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Now what would happen if Coinbase went down at a time when Bitcoin was going through a short period of decreasing value?
by tome 9y ago
Now what would happen if Coinbase went down at a time when Bitcoin was going through a short period of decreasing value?
- fullshark 9y agoThis is exactly my question. What happens when these exchanges face the inevitable panic/bank run?
- tome 9y agoI wonder how apt the comparison to a bank run is, given that AIUI Coinbase holds the Bitcoin of the exchange participants. Is there any legal form of sequestration of those assets?
- rednerrus 9y agoWe've been through this in the past. They just cancel your transactions without apology.
- emerged 9y agoThat's what they did to me. Incredible how much naivety surrounds and excuses their behavior. There is no recourse when they "accidentally" lose your purchase at $200 once it jumps to $450.
- Beejeepa 9y agoBank runs are bad when there isn't a full reserve. Coinbase should carry a full reserve. Fractional reserve banking is a prisoner's dilemma, we all marginally benefit from the status quo of credit/debit/interest, but in a crisis, the first people to pull out win, and everyone else loses.
- heartbreak 9y agoCoinbase isn’t a bank it’s an exchange. Why would they carry a reserve of anything? It stores your shares for you, but it’s not loaning them out. The only way you get money out of Coinbase is if someone buys your shares.
- tome 9y agoThey presumably have on hand the full amount of cash and Bitcoins that their participants have given them and don't loan any of them out. That means they have a full reserve.
- stef25 9y agoHopefully and unlike the exchanges using Tether.
- freen 9y agoYou aren't buying the bitcoin from Coinbase...
- tome 9y agoNo? My understanding was that if you want to sell Bitcons on Coinbase you have to give them custody.
- will_hughes 9y agoThey only need(* depending on TOS guarantee) to keep the full amount of Bitcoins matching your Coinbase wallet. They can take all the cash they've been given, pile it up and set it on fire if they like. 1 BTC at Coinbase is only worth whatever Fiat currency Coinbase is willing to buy it from you for. If that's $1 for all your Bitcoins, tough luck. They're under no obligation to guarantee a sale price for BTC.
- tome 9y ago> They can take all the cash they've been given, pile it up and set it on fire if they like. Then how do they pay you when you come to withdraw your cash?
- igorgue 9y agoHope you know Coinbase is only 8% of the total Bitcoin volume each day. https://coinmarketcap.com/currencies/bitcoin/#markets https://coinmarketcap.com/currencies/bitcoin/#markets
- ceejayoz 9y agoA run on one bank frequently has knock-on effects on other banks.
- tome 9y agoRight, "only 8%" is rather a lot.
- igorgue 9y agoYou guys really don't have experience in the space huh? Bunch of douchebags in this forums that like to talk like they know what they're saying :D
- sctb 9y agoPlease read the guidelines and then start commenting civilly and substantively. We ban accounts that won't. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- Beejeepa 9y agoBank runs are bad when there isn't a full reserve. Coinbase says it has 100% reserves. Bank runs are how fraudulent exchanges are caught: Bitcoin is self-auditing, and either you have it or you don't, there aren't IOUs or paper receipts. Fractional reserve banking is a prisoner's dilemma, we all marginally benefit from the status quo of credit/debit/interest, but in a crisis, the first people to pull out win, and everyone else loses.
- thedragonslayer 9y ago
- Florin_Andrei 9y agoIf there's a very large value swing, either up or down or both, services such as this are guaranteed to have to drink from the godzilla-scale firehose and learn to like it. If there's a run on the bank, the little people are gonna get screwed, no doubt about it, no matter what store of value we're talking about (seashells, gold, paper currency, cryptocurrency, gold-pressed latinum, etc).