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This is a bad idea. When you're buying a cryptocurrency, you're purchasing trust. Leaving your cryptocurrency with a third party undermines this. Any business i

by Svekax 9y ago

This is a bad idea. When you're buying a cryptocurrency, you're purchasing trust. Leaving your cryptocurrency with a third party undermines this. Any business idea based on people leaving cryptocurrency with a third party is doomed. Instead, why not tackle the reasons why buying those cryptocurrencies are difficult?

Taek 9y ago
If you are buying to speculate perhaps your concern is not the features of the currency but rather the profit potential. You might be perfectly content trusting a third party.
- Svekax 9y ago
  This could not be further from the truth. If anybody else has the private keys to your coins, you don't own the coins. People have been burned by a countless number brokers. They will not leave their coins with a company such as this. Only the most unsophisticated investors leave their coins with brokers. Anybody knowledgeable enough to invest in multiple cryptocurrencies is smart enough to know they need complete control over the primary keys. Otherwise, your investment could vanish at any moment.
  - jpatokal 9y ago
    Does your argument still apply if you change "coins" to "cash" and "brokers" to "banks"? I leave my fiat money in banks because I judge that the risk of the bank disappearing and taking my money with it is lower than the risk of my house getting burgled, catching fire, etc. Likewise, it's entirely reasonable to think that a competent Bitcoin broker is more secure and safe than my half-assed attempt to keep my own keys and risk losing access to my coins through my own incompetence.
    - nkuttler 9y ago
      > competent Bitcoin broker That's the entire problem. Bitcoin has existed for eight years, and for a long time virtually nobody knew about it. Not a single bitcoin broker could demonstrate competency yet. It's better to stay out of this market if you think you can trust them.
      - Svekax 9y ago
        devrandomguy 9y ago
        Looks like the parent uncovered an HN bug. I'm guessing that they posted an unbalanced asterisk, which resulted in the "reply" link being italicized, and an empty message.
        godmodus 9y ago
        NhanH 9y ago
        deleted 9y ago
        [deleted]
    - Svekax 9y ago
      Bitcoin theft from brokers and outside sources has been a big issue over the years. It's universally accepted that the only responsible practice is to transfer funds from brokers and not share your private keys. I can now tell you don't own and know nothing about Bitcoin. This discussion is pointless and has now ended.
      - adim86 9y ago
        Wow why the aggression man? You have a point and it will benefit the community if you spent just two more minutes to educate people on your viewpoint, rather than attack the intelligence or knowledge of others. Links to articles to back up your point will help and advice on how you store yours will be of even more help. Contribute positively. Thanks
    - pmorici 9y ago
      Banks are insured By the fdic. There is no bitcoin custodian that has insurance that even comes close to what the fdic garuntees. Done correctly you are absolutely better off with your btc stored at home
  - tobltobs 9y ago
    Most of the people who by gold don't seem to be concerned also by the fact that they just hold paper not the real thing. If this business model works for gold it should be viable for btc also. I am not talking about if it is a good idea to hold paper gold or btc, just if people would by paper btc.
  - deleted 9y ago
    [deleted]
mbrock 9y ago
Coinbase doesn't seem all that doomed to me. Neither does Polychain Capital, the cryptoasset hedge fund backed by Andreesen Horowitz and Union Square Ventures.
- Svekax 9y ago
  Coinbase is a broker. They make money by charging a fee when you convert between currencies. Their customers purchase Bitcoin and then transfer the funds into a Bitcoin address that they generated locally. Polychain Capital is a hedge fund that only accepts investments greater than $500k from investors wealthy enough to manage the risk. If op had something like this in mind, he wouldn't be gauging the interest of random people on HN. Still, I believe they're too tempting a target and it's only a matter of time before their holdings are stolen.
  - tradersam 9y ago
    Hey guess what! Coinbase is insured.[0][1] [0]:https://support.coinbase.com/customer/portal/articles/1662379-how-is-coinbase-insured- https://support.coinbase.com/customer/portal/articles/166237... [1]:https://www.coinbase.com/legal/insurance https://www.coinbase.com/legal/insurance
    - runeks 9y ago
      So was BitPay: http://www.coindesk.com/bitpay-sues-insurer-after-losing-1-8-million-in-phishing-attack/ http://www.coindesk.com/bitpay-sues-insurer-after-losing-1-8...
massaman_yams 9y ago
This is a line of thinking akin to goldbuggery in the traditional investing world; it's the same kind of mindset that leads to cash stuffed underneath mattresses and basements full of nonperishable goods. It is, in a word, paranoid, and doesn't represent a balanced assessment of risk factors. Granted, risk is higher with cryptocurrency given its infancy; I won't dispute that. But if we trust brick & mortar banks to have adequate security policies and practices to deal with fiat currency, then the amount of trust we need to place in a competent exchange isn't multiple orders of magnitude higher than that. Just as there are security policies to mitigate risk in the world of cash, so are there policies to mitigate risk in the cryptocurrency world. Maybe the risk with an exchange is one order of magnitude higher at the moment vs fiat; that seems like a reasonable amount. But 2-3+? No, particularly given the risks already present for fiat currency. And while we're at it, consider hardware failure risk if you're storing your own wallet files. What's an average failure rate for a storage device per year? 1-3%? Great, I'm sure you have backups. Not every user can be bothered, but any competent exchange will. Or - on the crypto side - what amount of value would be at risk due to an event like a hard fork? That's a risk at the currency level, not at the wallet/key level. The overwhelming majority of businesses don't live or die based on the opinions of the paranoid; they succeed or fail based on the opinions of the average customer.

by Svekax 9y ago

Taek 9y ago

If you are buying to speculate perhaps your concern is not the features of the currency but rather the profit potential. You might be perfectly content trusting a third party.

Svekax 9y ago
This could not be further from the truth. If anybody else has the private keys to your coins, you don't own the coins. People have been burned by a countless number brokers. They will not leave their coins with a company such as this. Only the most unsophisticated investors leave their coins with brokers. Anybody knowledgeable enough to invest in multiple cryptocurrencies is smart enough to know they need complete control over the primary keys. Otherwise, your investment could vanish at any moment.
- jpatokal 9y ago
  Does your argument still apply if you change "coins" to "cash" and "brokers" to "banks"? I leave my fiat money in banks because I judge that the risk of the bank disappearing and taking my money with it is lower than the risk of my house getting burgled, catching fire, etc. Likewise, it's entirely reasonable to think that a competent Bitcoin broker is more secure and safe than my half-assed attempt to keep my own keys and risk losing access to my coins through my own incompetence.
  - nkuttler 9y ago
    > competent Bitcoin broker That's the entire problem. Bitcoin has existed for eight years, and for a long time virtually nobody knew about it. Not a single bitcoin broker could demonstrate competency yet. It's better to stay out of this market if you think you can trust them.
    - Svekax 9y ago
      - devrandomguy 9y ago
        Looks like the parent uncovered an HN bug. I'm guessing that they posted an unbalanced asterisk, which resulted in the "reply" link being italicized, and an empty message.
        godmodus 9y ago
        NhanH 9y ago
        deleted 9y ago
        [deleted]
  - Svekax 9y ago
    Bitcoin theft from brokers and outside sources has been a big issue over the years. It's universally accepted that the only responsible practice is to transfer funds from brokers and not share your private keys. I can now tell you don't own and know nothing about Bitcoin. This discussion is pointless and has now ended.
    - adim86 9y ago
      Wow why the aggression man? You have a point and it will benefit the community if you spent just two more minutes to educate people on your viewpoint, rather than attack the intelligence or knowledge of others. Links to articles to back up your point will help and advice on how you store yours will be of even more help. Contribute positively. Thanks
  - pmorici 9y ago
    Banks are insured By the fdic. There is no bitcoin custodian that has insurance that even comes close to what the fdic garuntees. Done correctly you are absolutely better off with your btc stored at home
- tobltobs 9y ago
  Most of the people who by gold don't seem to be concerned also by the fact that they just hold paper not the real thing. If this business model works for gold it should be viable for btc also. I am not talking about if it is a good idea to hold paper gold or btc, just if people would by paper btc.
- deleted 9y ago
  [deleted]

mbrock 9y ago

Coinbase doesn't seem all that doomed to me. Neither does Polychain Capital, the cryptoasset hedge fund backed by Andreesen Horowitz and Union Square Ventures.

Svekax 9y ago
Coinbase is a broker. They make money by charging a fee when you convert between currencies. Their customers purchase Bitcoin and then transfer the funds into a Bitcoin address that they generated locally. Polychain Capital is a hedge fund that only accepts investments greater than $500k from investors wealthy enough to manage the risk. If op had something like this in mind, he wouldn't be gauging the interest of random people on HN. Still, I believe they're too tempting a target and it's only a matter of time before their holdings are stolen.
- tradersam 9y ago
  Hey guess what! Coinbase is insured.[0][1] [0]:https://support.coinbase.com/customer/portal/articles/1662379-how-is-coinbase-insured- https://support.coinbase.com/customer/portal/articles/166237... [1]:https://www.coinbase.com/legal/insurance https://www.coinbase.com/legal/insurance
  - runeks 9y ago
    So was BitPay: http://www.coindesk.com/bitpay-sues-insurer-after-losing-1-8-million-in-phishing-attack/ http://www.coindesk.com/bitpay-sues-insurer-after-losing-1-8...

massaman_yams 9y ago

This is a line of thinking akin to goldbuggery in the traditional investing world; it's the same kind of mindset that leads to cash stuffed underneath mattresses and basements full of nonperishable goods. It is, in a word, paranoid, and doesn't represent a balanced assessment of risk factors. Granted, risk is higher with cryptocurrency given its infancy; I won't dispute that. But if we trust brick & mortar banks to have adequate security policies and practices to deal with fiat currency, then the amount of trust we need to place in a competent exchange isn't multiple orders of magnitude higher than that. Just as there are security policies to mitigate risk in the world of cash, so are there policies to mitigate risk in the cryptocurrency world. Maybe the risk with an exchange is one order of magnitude higher at the moment vs fiat; that seems like a reasonable amount. But 2-3+? No, particularly given the risks already present for fiat currency. And while we're at it, consider hardware failure risk if you're storing your own wallet files. What's an average failure rate for a storage device per year? 1-3%? Great, I'm sure you have backups. Not every user can be bothered, but any competent exchange will. Or - on the crypto side - what amount of value would be at risk due to an event like a hard fork? That's a risk at the currency level, not at the wallet/key level. The overwhelming majority of businesses don't live or die based on the opinions of the paranoid; they succeed or fail based on the opinions of the average customer.