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Coinbase holds the dollars for you. It's arguable to what extent bitcoin even factors in here after your initial deposit, since everything is under the control

Coinbase holds the dollars for you. It's arguable to what extent bitcoin even factors in here after your initial deposit, since everything is under the control of Coinbase. You are effectively holding a note called "Coinbase bitcoin" that fluctuates in value compared to the dollar, and you get a spot exchange rate when you spend. This is not the way bitcoin was meant to be held and spent.

krapp 11y ago
>This is not the way bitcoin was meant to be held and spent. That seems like a meaningless assertion to make about an unregulated currency. If the free market optimizes for regulated intermediaries, that's perfectly valid.
- flatline 11y ago
  I agree that it is valid for regulated intermediaries to participate. The notion of someone else holding your bitcoins, however, is anathema to the entire PKI behind the protocol. Someone else has your private keys, they own your coins, period. If they happen to give you access, good for you - but don't count on that access always being there, and not going away for good because reasons. There are other services that offer m-of-n signatures so that you retain control of your keys and a service provider can still facilitate transactions. Coinbase may even offer one of these services, I don't know. But the primary service that they offer is that of a bank - a non-transparent bank that may or may not have any quantity of bitcoin at any given time. Part of bitcoin's original stated intent was to circumvent this power of banks, particularly the power to run at a fractional reserve and pull "bitcoins" out of thin air, which works fine until it doesn't. And that is exactly what Coinbase and AFAIK most of the other providers in the bitcoin sphere are doing, with many famous scams, crashes, and losses along the way.
anonymoushn 11y ago
This pretty much has to be done if Bitcoin is to have any significant number of users doing everyday transactions. The hilariously low transaction rate and long transaction times would otherwise prevent people from using Bitcoin to pay for coffee.
abandonliberty 11y ago
Wow, that is terrible. The twisted people who came up with this deserve some respect given how they managed to get this on HN. "Bitcoin" all the things => Profit

krapp 11y ago

>This is not the way bitcoin was meant to be held and spent. That seems like a meaningless assertion to make about an unregulated currency. If the free market optimizes for regulated intermediaries, that's perfectly valid.

flatline 11y ago
I agree that it is valid for regulated intermediaries to participate. The notion of someone else holding your bitcoins, however, is anathema to the entire PKI behind the protocol. Someone else has your private keys, they own your coins, period. If they happen to give you access, good for you - but don't count on that access always being there, and not going away for good because reasons. There are other services that offer m-of-n signatures so that you retain control of your keys and a service provider can still facilitate transactions. Coinbase may even offer one of these services, I don't know. But the primary service that they offer is that of a bank - a non-transparent bank that may or may not have any quantity of bitcoin at any given time. Part of bitcoin's original stated intent was to circumvent this power of banks, particularly the power to run at a fractional reserve and pull "bitcoins" out of thin air, which works fine until it doesn't. And that is exactly what Coinbase and AFAIK most of the other providers in the bitcoin sphere are doing, with many famous scams, crashes, and losses along the way.

anonymoushn 11y ago

This pretty much has to be done if Bitcoin is to have any significant number of users doing everyday transactions. The hilariously low transaction rate and long transaction times would otherwise prevent people from using Bitcoin to pay for coffee.

abandonliberty 11y ago

Wow, that is terrible. The twisted people who came up with this deserve some respect given how they managed to get this on HN. "Bitcoin" all the things => Profit