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Bank 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
by Beejeepa 9y ago
Bank 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?