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Coinbase is in a bad situation here. If they set a precedent that all BTC forks will be available to their users, then they open themselves to some pretty obvi

by blhack 9y ago

Coinbase is in a bad situation here. If they set a precedent that all BTC forks will be available to their users, then they open themselves to some pretty obvious DOS attacks. 10 new "bitcoins" could fork every day. Are we really going to expect coinbase to support them all? That's absurd. I think it's pretty obvious that they're going to just issue the BCH to people eventually. Here's another thought experiment: I am a now-extremely-wealthy bitcoin early adopter, and I am so happy at bitcoin's success that I am going to distribute $100 of USD cash per bitcoin to every person who can show me that they own a bitcoin. To claim your $100, send me a Self-addressed-stamped-envelope proving your bitcoin ownership, and I will mail you back the cash. Does coinbase have an obligation to send a bunch of SASEs to me? Are the coinbase customer's "owed" that $100? I personally don't think so. I think that's the tradeoff you're making by having coinbase securely store your coins for you.

celticninja 9y ago
It would require enough mining power to keep the chains alive, this is probably the only chance of keeping a fork of bitcoin alive, and even this is tenuous. Bitcoin Cash has a large support base however very little of that seems to be in the form of miners and you can have all the supporters and users in the world, but if you have no miners then you have no network. Given that they will use the same technology and have the same size block reward it doesn't seem to make sense to mine the currency that is worth less. When difficulty adjusts downwards you may get more block rewards initially but unless the coins hit parity there will always be a benefit in mining the more valuable coin.
- rjbwork 9y ago
  It also doesn't make sense to mine a currency that has no users...or people taking it as payment. If there is a user base, miners will materialize.
hendzen 9y ago
Yes we expect Coinbase to support them all. Public companies have complicated stock actions like spinoffs (i.e. "Forking" the company), rights offerings, scrip offerings, stock dividends, etc. Do you think ETrade gets to not give their users the results of such actions because it would be complex to implement?
- PrimHelios 9y ago
  Not just anybody can "fork" a company. Anyone and everyone can fork a blockchain multiple times.
  - dsacco 9y ago
    That's immaterial, because a company cannot force customers to forfeit assets by giving them a 10 day ultimatum.
    - PKop 9y ago
      Don't store your coins on an exchange then.. like you've been told over and over and over again
    - PrimHelios 9y ago
      Oh yeah, that's absolute shit and there's been a precedent set that'll end with Coinbase owing a lot of money. I'm just pointing out that they shouldn't have to support anything (so long as a proper warning is given if possible).
  - product50 9y ago
    If it is so simple, why is this the only fork which has happened to BTC in the past 9 years?
    - AgentME 9y ago
      It's not.
    - Atheros 9y ago
      Same reason it took someone three years to create an altcoin. Doing so had no benefit.. until it did.
    - PrimHelios 9y ago
      Because forking isn't the hard part. Actually maintaining and creating a better block chain is. Either way, that's anecdotal.
zeroxfe 9y ago
> 10 new "bitcoins" could fork every day. Are we really going to expect coinbase to support them all? That's absurd. Of course it's absurd, and nobody expects them to support 10 forks a day. If that was actually happening, Coinbase would be in a much better position to say no. But this is a single fork, and one where the new currency has a lot of value, enough that customers are threatening to sue.
- wolco 9y ago
  Anyone can sue but therr is no case. You are responsible for who you let hold your coins. If someone gives everyone who is holding a coin a new coin whoever is holding your coin doesn't have to accept it; Unless you agreed beforehand. In this case they told you before they will not accept it and you still left the coins with them.
  - nylonstrung 9y ago
    >You are responsible for who you let hold your coins The SEC has said that ICO tokens are securities. Do you really think intermediaries and wallets have no legal restrictions or obligations dictating what happens to them? You can't categorically say that the fact they stated they won't accept BCC makes it completely legal for them to withhold millions of dollars worth of crypto. Terms of service ≠ securities law.
matt_wulfeck 9y ago
As one of the btc nouveaux rich, help me understand something I see reoccurring among my other btc-rich friends. Generally, when you're up big (and in some cases extremely wealthy), you diversify your investments in order to preserver your wealth. However, almost without exception my btc friends are such believers that they are holding on for the ride forever. Is it just that the risk-averse were initially drawn to btc as a speculative vehicle? Or is it a matter of principle to hold forever?
- SilasX 9y ago
  I've seen the same -- I know someone who got in early to BTC, then moved it all into Ethereum early, such that he has enough to comfortably retire today. But he won't cash any of it in except for a small amount each month to live on, while he lives rent free with others. When I explain the logic of hedging and mitigating risk and locking in gains, he was insistent that the right strategy is to hold because it's going to go up some more, and he doesn't need the money now for any of his current objectives. Come to think of it, I should at least consider that he's making it up, but I've met him several time and he's well versed in crypto and way ahead of the curve in learning about this stuff. Who knows?
  - random023987 9y ago
    > Come to think of it, I should at least consider that he's making it up, but I've met him several time and he's well versed in crypto and way ahead of the curve in learning about this stuff. Who knows? If you poll people after a presidential election, a higher percentage of people claim to have voted for the winning candidate than voted for the winning candidate. It's a lot easier to be well-versed in crypto and claim you won some big bets, than it is to be well-versed in crypto and actually have won enough big bets to "comfortably retire". The former requires hindsight, and the latter requires immense luck and timing.
  - prawn 9y ago
    Would he have to be well-versed to have enough BTC to retire? Surely you could just get on board the hype train at the right station, when it was cheap enough to buy a few, and maybe at the urging of a colleague, and go from there. None of the few people I know with BTC are especially well-versed in it.
aqme28 9y ago
> 10 new "bitcoins" could fork every day. I think you're vastly underestimating how difficult it is to mine a new block on-demand. It simply is not worth throwing that computing power at a DDOS attack. Moreover, if I _had_ that computing power, I'd rather just mine a regular block and get that sweet miner's reward.
- d4l3k 9y ago
  You could always make a forked version with a lowered difficulty. Doesn't sound unreasonable
  - TD-Linux 9y ago
    In fact, Bitcoin Cash does have modified retargeting that drops difficulty much faster. (they could just have well dropped difficulty by 100 times at the fork, as well)
  - rootsudo 9y ago
    So you have useless tokens. Value is perception.
    - traek 9y ago
      And should Coinbase then be obligated to distribute those useless tokens?
      - 6nf 9y ago
        No of course not. If the tokens are useless then nobody will blame Coinbase for not supporting them. But we're talking about BCH here, which is bigger than all other coins save Bitcoin and Etherium. There's a LOT of money at stake here.
        PKop 9y ago
        At what point do you know if it is useless or not? Who decides? How long should Coinbase wait to decide to support it..before it becomes useful or after?
SolarNet 9y ago
> 10 new "bitcoins" could fork every day Not really. You are forgetting how the difficulty works (or simply don't understand bitcoin). You'd have to have a significant percentage of the bitcoin mining infrastructure. If you have 1% of the bitcoin mining infrastructure it would take 100x the time to mine a block, or 1000 mins, or basically half a day, that would take a week of not getting bitcoin simply to confirm the new chain. As it is this new coin accounts for like 5% of the bitcoin mining power. To do 10 new forks every day would take a 70% of the bitcoin mining power to sustain for just a week.
- madars 9y ago
  This is assuming that forks retain the difficulty target, which they don't have to. In fact, the Bitcoin Cash fork doesn't.
- dgacmu 9y ago
  You can encode an immediate diff reduction as part of the hard fork. The block produced with too low a diff will make it invalid on the original chain, thus forking. It's trivial to create as many hard forks as you want.
- stale2002 9y ago
  No it wouldn't. All you have to do is change the proof of work algorithm. Bitcoin Cash literally did thus, by reducing the the difficulty.
snissn 9y ago
There's a really easy technical solution to this - let me have a hot wallet with coinbase and when i want to withdraw my bitcoins i can choose to have them hand off the private key for the account to me with bitcoins as of the block I deposited it
Akarnani 9y ago
There's logic in these arguments; however, they ignore securities laws. If BTC is a security, which the regulators probably think it is, then yes—you have to have a mechanism to bring concepts like splits, tenders, dividends to holders of the security if you are going to hold them for their benefit. Developers considering forks will likely be required to follow yet unclarified rules around how much, how often, waiting and disclosure periods, etc. (It's useful to consider how rules and systems have evolved governing how often Apple can split its stock or how Facebook investors are notified about tender offers, etc.)
- Akarnani 9y ago
  This article is an entertaining read on that considers some of the issues discussed in this thread: https://www.bloomberg.com/view/articles/2017-08-02/bitcoin-exchange-had-too-many-bitcoins https://www.bloomberg.com/view/articles/2017-08-02/bitcoin-e...
- blhack 9y ago
  It's interesting to think about a fork as a stock split, because there is no entity to decide on a split happening. It's really a 3rd party issuing tokens based on proof of bitcoin ownership. Definitely going to be some interesting times for financial regulators!
- hisabness 9y ago
  the cftc has ruled that bitcoin is a commodity.
- panda88888 9y ago
  The funny thing is that Bitcoin, because of its decentralized nature, doesn't have an entity tied to it (like Apple and AAPL). So who has the authority to "split" bitcoin? To "spin off" bitcoin? And under what obligation are the exchanges required to accept those modifications/additions to bitcoin? It's more like I announce tomorrow that I am going to issue a Pear stock at 1:1 for each existing AAPL stocker holder. Would Stock Brokers like Scottrade need to accept Pear stock on behalf of their customers that owns AAPL stock? Under what authority can I "spin off" an AAPL stock? I don't think Coinbase is under any obligation to honor any Bitcoin spin-off/fork/split, unless it is done by an authority of bitcoin (like Apple and AAPL), which for decentralized crypto currency like bitcoin means no one.

by blhack 9y ago

celticninja 9y ago

It would require enough mining power to keep the chains alive, this is probably the only chance of keeping a fork of bitcoin alive, and even this is tenuous. Bitcoin Cash has a large support base however very little of that seems to be in the form of miners and you can have all the supporters and users in the world, but if you have no miners then you have no network. Given that they will use the same technology and have the same size block reward it doesn't seem to make sense to mine the currency that is worth less. When difficulty adjusts downwards you may get more block rewards initially but unless the coins hit parity there will always be a benefit in mining the more valuable coin.

rjbwork 9y ago
It also doesn't make sense to mine a currency that has no users...or people taking it as payment. If there is a user base, miners will materialize.

hendzen 9y ago

Yes we expect Coinbase to support them all. Public companies have complicated stock actions like spinoffs (i.e. "Forking" the company), rights offerings, scrip offerings, stock dividends, etc. Do you think ETrade gets to not give their users the results of such actions because it would be complex to implement?

PrimHelios 9y ago
Not just anybody can "fork" a company. Anyone and everyone can fork a blockchain multiple times.
- dsacco 9y ago
  That's immaterial, because a company cannot force customers to forfeit assets by giving them a 10 day ultimatum.
  - PKop 9y ago
    Don't store your coins on an exchange then.. like you've been told over and over and over again
  - PrimHelios 9y ago
    Oh yeah, that's absolute shit and there's been a precedent set that'll end with Coinbase owing a lot of money. I'm just pointing out that they shouldn't have to support anything (so long as a proper warning is given if possible).
- product50 9y ago
  If it is so simple, why is this the only fork which has happened to BTC in the past 9 years?
  - AgentME 9y ago
    It's not.
  - Atheros 9y ago
    Same reason it took someone three years to create an altcoin. Doing so had no benefit.. until it did.
  - PrimHelios 9y ago
    Because forking isn't the hard part. Actually maintaining and creating a better block chain is. Either way, that's anecdotal.

zeroxfe 9y ago

> 10 new "bitcoins" could fork every day. Are we really going to expect coinbase to support them all? That's absurd. Of course it's absurd, and nobody expects them to support 10 forks a day. If that was actually happening, Coinbase would be in a much better position to say no. But this is a single fork, and one where the new currency has a lot of value, enough that customers are threatening to sue.

wolco 9y ago
Anyone can sue but therr is no case. You are responsible for who you let hold your coins. If someone gives everyone who is holding a coin a new coin whoever is holding your coin doesn't have to accept it; Unless you agreed beforehand. In this case they told you before they will not accept it and you still left the coins with them.
- nylonstrung 9y ago
  >You are responsible for who you let hold your coins The SEC has said that ICO tokens are securities. Do you really think intermediaries and wallets have no legal restrictions or obligations dictating what happens to them? You can't categorically say that the fact they stated they won't accept BCC makes it completely legal for them to withhold millions of dollars worth of crypto. Terms of service ≠ securities law.

matt_wulfeck 9y ago

As one of the btc nouveaux rich, help me understand something I see reoccurring among my other btc-rich friends. Generally, when you're up big (and in some cases extremely wealthy), you diversify your investments in order to preserver your wealth. However, almost without exception my btc friends are such believers that they are holding on for the ride forever. Is it just that the risk-averse were initially drawn to btc as a speculative vehicle? Or is it a matter of principle to hold forever?

SilasX 9y ago
I've seen the same -- I know someone who got in early to BTC, then moved it all into Ethereum early, such that he has enough to comfortably retire today. But he won't cash any of it in except for a small amount each month to live on, while he lives rent free with others. When I explain the logic of hedging and mitigating risk and locking in gains, he was insistent that the right strategy is to hold because it's going to go up some more, and he doesn't need the money now for any of his current objectives. Come to think of it, I should at least consider that he's making it up, but I've met him several time and he's well versed in crypto and way ahead of the curve in learning about this stuff. Who knows?
- random023987 9y ago
  > Come to think of it, I should at least consider that he's making it up, but I've met him several time and he's well versed in crypto and way ahead of the curve in learning about this stuff. Who knows? If you poll people after a presidential election, a higher percentage of people claim to have voted for the winning candidate than voted for the winning candidate. It's a lot easier to be well-versed in crypto and claim you won some big bets, than it is to be well-versed in crypto and actually have won enough big bets to "comfortably retire". The former requires hindsight, and the latter requires immense luck and timing.
- prawn 9y ago
  Would he have to be well-versed to have enough BTC to retire? Surely you could just get on board the hype train at the right station, when it was cheap enough to buy a few, and maybe at the urging of a colleague, and go from there. None of the few people I know with BTC are especially well-versed in it.

aqme28 9y ago

> 10 new "bitcoins" could fork every day. I think you're vastly underestimating how difficult it is to mine a new block on-demand. It simply is not worth throwing that computing power at a DDOS attack. Moreover, if I _had_ that computing power, I'd rather just mine a regular block and get that sweet miner's reward.

d4l3k 9y ago
You could always make a forked version with a lowered difficulty. Doesn't sound unreasonable
- TD-Linux 9y ago
  In fact, Bitcoin Cash does have modified retargeting that drops difficulty much faster. (they could just have well dropped difficulty by 100 times at the fork, as well)
- rootsudo 9y ago
  So you have useless tokens. Value is perception.
  - traek 9y ago
    And should Coinbase then be obligated to distribute those useless tokens?
    - 6nf 9y ago
      No of course not. If the tokens are useless then nobody will blame Coinbase for not supporting them. But we're talking about BCH here, which is bigger than all other coins save Bitcoin and Etherium. There's a LOT of money at stake here.
      - PKop 9y ago
        At what point do you know if it is useless or not? Who decides? How long should Coinbase wait to decide to support it..before it becomes useful or after?

SolarNet 9y ago

> 10 new "bitcoins" could fork every day Not really. You are forgetting how the difficulty works (or simply don't understand bitcoin). You'd have to have a significant percentage of the bitcoin mining infrastructure. If you have 1% of the bitcoin mining infrastructure it would take 100x the time to mine a block, or 1000 mins, or basically half a day, that would take a week of not getting bitcoin simply to confirm the new chain. As it is this new coin accounts for like 5% of the bitcoin mining power. To do 10 new forks every day would take a 70% of the bitcoin mining power to sustain for just a week.

madars 9y ago
This is assuming that forks retain the difficulty target, which they don't have to. In fact, the Bitcoin Cash fork doesn't.
dgacmu 9y ago
You can encode an immediate diff reduction as part of the hard fork. The block produced with too low a diff will make it invalid on the original chain, thus forking. It's trivial to create as many hard forks as you want.
stale2002 9y ago
No it wouldn't. All you have to do is change the proof of work algorithm. Bitcoin Cash literally did thus, by reducing the the difficulty.

snissn 9y ago

There's a really easy technical solution to this - let me have a hot wallet with coinbase and when i want to withdraw my bitcoins i can choose to have them hand off the private key for the account to me with bitcoins as of the block I deposited it

Akarnani 9y ago

There's logic in these arguments; however, they ignore securities laws. If BTC is a security, which the regulators probably think it is, then yes—you have to have a mechanism to bring concepts like splits, tenders, dividends to holders of the security if you are going to hold them for their benefit. Developers considering forks will likely be required to follow yet unclarified rules around how much, how often, waiting and disclosure periods, etc. (It's useful to consider how rules and systems have evolved governing how often Apple can split its stock or how Facebook investors are notified about tender offers, etc.)

Akarnani 9y ago
This article is an entertaining read on that considers some of the issues discussed in this thread: https://www.bloomberg.com/view/articles/2017-08-02/bitcoin-exchange-had-too-many-bitcoins https://www.bloomberg.com/view/articles/2017-08-02/bitcoin-e...
blhack 9y ago
It's interesting to think about a fork as a stock split, because there is no entity to decide on a split happening. It's really a 3rd party issuing tokens based on proof of bitcoin ownership. Definitely going to be some interesting times for financial regulators!
hisabness 9y ago
the cftc has ruled that bitcoin is a commodity.
panda88888 9y ago
The funny thing is that Bitcoin, because of its decentralized nature, doesn't have an entity tied to it (like Apple and AAPL). So who has the authority to "split" bitcoin? To "spin off" bitcoin? And under what obligation are the exchanges required to accept those modifications/additions to bitcoin? It's more like I announce tomorrow that I am going to issue a Pear stock at 1:1 for each existing AAPL stocker holder. Would Stock Brokers like Scottrade need to accept Pear stock on behalf of their customers that owns AAPL stock? Under what authority can I "spin off" an AAPL stock? I don't think Coinbase is under any obligation to honor any Bitcoin spin-off/fork/split, unless it is done by an authority of bitcoin (like Apple and AAPL), which for decentralized crypto currency like bitcoin means no one.