to complain about fees and continue to drag your feet to implement tech that is lowering fees in production right now that other companies already have activated.


Yep! I contacted customer support over a month ago as I am unable to make withdrawals. Still haven't heard a thing from them.

Same. I'm a little surprised that their focus on "compliance" doesn't cover things like de facto theft of your customer's money. Are there no financial regulations requiring the honoring of withdrawals within a certain period of time?

Either way, we still have the option of buying BTC and transferring it to a company that doesn't defraud its customers, then withdrawing from there.


Coinbase seems to be the quintessential "sell shovels during a gold rush" company. Definitely provides a good case study about how to create a successful business during new industry booms.

The giant balance up top is an incredible FOMO machine. In the best findom/gamification, you can increase your "score" simply by giving them more money. The volatility makes the game more difficult to predict than most free-to-play games, but the daily graphs going up so fast make it hard to resist.

My brokerage account and bank accounts also display the balance. Sometimes at the top, sometimes in the middle. It's a UI decision, more than a FOMO game. With that mindset, capitalism itself is a FOMO and the balance at the top of your head (your net worth) the FOMO machine.

you mean... like most banking apps?

god forbid they make obvious what most users are using the app for.


In my opinion, selling the miner hardware is more like selling the shovels. Coinbase is more like the laundry service.

I'm sure someone else can poke holes in this as well. =)


Let's be careful when taking about any kind of laundering when discussing Bitcoin :-)

The number one currency for evil purposes is and will be USD, for a very very very long time.

Coinbase is the one that buys and sells gold though, they don't provide the miners or (personal) wallets. Incorrect analogy. The shovel sellers are the parties that sell mining hardware, GPU's and ASICs.

It is pretty funny how the original value proposition of "being your own bank" given in the bitcoin whitepaper, which is necessitated by actually possessing the private keys, has gone out the window due to convenience and a lack of understanding of the fundamental blockchain technology by speculators. Coinbase is central in these facts.

It's not so much that they don't understand, but rather that they don't care. People can buy Bitcoin for fun or to try to make money without believing in the ideology that was originally used to justify it.

Which is why I got out of bitcoin.

There's literally nothing special about bitcoin, apart from its decentralised nature.

Other than that, it's just a big ledger. No different from virtually any other database. It's special because it's decentralised.

The way people use bitcoin however, completely reverses that and is extremely geared towards use of centralised parties. It's as if we built solar panels to generate electricity with which we heat up our oceans, causing ice caps to melt and global warming to occur. It's a bit of a joke.

We're now all valuing a system, above other systems, for its unique decentralised properties, while subsequently throwing that out the window, yet still expecting this system to be uniquely valuable. We're all introducing trust into a trustless system, and paying intermediaries and middlemen a cut in the process.

That's fine for other investments, e.g. productive assets that are valuable for other reasons. But it's not fine for an investment into something that's valuable because it's trustless, decentralised and disintermediating.

There's some nuance I'm leaving out of course, you can argue against this post, but by and large you can't ignore this massive disconnect between bitcoin's value proposition and bitcoin's reality. Nor can you argue anymore, like we used to, that it's just a phase. If anything, there's less and less regard for personally run wallets, personal nodes, personal mining, personal transactions, and an increase in use of centralised parties, with centralised wallet providers, cloud and company mining, transaction processors etc.


I think you captured this notion quite well and I think it's very interesting that for a decentralized system people have immediately given up on that so called benefit because it wasn't as easy to use as a trusted intermediary.

Then the whole angle of "trusted" is complex due to the parties that you are entrusting and the number of issues that they have suffered.

So then you look at banks and say ok, interesting, perhaps I haven't quite noticed the seamless ease of use layer that they provide, that I have undervalued simply because it's been a fact of life for so long it becomes invisible until you deal with the exact opposite.


That’s an overly reductive way of looking at it. That being said, I’m sorry you didn’t have a good experience with it, and hopefully some day the process can be seemless.

I think that's a clear sign of bubble -- I'll just buy this thing because it will just appreciate forever.

You can still be your own bank if you want, but it's much more convenient to have a centralized exchange to find other people willing to buy / sell.

You can still convert all you wealth to gold and carry it around, but it's just more convenient to use something called bank notes. The disadvantage is you have to trust the bank, or coinbase or whatever -- you know, the actual reason bitcoin was invented in the first place.

That's because the writer did not understand/ignored scaling problems.

I remember reading somewhere that even satoshi acknowledged that larger services providers would take over in time, that it was infeasible to expect every user in the economy to run a full node and participate in transactions at the block level.

Most interesting thing I learned from this article:

Brian Armstrong, Coinbase CEO, "said he now holds more of his wealth in a Bitcoin competitor, Ether"


Brian Armstrong has quite the history of being on the wrong side of every argument to do with safe and scalable crypto implementation. He has been a champion of centralization and attacks on bitcoin governance. He was a vocal proponent of four out of the five failed fork attempts of bitcoin over the past couple of years. He, and coinbase investors, are very lucky they had people like Charlie Lee managing the technical parts of coinbase.

I’m not sure if you’re willfully misinterpreting what happened or just unware, but the debate over how to scale bitcoin (basically, on-chain vs off-chain) is know being played out with Bitcoin vs Bitcoin Cash. And it’s looking like big blocks is actually a solution for scalability (lower fees, faster transactions), at least in the short term.

(For those not aware, Bitcoin Cash is a fork of Bitcoin that removes segwit, the initial groundwork for off-chain scaling solutions, and instead simply increased the blocksize; so far this has proven to greatly reduce network congestion.)

Maybe it was the right call for Coinbase to not support many of the forks, but they will be adding support for Bitcoin Cash in 2018 (at least withdrawals). So it’s inaccurate to characterize Brian Armstrong on the “losing” side of these debates.


Bitcoin Cash is the brute force solution to scaling. Increasing block size results in longer validation times as well as slower block propagation. Both of these things lead to centralization. The entire purpose of bitcoin is to be as decentralized as possible.

Anyways, here's a video released today of a lightning transaction happening on mainnet: https://www.youtube.com/watch?v=a73Gz3Tvx3k

Here's a video of Greg Maxwell explaining how slight propagation delays can lead to drastic increases in centralization: https://www.youtube.com/watch?v=EHIuuKCm53o

And here's rootstock, an ethereum compatible solution for smart contracts: https://www.rsk.co/

Bitcoin Cash is like trying to solve traffic congestion by adding more lanes.


Why would anyone ever use rsk? They created a centralized clone of Ethereum and charge 20% fees, or something like that.

Here's a truly revolutionary scaling solution by the inventor of Bitcoin's Lightning network and Vitalik Buterin: https://plasma.io/

Also here is an Ethereum's equivalent of the Lightning network, which was deployed on main net recently: https://raiden.network/


I don't mind eth. I hope they can solve their problems. But they have problems, and they are running out of time to work them out. Their blockchain is out of control size. Nodes are dropping and they aren't coming back up. I've heard about sharding and pos, but i haven't seen anything approaching a solution yet. It's an issue.

Edit: > Why would anyone ever use rsk?

ICO. Share offer.


> Increasing block size results in longer validation times as well as slower block propagation

Processing more transactions requires more resources. That's not a bad thing. One might note that currently Bitcoin Cash is usable as a medium of exchange, whereas Bitcoin is not.

They can reduce the bandwidth requirements by implementing e.g. compact blocks.


Feel free to implement your code changes on the alt of your choice. Bitcoin node users remain unaffected.

It's over right? The whole attempt to sideline the bitcoin development team failed, and now that uncertainty has been removed, the price of bitcoin is skyrocketing. That's because bitcoin is valuable for what it is, not for unproven use-cases that decrease bitcoin security. We will get to those use-cases through layering bitcoin, and will not have to sacrifice security to do it.

Accept it. Move on.


And guess what, businesses are moving on. Steam just dropped Bitcoin as a method of payment. And before that OpenBazaar. And Yours.

Using the blockchain for one-off payments between participants is never a viable solution. The establishment of lightning allows commits to be aligned with the long term relationship between two participants. Even after that relationship ends, a completely unrelated payment may be routed through your channel, earning you a micropayment. There was never a solution to that type of functionality with a 10 minute block creation schedule.

That went live on main chain two days ago.

https://www.youtube.com/watch?v=a73Gz3Tvx3k


Blockchains are successfully used for one-off payments, even Bitcoin used to be. Not anymore. And Lightning doesn't solve that problem. Thus other cryptocurrencies will thrive as methods of payment, whereas Bitcoin will remain a settlement layer for recurring payments at best.

Ah lightning network, the vaporware that is always just around the corner...

FWIW OpenBazaar has not dropped Bitcoin as a method of payment, just chosen to diversify payment options.

The Bitcoin community I once knew is truly dead, if making purchases is an "unproven use-case" and the desire to do so on other chains is met with such hostility.

Fortunately among the other cryptocurrencies are communities that have not yet been compromised by greed.


You should invest in litecoin. They have had the blockspace you're looking for for years.

Nothing wrong with my memory

http://bitcoinist.com/coinbase-ceo-brian-armstrong-announces...

Not to mention being a signatory to the nya, being the attempted hostile takeover of bitcoin via 2x that crashed one block before the fork. And let's not forget :

http://www.coinfox.info/news/persons/5012-brian-armstrong-ca...

Losing side. Every time.

And no one is interested in a centralized alt like bch, which is why it has virtually no traffic. If people were interested in that use case, they'd be using litecoin, having double the capacity of bch, as well as having segwit, and atomic swaps with bitcoin.


I dislike it when people like you try to paint segwit2x as a "hostile" attempt to take over Bitcoin. It was not. A few confrontational segwit2x supporters made it look this way, but in reality the people at the center of the movement genuinely cared about simply making Bitcoin scale.

See also a longer explanation I wrote at: https://www.reddit.com/r/btc/comments/7508mh/comment/do7umhy


Segwit2x attempted to replace the existing Bitcoin software and network with something the entire current development team thought was a terrible idea. It relied on the premise that the reason almost every person who had experience deploying changes to Bitcoin opposed it was because they were part of a secret conspiracy to cripple Bitcoin. The software was developed by a single guy, was to be deployed on a ludicrously tight schedule with no real code review, and had bugs that would've caused chaos if t wasn't cancelled at the last minute due to opposition. Hostile takeover seems accurate.

Oh, and BitPay (the payment provider Steam used) tried to trick users into switching to it via a blog post telling them they needed to upgrade to it because of Segwit and their money was at risk if they didn't. Every user who followed their advice will now have a client that doesn't work.


"Everybody should sign this paper and promise to use btc1 instead of bitcoind. We have a guy on payroll who is both project maintainer and lead developer of said software."

Yes, I can see how some people might see that as a bit hostile. It's as if IBM went around all the Fortune 500 soliciting signatures to swap out all Libreoffice for Openoffice.

Except perhaps Openoffice is a healthy project in comparison.


Is Armstrong involved in it? It's an attack. I have nothing against the business of coinbase. They provide a service and are compensated for it. He needs to just butt his head out of technology governance.

> so far this has proven to greatly reduce network congestion.

their main stroke of genius was not having any transactions on their chain


Bitcoin Cash has a much lower blocksize, not larger. It is the maximum limit that is larger. They regularly have < 100 kB blocks. Of course there is no congestion. Nobody uses it.

Coinbase is only supporting Bitcoin Cash because there was a large and very legitimate class action lawsuit headed their way if they didn't.

Just out of curiosity, why only BCash and not the other "big" forks of BTC (like Gold)?

Armstrong was right about Bitcoin's 1 MB limit leading to massive fee increases and retail unusability, and he was right about Ethereum becoming massively adopted.

Your characterization of Armstrong's position as being pro-centralization is typical of the total disconnect between the 1-MB-Bitcoin crowd and reality.

According to your logic, Satoshi Nakamoto was pro centralization when he described a future with GB blocks and thousands of transactions on-chain per second.


One would think that his company would be first in line to implement the new 2 MB limit then. But no, they're last, and they still don't batch their transactions or implement a proper fee estimator. Their customers still overpay for transactions, often by several hundred percent.

The reality is that they don't care much about fees, they just pass them on to their customers.


For people who want to understand more about the context of this, this is a great read: https://www.reddit.com/r/BitcoinMarkets/comments/6rxw7k/info...

I dunno, are we happy with the status quo? Making money is nice, but I miss being able to use bitcoins to buy things.

I have a bitcoin debit card. It works just fine thanks. I can spend it anywhere that accepts a card.

You are spending fiat though with that debit card, like every debit card. Transactions are off-chain.

That makes absolutely no difference whatsoever. By your logic, people using coinbase to hold their coins aren't holding bitcoin. It is exactly the same.

Bitcoin from my wallet is being spent. It is increasing in value while i don't spend it, because it is in bitcoin. It is no different than an American using their cc in europe.


> By your logic, people using coinbase to hold their coins aren't holding bitcoin

Exactly, they aren't. Coinbase owns the private keys, thus the bitcoin.


I completely agree. That why the money on my bitcoin debit card is only a fraction of the total amount of bitcoin I own, and I put money on the card when I want to. Because I understand the risk of putting bitcoin on an exchange, and am prepared to accept that risk for that amount, for the convenience of being able to spend my bitcoin whenever I choose.

What you're promoting is a totally centralized cryptocurrency vision for the vast majority of the world, where the very rich and large institutions alone get to use their private keys with any frequency.

It utterly contradicts the title of Bitcoin's white paper:

Bitcoin: A Peer-to-Peer Electronic Cash System


Nodes are peers. If you don't own one, especially if you can't run one, and you don't use it to secure your transactions on the blockchain, you aren't one.

You skipped right over the peer part, even though the word is used twice, and started talking about the cash part.


If you don't control your own private keys, you don't have any control of your own money. Satoshi certainly did not think using light clients while controlling one's own private keys contradicted the principle of "peer-to-peer electronic cash".

No matter how you try to spin it, you can't make a future where the vast majority can't control their own private keys sound consistent with Satoshi's vision, or rewrite the public statements Satoshi made about how Bitcoin should scale.


You need to learn how bitcoin works and what a node does.

"He was a vocal proponent of four out of the five failed fork attempts of bitcoin over the past couple of years."

Maybe he boasted what was best for the currency, but propaganda won in the end. So he switched knowing a manipulated currency is not an investment he is interested in?

It's important to realize that bitcoin's message is being manipulated by blockstream. It's not a conspiracy theory, it's conspiracy reality. Subreddits like /r/bitcoin had moderation schemes that buried support for the change, and boosted opposition.


Ethereum has better use case than Bitcoin with it's smart contract implementation. Though the fallout of crypto kitties is proving that improvements can still be made.

Thoughts on EOS?

Short answer - I am not a fan of EOS.

Long answer - I had a chance to interact with one of the founders - Daniel Larmier back in 2013/14 during his Bitshares days. My impression is that while he has all these grand ideas, he doesn't know how to follow through. Then there seemed to be a lot of nepotism during the Bitshares build.

And then there is this:

> What features, uses or attributes do EOS Tokens have? Can the EOS Tokens be used on a blockchain adopting the EOS.IO Software?

> block.one is building the EOS.IO Software but it will not configure and/or launch any public blockchain platform adopting the open source EOS.IO Software (the “EOS Platform”). Any launch of an EOS Platform will occur by members of the community unrelated to block.one. Third parties launching the EOS Platform may delete, modify or supplement the EOS.IO Software prior to, during or after launching the EOS Platform. The EOS Tokens do not have any rights, uses, purpose, attributes, functionalities or features, express or implied, including, without limitation, any uses, purpose, attributes, functionalities or features on the EOS Platform.


Ever been sued by the government? Want to know how not to be?

It seems that you are quite hostile to the highlight in the post.

I have never been sued by the government. I don't plan to be sued so that knowledge is useless for me.


What I was trying to say is, Block.one(like every blockchain project/currency) has to be very careful in how they market themselves and their blockchain, legally. It's still the wild west in crypto, which makes it prime for government market regulators to target any projects they want to take down. Safest way to play this is to essentially not own up to or promise anything within company legal documents. This is why Block.one does not allow anyone from the USA or China(I believe) to buy into its ICO at this moment. Look into the history of E-gold. That was like a bitcoin network that worked, but was shut down because the government knew who the top 3 people that ran it were.

As long as Block.one markets it well, makes it easy for developers to develop on, as well as normal people to use its dapps, it should come out on top. That's my opinion on it. The head engineer seems to be one of the few geniuses in the industry, as he's already built 2 very successful blockchains, and he's building EOS for him to develop on. I also think he wants to prove Vitalik(Ethereum founder) wrong on his direction for Ethereum, which might help EOS's marketing. Time will tell. I plan on soon developing/testing on EOS during its ICO to have a head start for when all the bugs are worked out and they improve the blockchains performance for the real scalability it's promising.

A theoretical system is always going to seem better than an active implementation.

Not surprising; Coinbase (iirc) was one of the exchanges that traded Ether early on, and it went up by 4500% over the past year, vs 1500% for Bitcoin. (bit more if you consider the Bitcoin Cash fork). Ergo if he was able to invest a wad of cash into ETH early on, the gains would be a lot higher.

"too big to fail" doesn't yet apply to any entity directly engaged in this space, as its entire business model. J.P. Morgan got away with a central role in the GFC because it did not suit the regulatory environment to kick one of the legs of a wobbly table.

The same does not apply to this, or any other coin- centric company. Yes, in our terms, these are huge dollar sums. But if you work in fintech, this is a small pimple on the side of trades in real goods, and existing financial instruments.

Look: the fintech people get this space, and they are not dissing the model entirely. But please, don't pretend that the feds could not shut this agency down tomorrow, and it would have almost no effect on the US bottom line reports for financials.


That's a pretty good summary of a casual conversation I had with someone that works in investing about Bitcoin and Ethereum. He said blockchain is here to stay and that knowing what companies are going to try and do with it is useful but these currencies, or at the very least, their value, could go away very quickly.

This is what my uneducated hunch is, so I'm glad to hear you say it, but I'm enjoying reading all the countervailing opinions too, to educate myself further!

I'm glad to have finally pushed myself to read and learn more about all this sense it does seem to be hitting the mainstream.

Here's a shit ton of reading if you're interested:

https://github.com/xel/blockchain-stuff


I used to use coinbase but some godawful KYC/AML thing kicked in and asked me to send them a "selfie" of myself, which creeped me the hell out. I'm a US citizen, am not on any sort of list of prohibited people, and had already given them a photo of my driver's licence and my SSN -- and have had no issues with opening other bank/bitcoin-exchange accounts online previously.

I thus switched to Gemini because I do not want to support this invasive nonsense. It's literally an automated version of "put shoe on head" (the request that /b/tards would make of camgirls that they wanted to troll).

Between that, and the thing where you literally have to enter your BANK'S username/password to ANOTHER WEBSITE (coinbase, in this case) to prove you have that account (of course it chokes on 2FA); the USian banking system is such a scary bad mess -- and i'm pretty sure that that's a significant driver of bitcoin adoption (and there's also the ACH clusterfuck).


You don't have to provide your credentials if you don't want to -- it's just much faster that way.

On that page, instead search for your bank, and in the event it or whatever you're searching for doesn't come up, select the "Enter manually" option, and it'll do the old PIN-via-two-sub-dollar-deposits confirmation trick. It'll take a couple days, but it works.


You had to provide your bank user/pass to Coinbase? I only had to provide routing and account numbers, then verify the ACH amounts (edit: and driver's license photo). But I'm only in the shallow end of the kiddie pool here.

Coinbase offers both options: bank username & password or routing & account numbers. If you choose to provide bank username & password, verification is instant. If you choose to provide routing & account numbers, verification via deposit/withdrawal of small amounts takes days.

I must have missed the user/pass option during the sign-up flow.

ACH does not work in read or in write-only mode. Once you provide someone your ACH info, they can deposit you money.. or empty out your bank account!

I had few rough service providers who tried to come up with some magical charges (technical fee of $500 per year) after agreement was signed and had to change bank numbers to make sure they wont take the money out since it would be more than $500 to fight them in court.

The company is called EMS Merchants btw.. you can read horrible stories of merchants screwed by them in this way via ACH on online forums.


It's pretty simple to do a hot/cold account setup at most banks. I've got a checking account which is unlinked to all other accounts and I try to keep it at a $0 balance. The online banking site makes it easy to transfer money into and out of that account from the accounts I keep money in.

It's a little more work to stay on top of transferring out money when it gets deposited and putting it in when I want to spend it, but it gives me a bit more piece of mind when giving out routing/account numbers.


That's an excellent idea. My bank(s) have a so-called Savings Account (separate from the main Checking Account) that yields a microscopic amount of interest, which I never use since I 'save' money elsewhere. That might be a great use case for what you describe.

So if you write someone a personal check they can empty your account?

Yep, and this happened to Donald Knuth: http://www-cs-faculty.stanford.edu/~knuth/news08.html

This is just bananas. I always thought the routing/acct would just authorize deposits. I assumed this, because every time I need this info, I look at my checks. (When people wire money to me).

When you write a check, the signature is the authorization to withdraw funds, and the amount and recipient is specified.

I’m shocked that banks would permit a withdrawal without some kind of “anolog” to this authorization pattern.

It makes all these worries about passwords and online credentials seem quaint. These numbers are all over the place, online and off. Why aren’t halfway clever hackers draining accounts right now?


It’s a huge risk mitigated by the banks being a mostly-trusted network. If someone abused ACH they’d lose access to the network quickly, and your bank can build checks in on their side so if a transaction arrives from a foreign bank they might call you to confirm (when I bought my house the down payment was large enough to trigger a confirmation visit).

Yes but I believe with ACH you have 60-days to dispute the fraudulent debits.

It is like transactions are in P-time and disputes are in NP-time.

Of course. There's no inherent technical countermeasures against someone doing so.

Not unless they either have physical check from you, OR are enrolled into MSP (merchant service provider). But MSPs will monitor fraudulent activity just like providing CC in any online store gives them access to empty your CC doesnt mean they will get away with it :)

But isn't the same the info you provide to companies like Coinbase (account and routing number) on the bottom of all of your checks? Oh, but if they're a merchant they have different abilities?

Yeah, normal people cannot initiate ACHes but merchants can.

No, all one needs to do is have access to the routing / account number and one can start withdrawing funds, paying bills, etc. There is nothing in place to prevent that and nothing else is needed.

And the police will do nothing about it. Even if the fraudster uses your checking account to pay for their power bill. Good luck getting the police in a big city to head over to the house and investigate.

That might be true in isolated cases with dysfunctional police departments but there are a lot of people in jail for charges like check kiting who’d disagree with you.

Wait what? Did they really ask for your bank login credentials? If so, approximately what date was that?

They use Plaid[1] to verify bank accounts using bank login credentials instead of micro deposits -- which reduces abandoned applications since you don't have to wait a couple days to complete verification.

This is a very common thing for fintech companies to do.

[1] https://plaid.com/


It's so bizarre to me that there isn't proper auth delegation in online banking. You should never have to put credentials for one domain into a form on another domain. Let alone banking credentials!

And that's a huge indicator of why blockchain finance is attractive. The banking system is AWFUL. Exchanges are bridges between banks and blockchains, and it's quite reasonable to want to keep your money in cryptocurrency just for technical usability reasons. I can send cryptocurrency from a shell script -- that's not going to work with bank money in a million years, or if it does it's going to be because of the competition from blockchains. Blockchains enable permissionless innovation in finance, and that's HUGE.

You're talking about the USA banking system, which is pretty much stone age compared to everyone else. (paper checks? really?) For example, in EU the requirement for banks to open up APIs to everyone is coming in force next year, a bit closer than a million years - and it's not happening because of competition from blockchains, it was put in force (before blockchains boomed) for reasons of consumer rights and restricting anti-competitive behavior by banks.

I'm not sure the EU directive will open up APIs to everyone. More likely it will be to a regulated class of businesses, right? If it really means I will be able to directly access and manipulate my own personal and business bank account with curl, then I'm really excited. If I have to go through a bureaucratic approval process, then it's still pretty cool, but not what I really want (permissionless innovation).

Yes, the main intent is not for end-users to access those APIs directly - most consumers don't want that, and the larger business who want it already have such access, pretty much every bank here offers a cash management solution that allows you to automatically access your account data and send transactions from your system to the bank. The big expectation is that it will open up the market to fintech service providers / tool makers who can then provide services using that API to every customer of every bank; but there certainly could be (or you could make) a service provider that offers exactly what you describe - a consumer friendly API for direct access, handling the authentication in some manner that's compatible with isolated curl requests. You wouldn't have to get permission from the involved banks to do that, but you would have to get the permission from the customers, of course.

You can do that with Monzo already

Looks neat, but it'll be years before that's widely available worldwide. Monzo has a waiting list and probably don't offer business accounts. Blockchains right now enable everyone in the world to open however many "accounts" they want instantly.

I think everyone here is super overblowing this.. You're redirected to a new domain (of your bank) for verification. Then directed back.

What the fuck? There is no way, never, ever, that I would even consider doing that. How the hell is it a good idea for any company to try to convince people that it should be normal to share login credentials with a third party for any service, much less something as sensitive as one's bank account? That's just training people to get scammed.

> That's just training people to get scammed.

Yes. All the work of "don't enter your bank password on any website that isn't your bank" went down the bloody trash once this awful workaround to the awfulness that is ACH happened. It's very sad.


I don't disagree, but this takes seconds instead of 2-3 business days in the case of ACH verification. 2-3 business days is an absolute eternity in the world of Bitcoin speculation.

You can do what Gemini does -- credit the account with fake money once the user requests ACH transfer, let them make trades with it, and only let them withdraw any proceeds of it (whether bitcoin or fiat) once the ACH transaction fully settles.

That's a really interesting approach... do they front the money to the user while the deposit is settling?

boy, somebody ought to work on a replacement for that awful ACH system

UK has Faster Payments; which runs 24/7 and has times measured in seconds, unlike ACH (doesn't run on weekends, takes days), and charges no costs to end-users. This is a well-solved problem, the issue is that USian banks make far too much off overdraft fees to want to upgrade their infrastructure at the cost of making less money from parasitic fees.

Hasn't Mint been doing this for ages?

Was about to say this. Pretty much most of services that tie in with a bank account that I've ever used provide this option as an alternative to waiting 3 days for bank account verification. It is truly bizarre how this has become the standard.

Yes, but Mint used a similar approach.

Not sure if this is what they use now, but Mint used a similar (but older) service to Plaid called Yodlee [0] as their backend for accessing bank accounts.

[0] https://www.yodlee.com/

[1] https://techcrunch.com/2009/09/18/mint-is-yodlees-youtube/


I entered one account on Mint and found myself with OP, and decided I didn't want to enter a bunch of different login credentials into a different app.

At least for my bank, it used the same login popup many other sites (including Gemini) use.

It asked me, yesterday.

It seems that this was in response to the people trying to game the system - fake ids, fake accounts etc.

Coinbase has a key difference from traditional brokers such as Charles Schwab, Scottrade, etc.

It doesn't charge a flat fee for buy/sell crypto currency, but a 2-3% fee based on the transaction value.

So even though I'm sure they've been making cash hand over fist this past 12 months, it makes any sort of future prediction extremely difficult. They not only have to predict customer growth (which leads to transaction volume), but also the price of those cryptocurrencies. It's akin to calculate position from nothing but a accelerometer, and that double integral would be quite a bit of margin of error.

But in the end it may not even matter, as far as revenue growth and even profit wise I'm sure they are doing absolutely amazingly.

Hell, I wouldn't even be surprised if Coinbase has higher daily revenue (definitely more profitable) than Uber at this point.


I bet Coinbase makes more money from their exchange (GDAX) which does $1 billion each day in volume. While limit orders are free, market orders cost 0.25% of transaction value.

Why would anyone ever want to use a market order versus a limit? In any exchange, for any kind of trading? If you're really ok with e.g. selling for 0.01, set that as your limit.

Because the market could move against you.

If you're ok with buying for 100, but someone else is selling for 99, you've effectively done a market order and have to pay the fees. However if the lowest sell is 101 and then the price moves up to 105, you've just screwed yourself for 4 in order to save 0.25


Huh? Just set your limit to 105 or 200 or 10500. There's no reason to ever use a market order unless there's some other severe limitation on limit orders in a particular implementation.

You can't set your 'limit' to 105, when the current price is 101. That's a market order.

Even if you could, why would you want to buy at 105, when the current price is 101? Just to don't have to pay 0.25 in fees!? That sounds like "The Firm" from John Grisham where rich people would rather pay $2 to lawyers than $1 in taxes.


This is incorrect.

You do not know what the current price will be when you click the submit button. You may enter a limit of 105, and find that when you get around to submitting, the price is suddenly 205 or 1.05. This is why you use a limit order, so that your "market" order doesn't give you a sudden surprise.

On top of that, the current price is only valid for a certain depth. So if the asks are 10x101 and 20x106, I want to set my limit to 105 to make sure I only take that 10x101 order off, and not start chewing through and execute at a much different price than "current". All these orders are changing extremely rapidly for any popular item, so using limits makes sure you get the execution you want.

The limit does not set the price that your order will execute at, but the limit. It'll match at or better than the limit you set. So you never end up paying more than you're OK with, but you prevent getting burned by sudden movements. This is much more important on these cryptocurrency exchanges than traditional stocks.


> it makes any sort of future prediction extremely difficult.

People will always buy $100 worth or whatever regardless of what percentage of a bitcoin that gets them.


Not exactly true. If hype goes up then more people are willing to dump more money into it. The volume and user growth are definitely related to how much hype/excitement there is.

With a flat fee they would also benefit from having more users/transactions.

This seems similar to forex transactions. Fidelity charges a % based fee when buying/selling foreign currency.

Limit orders are free on GDAX.

Experimenting with the low-end shows a $0.99 floor on their fee.

Use GDAX and a limit order and you can purchase for free. Easy to transfer between gdax and Coinbase.

If GDAX is better why use Coinbase?

Not better, just different. On Coinbase you can buy in one step and lock in a price before your bank transfer clears. You can't do that on GDAX. It's a multi step process where you have to deposit money first before you can think about buying. You also don't have to worry about slippage or different order types on Coinbase. It's all abstracted away for you and very simple.

GDAX is a trading platform, so it might seem a little more daunting (UI-wise) for someone new to crypto.
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