32 ms·

Coinbase Wants Wall Street to Resolve Its Bitcoin Trust Issues

154 points by Vannatter 9y ago

chollida1 9y ago
EDIT Yuck, this blew up and I think alot of people took it the wrong way. I think Coinbase is great, and I'm sure everyone who works there is awesome and terrific at their job. Anyone who has worked on any half way successful project knows just how hard both uptime and security are and I'm in no way upset at Coinbase for having growth issues. I've done this for years and might not even get an interview with them. They'll be fine, they're just learning how to deal with alot of hard issues all at once. The question was posed, what do you need to do to get institutional money and I answered. To clarify... Coinbase , atleast from a hedge funds perspective has 2 tasks. 1) prime broker or custodian, from this perspective you just can't be hacked and loose anyone's bitcoins. Not sure how a hedge fund would tell its clients that they lost any amount of their funds due to an exchange being hacked, this is just so foreign to the way the markets currently work. I don't think the funds clients would be too accepting of a loss of any amount due to this. 2) as an exchange, This is probably easy for people to understand. When the volume picks up that's when you make your money. If Volume causes the exchange to go down, you can't make money. Again this is very rare for most markets now to go down to volume and when it does it doesn't really matter too much because the concept of having your shares with an exchange doesn't really make sense in the equities market. You'd just start trading at another exchange and none of your shares are actually held with the exchange, nor do you need to send shares to an exchange to trade, you just trade and settle at the end of the day. EDIT END I'll preface this by saying, what I'm asking for is hard, very hard, but being a grown up is hard..... You can't just ask people to invest billions of other peoples money and then claim "best efforts" if your exchange crashes under load. Well what institutional investors want is pretty simple to understand, though very hard to implement. 1) No counterparty risk. Everyone can get hacked, but coinbase being hacked shouldn't every, under any circumstances result in me loosing any bitcoin they hold on my behalf. A hedge fund can't just go to their clients and say sorry, lost all our money, coinbase got hacked, the hedge fund itself and its principles would be sued into oblivion. I mean if the Nasdaq, NYSE or prime broker ever got hacked, no one would expect to suddenly loose all their shares, or cash held with their prime broker. 2) The exchange can't go down, like at all. Once a year for 5 minutes is fine, or every day at midnight for 10 minutes is fine, but during regular trading hours you can't just throw your hand up and say "hey, best efforts here there just alot of volume right now, we'll be up in a few minutes" Hedge funds make their money on volatility, which means the more volatile and busy the exchange is the more they'll want to trade. Going down when times are busy is just can't happen.
- brndnmtthws 9y ago
  I don't know what reality you operate in, but hedge funds don't provide anywhere close to those types of guarantees. Exchanges do indeed go down, and when they do they shrug their shoulders and say "woops". Source: I work for a hedge fund.
  - chollida1 9y ago
    > I don't know what reality you operate in, but hedge funds don't provide anywhere close to those types of guarantees. Strange comment, I think I've confused you. All this was about exchanges and what hedge funds expect from them, not guarantees about what hedge funds provide. And you are right, exchanges do go down, and its news when they do because they are so good at what they do that its very rare. > I don't know what reality you operate in I operate in the US Cash Equities and options markets. What I've asked for is par for the course there, in that no one mentions it because its the very lowest base, must have requirements.:) When was the last time you heard of Goldman Sachs begin hacked and all the hedge funds that use them as a prime loosing all their money?
    - brndnmtthws 9y ago
      Hedge funds do a better job of hiding their failures than something which operates on a public ledger, because everything is done behind closed doors. Furthermore, hedge funds are very good at finding creative ways to lose money, and they have great liberty in doing so. The reporting requirements for hedge funds are relatively lax compared to, say, an index fund.
      - chollida1 9y ago
        I agree with everything you've just said. And yet, it has absolutely nothing to do with what we are talking about:) Which is what exchanges need to do to get institutional investors;)
        deleted 9y ago
        [deleted]
gwbas1c 9y ago
A good currency is fungible: It has a stable value and allows rapid exchange. Bitcoin does not meet these basic requirements. So many people forget that the original paper clearly states that Bitcoin is an experiment.
- once_inc 9y ago
  > So many people forget that the original paper clearly states that Bitcoin is an experiment. Where exactly in the white paper does it state this? I've just looked it up, and don't see any reference to Bitcoin being an experiment.
  - gwbas1c 9y ago
    The beginning
- djsumdog 9y ago
  I've wondered about this. I haven't tried paying for any services with BTC, but I suspect many of them would change you the current real price (in euros, usd, gbp) and show you the equivalent btc in today's money. So some of these servers that were wise have only paid everything (servers, wages, etc.) using the real currency that comes in via credit cards and paypal and have just held onto the btc .. which makes it extremely valuable. But people don't set prices in btc. The prices are set in fiat currency and are paid for based on the price of btc that day .. meaning you could have spent 10euro for a service last year in btc that would have been worth 100euro .. or that could be worth 0.01 euro depending on where the market goes. But yes you're right, unless services start pricing actual service in btc, it's not really fungible for goods. It's always going through that translation layer. If anything, if McDonalds started taking mBTC and charged x mBTC for a burger and didn't change that value with the market, you'd start to see bitcoin stabilize (although you might be paying $100 for a burger some days .. if you go by what the exchanges claim the value is).
  - Globz 9y ago
    I paid for a VPN service in 2011 for 0.19 BTC / (~5$ USD or something back then) which is now worth over $3300 USD at today's price...to me it shows that we are not dealing with a currency, if all you can do is hold and avoid spending it in fear of "losing" money then it has no real value except selling at the right time so someone else can buy your share, hold it and eventually sell it and so forth..
H99189 9y ago
Coinbase should solve it's coinbase trust issue. I bought a small amount of litecoin almost 2 weeks ago, i'm well past my "delivery by" date, my funds left my bank account over 10 days ago, yet I still don't have my coins in my account.
- ryanmarsh 9y ago
  Same. Coinbase are in over their heads. There is so much room for competition here. At times I’ve been unable to access my accounts or have transactions complete in a reasonable amount of time. Coinbase closed my account without notice with no explanation other than a mention of their desire to comply with FinCEN. I never got an answer from them as-to what I did “wrong”. I sure as hell wasnt selling heroin or babies on Silk Road. Imagine if Wells Fargo closed an account without notice or explanation after a customer had a few normal deposits and withdrawals. deep rolls eyes
  - Joeri 9y ago
    Imagine if Wells Fargo closed an account without notice or explanation after a customer had a few normal deposits and withdrawals. You don't have to imagine. https://consumerist.com/2017/08/21/feds-investigating-wells-fargo-sudden-account-closures/ https://consumerist.com/2017/08/21/feds-investigating-wells-...
    - FireBeyond 9y ago
      At least you have organized, specific recourse. From the first few words of the headline of that article: "Feds Investigating..."
  - passwordreset 9y ago
    >Imagine if Wells Fargo closed an account without notice or explanation after a customer had a few normal deposits and withdrawals. BB&T has done this to me in the past. The only recourse is taking your business elsewhere. Coinbase doesn't seem too different in that regard.
- 9y ago
deleted 9y ago
[deleted]
lawlessone 9y ago
I want coinbase to resolve its segwit issues.
- jon_smark 9y ago
  Indeed. Considering the volume of transactions going to and from Coinbase, their adoption of Segwit would go a long way towards alleviating the current mempool situation, which would bring lower fees for everyone.
- brndnmtthws 9y ago
  Underrated. It's pretty amusing that Brian was willing to back an altcoin (B2X) that hadn't even performed basic testing before its spectacular failure, and yet coinbase can't manage to enable segwit. Did they implement their own Bitcoin and decide not to port segwit?
- dajohnson89 9y ago
  https://blog.blockchain.com/2017/11/15/segwit-bitcoin-cash-update/ https://blog.blockchain.com/2017/11/15/segwit-bitcoin-cash-u...
simonebrunozzi 9y ago
It is not easy to build a company/service like Coinbase; having said that, I think that Coinbase in its current state is slightly better than a joke, starting from their customer support.
- cheapsteak 9y ago
  Contacted their support 13 days ago about my account somehow being restricted (can't buy or sell). Not a peep besides the automated response. 13 days and counting... Wonder if anyone has an outstanding ticket being ignored that's longer than that
  - williw 9y ago
    Don't expect to get an answer. I had an issue as well, hasn't been resolved after 3 months. Their phone support is even a bigger joke. 2 hours of waiting and no answer then they just hang you up. GDAX (owned by Coinbase) is the same, I wasn't able to download the statements because login was suspended for some reason.
  - djsumdog 9y ago
    Wow, they sound a lot like Cloud at Cost: http://penguindreams.org/blog/cloud-at-cost-part-ii-the-unsustainable-business-model/ http://penguindreams.org/blog/cloud-at-cost-part-ii-the-unsu...
creeble 9y ago
I like this article, "Bitcoin is none of the things it was supposed to be": https://theoutline.com/post/2592/bitcoin-is-none-of-the-things-it-was-supposed-to-be https://theoutline.com/post/2592/bitcoin-is-none-of-the-thin... Bitcoin can't operate as a currency without having exchanges between it and other currencies, and those exchanges strip all the benefits of bitcoin. Edit: show title of article.
- nextstep 9y ago
  A few years ago, it was easy to say "well, all the issues are at the BTC <-> USD (or other fiat currency) boundaries". But today's bitcoin is nearly unusable even just within the confines of the bitcoin network. For small amount of bitcoin (less then $15) it is incredible impractical to make a single transaction. Fees are around $5 and often much higher, with confirmation times sometimes reaching 6+ hours. Maybe there is hope with Bitcoin Cash (BCH), because it can piggyback on the existing bitcoin integration infrastructure. Or maybe Ethereum or Monero or some other altcoin will take the place of Bitcoin. But more and more, it's looking like the original cryptocurrency has failed to innovate and solve fundamental scaling issues and it's first-mover advantage won't last. If these altcoins can scale better than bitcoin, they only need to match bitcoin's integrations with the existing financial system to win.
JustAnotherPat 9y ago
Coinbase has been one of the more poorly constructed sites I've used in the past couple years. I don't just mean the inability to handle volume. I saw it riddled with HTML errors, there were buttons that didn't do anything, I got (html) responses that were false, which I only knew was the case because I looked directly at the API response. I remember I 'sold' some litecoin on Coinbase that never sold. Took me to a couple days just to know it wasn't going to mysteriously disappear. I find the fact that they want to add new coins even though they haven't solved any of their current issues very alarming.
- jboggan 9y ago
  I remember the problem they had a few years ago using MongoDB to do their financial transactions, people reported lots of double and triple withdrawals.
JackFr 9y ago
> In traditional finance, custody banks like State Street Corp. hold securities, keep records and provide other services for investment advisers. A lack of similar offerings in the cryptocurrency world has kept many institutions on the sidelines. >Coinbase has offered a solution: crypto custodial services, slated to roll out next year. Called Coinbase Custody, it'll be available to investors with at least $10 million in deposits. Honestly, WTF?
- blhack 9y ago
  What about this is WTF? Please explain, in detail, how somebody with $10M in BTC should store it.
  - nostrademons 9y ago
    I think the WTF is that the original point of cryptocurrency was that it was supposed to be decentralized, with no big institutions that you must trust. Coinbase Custody is essentially reinventing the exact institutions that bitcoin was supposed to cut out of the loop. You're supposed to store $10M in BTC on the blockchain, which - after all - records ownership of every bitcoin ever mined. And keep access to it in a paper wallet; control of those $10M lies in access to a private key, so if you keep the key secret, nobody can access them (like with Satoshi's $40B or so in Bitcoin). That people don't seem to want to do this is perhaps a lesson in human nature that crypto-anarchists and other aficionados of "trustless completely-distributed systems" should perhaps heed. This same dynamic comes up over and over again, from open-source to the Internet to P2P and now to cryptocurrency.
    - FabHK 9y ago
      Very well put. It is sort of funny, isn't it. Bitcoin maximalist: "Bitcoin, no need to trust evil centralised institutions!" Actual Bitcoin users: "Oh, hey, could you take care of my Bitcoin balance for me, please? And you have password recovery, right?"
      - shanusmagnus 9y ago
btczillionaire 9y ago
I'm sure you all have very insightful comments about why bitcoin is in a bubble and will fail. Meanwhile, I ignored your comments years ago and I'm very, very comfortably retired now. But please, do go on with your smart insightful comments.
- someguy112 9y ago
  We're all very proud of you.
  - deleted 9y ago
    [deleted]
- conanbatt 9y ago
  It can be both a bubble and make lots of people rich... Also wtf with this comment. Who are you answering to
  - dkersten 9y ago
    All bubbles make someone rich.
- mancerayder 9y ago
  Most of the comments here aren't about Bitcoin being in a bubble and falling, they're about Coinbase and varying aspects of their growing pains (security, scalability, lack of insurance and so forth). Maybe becoming very, very comfortably retired as a bazillionaire has a deleterious effect on reading and attention.
  - btczillionaire 9y ago
    Very clever response. I still made money ignoring people like you.
    - 659087 9y ago
empath75 9y ago
Until the situation with bitfinex pumping billions of unbacked tether into the ecosystem is resolved, doing anything involving bitcoin right now is insane. They’ve released almost $200 million worth of tether in the last day.
- heurist 9y ago
  I've been reading about this but still don't understand the scope. The money might all be fraudulent, but it also seems like the most liquid exchange on the market would also have a huge pile of cash to sit on right now after the last few years appreciation of btc. Did Tether fraud kick off this wave?
  - jboggan 9y ago
    If you look at Bitcoin, Litecoin, and Ethereum, all three kicked off their current bull market in April after Tether lost their banking relationships and stopped even trying to show that they had funds in reserve. I absolutely think that the Tether fraud kicked off this wave to the point that the general public would come in and hold the bag.
    - shrimpx 9y ago
      There is zero concrete proof, only people sharing their theories and beliefs so far.
- meritt 9y ago
  My theory on tether is their goal is to absorb as much downward (selling) pressure as possible on the BTC/USD market and encourage only upward movement of BTC (equally applies to any other crypto) 1) Someone who wants to sell $1M USD of BTC may be happy to take $1M USDT instead for legal/tax purposes. This transaction would have zero impact on the BTC/USD price. 2) Tether receives $1M worth of BTC they can slowly disperse back into the market via their own exchange (since Bitfinex owns Tether) in a controlled manner that doesn't push the price down. 3) With USD in hand they can either put it into their reserves (assuming we trust them) or they could also use the cash to further eliminate any selling pressure on the exchange (with a large buy order "wall") or even generate upward pressure. 4) BTC price becomes stable or only moves upward and attracts more outside money and speculation. Repeat the cycle.
guiomie 9y ago
It's interesting the negativity I read about Coinbase in this thread. Makes me wonder if those who do complain tried other exchanges? I've tried Kraken (down much more often), Bittrex (worst trading UI ever), CAvirtex (they are shutdown) ... Coinbase/ GDAX I have had a much better experience. If you want a fast money wire, pay the price for same day processing (30$), I always do and it usually takes a 2 hours.
- FanaHOVA 9y ago
  The fact that other exchanges are worse doesn't make Coinbase any better though, that's the problem. It'd be interesting to see what % of coins is held by them. While I don't really care about Coinbase per se, I think that it could hurt the public perception of the whole crypto ecosystem if something went wrong and people were locked out of their accounts, lost funds, etc.
dimillian 9y ago
I think most of you don't realise at what scale Coinbase work. You just have to watch the trade history on GDAX for a few seconds to understand the sheer volume of what is actually happening. The GDAX web socket is very very robust. It's very rarely down for me, and have not been down at all since they did whatever upgrade/maintenance they had to a few days ago.
- callmeed 9y ago
  Do you realise the scale at which wall street/nasdaq/nyse all work? Have you ever looked at trading volume in large brokerage tools like TD Ameritrade. GDAX isn't there. I think the point most people here are making is–this is the big leagues and if you want to be taken seriously, suspending trading mid-day is unacceptable (happened this week). Nothing to do with web sockets IMO.
- physguy1123 9y ago
  Yesterday Nasdaq handled ~10 million trades and probably ~1 billion messages so about 30k messages per second over all equities while keeping response times below 100 microseconds for the most part. GDAX is peanuts compared to any of the equities exchanges. Hell, I worked for a startup FX exchange once with a team of 4 devs working on the actual matching pipeline and our beta product handled much more volume with better latency.
socrates1998 9y ago
1) Wallstreet is pretty corrupt, so getting them to help you with trust issues is odd to me. I get that Wallstreet has "legitimacy credentials", so that you will get more old money and institutions investing in you if they saw it's safe. I completely disagree with that. Wallstreet and big banks have lost trillions of dollars investing in "Safe" stuff before. 2) Coinbase needs to make sure they deliver what they say they can deliver. No hacking. No delivery issues. Minor to none technical issues. That's how you build trust long term. Honestly, Wallstreet won't matter if your goal is to be around in 10 or 20 years. 3) This brings me to my last point, if you really are trying to do this thing long term, why would even care about Wallstreet? Asking them for help just screams to me, "We want to make a shit ton of money right now before everything falls apart" I am seriously worried about the large exchanges ability to handle the amount and size of the transactions. Especially the growth.
- lucozade 9y ago
  > why would even care about Wallstreet? > I am seriously worried about the large exchanges ability to handle the amount and size of the transactions. One approach to solving hard problems is to enlist the help of people who have a great deal of experience in solving the same hard problems. You don't have to, of course. It's possible that having a table tennis table is sufficient to help one muddle on through. But it sounds like Coinbase are taking a more pragmatic path. In the circumstances, that's probably prudent. Unfortunate but prudent.
659087 9y ago
The Bitcoin "community" seems to try very hard to prevent that from happening, even if you ignore all of the shady activity various exchanges are engaged in.
- 659087 9y ago
  Do the downvoters care to explain themselves instead of just trying to bury my post? Do you guys think the constant forks, obvious coordinated market manipulation, constantly changing story about what Bitcoin is supposed to be, and general obnoxiousness and ridiculous behavior of the majority of Bitcoin cultists makes Bitcoin look good to outsiders? As someone who has been involved with and supportive of Bitcoin for several years (I started mining in 2011), the fact that it's impossible to point out any of the negative aspects of Bitcoin and the community surrounding it without just being downvoted or accused of "not holding any Bitcoin and being jealous" is starting to become incredibly tiresome. Denying the negative aspects of this sector is just going to encourage those negatives to continue. You guys are your own worst enemy. I know a number of people who won't touch Bitcoin with a 500ft pole because of this shit. These are people with large sums of money that could be flowing into the sector, who are being chased away by the stupidity and shysterish behavior of the Bitcoin community and shady exchanges.
erentz 9y ago
I’m confused by this bit: > “But first, Coinbase...needs to legitimize itself -- and bring in revenue...” Like it doesn’t have revenue? It’s daily volumes of BTC are around 30k. Sometimes a lot more. Plus ETH. Plus LTC. They must be making at least a million per day in trading fees. They’re a money printing machine at this point.
- adamnagel 9y ago
  On Dec 9, LTC's creator posted that GDAX/Coinbase made $2MM in fees on LTC alone that day: https://twitter.com/SatoshiLite/status/939476331397390336 https://twitter.com/SatoshiLite/status/939476331397390336
- kneath 9y ago
  In the context of this article (Coinbase going after Wall Street, looking to join Big Finance), I would guess that $1MM/day isn't significant enough revenue to count. Especially if they have overhead. Lone traders can make as much with a computer and a few subscriptions. For comparison, JPMorgan generates around $280MM/day of revenue and $74MM/day of profit.
artur_makly 9y ago
their ID system had not worked for MONTHs. https://status.coinbase.com/ https://status.coinbase.com/ i cant buy or sell while traveling outside the USA.
- temp987654 9y ago
  Why do you use the worst service available? There are way better players in this market than Coinbase imo.
  - artur_makly 9y ago
    who do u recommend? i need to connect a US bank account but i dont have a US cel or US driver's iD...just a US Passport. everyone seems to ask for a Driver's ID or Cel.
shroom 9y ago
This may be a stupid question but I dont understand every aspect of bitcoin so bear with me. Is Bitcoin access coupled with one private key or multiple? Say someone has 10 bitcoin on their computer and a private key so its only accessible from that computer. That computer holds a lot of value. If the computer gets stolen theyve stolen all the bitcoins with it? Given that the secret to the private key can be broken at some point in the future. Or is there a way for the user to claim back his/ger bitcoin by creating a new key with same secret?
- umanwizard 9y ago
  Most wallets have a way of deterministically generating private keys from the same pass phrase. So you would enter the same pass phrase, it’d generate the same key, and you’d be fine (assuming the thief hadn’t spent your bitcoins to his own address yet)
- diego 9y ago
  You don't want to store your private key unencrypted on a computer ever. If someone gets a hold of a private key, they control all the bitcoin under that address. However they acquire the private key doesn't matter.
  - shroom 9y ago
    Thanks! Reason Im asking is first ive Never traded btc and second I have friends who started and I can imagine they know anything about crypto, private keys, secrets etc. I might need to point this out to them if they continue with this.
    - nicky0 9y ago
      Most crypto traders don't even hold their own bitcoin. The exchange holds it for them.
- superquest 9y ago
  Often times you can create a wallet with a "recovery seed" -- which is usually a sequence of 12 words. This seed can be used to recover the secret.
beatboxrevival 9y ago
I've been trying to log into my account for over 3 weeks with no response from Coinbase. They need to handle their own support issue better if they want consumer trust.
- dudus 9y ago
  Maybe you should handle your own password management issue better if you want Coinbase to provide good support.
- mv4 9y ago
  In my case, I sent some ETH to "my" ETH wallet at Coinbase, received an email from Coinbase alerting me of the incoming transfer, and then - nothing, that ETH is nowhere to be found except on the blockchain (it's not showing in my ETH Coinbase account, and it's not shown under transactions). Frankly, this (misplacing a transaction) is more concerning to me than delays or verification issues. Losing a transfer like that puts their whole transactional integrity into question. Again, delays (something showing as "pending", etc) I could live with, considering their recent spike in usage. But, when a transaction is simply missing, while the ones before and after it are showing in Coinbase, is scary. I agree with you that they need to handle their support much much better. The bulk of their cases (judging by the publicly visible mentions of @CoinbaseSupport on Twitter) can be handled by simply explaining the situation and telling people to wait. There are only 5 or 6 issue types that can be categorized and routed programmatically even. Instead, they are currently only responding to 0.5% (not a typo) of Support requests on Twitter (not counting DMs). I think that may be the lowest response rate I've ever seen from a company, especially a tech one.
- sfennell 9y ago
  I had a similar and frustrating issue where my 2 factor auth was re-enabled after I manually disabled when I knew I was giving up my phone. They eventually helped, but it took longer than I would like.
idibidiart 9y ago
Coinbase.Gov
kapauldo 9y ago
Coinbase de-anonymizes bitcoin users, taking away a big bitcoin feature. You'll notice how they also don't disclose transactional versus speculation ratios. That's because Coinbase is largely a speculation platform. I have no problem with speculation, but the big lie that's being told about Bitcoin is that people are using it buy groceries, and it just isn't true.
lechiffre10 9y ago
Their website is often down, can't properly scale up and they expect trust? If you're Canadian, you can buy but can't sell cryptos, that's a red flag anywhere regarding investments.
justifier 9y ago
what is coinbase's stance on the future of cryptographic hash functions? are they just trying to cash in as much as possible, like many of the investors, before the math is settled or do they publicly state that they believe.. meaning without proof.. that p!=np? are they resting their future, and the futures of all of their users.. and here apparently the economy writ large.. on faith?

154 points by Vannatter 9y ago

EDIT Yuck, this blew up and I think alot of people took it the wrong way. I think Coinbase is great, and I'm sure everyone who works there is awesome and terrific at their job. Anyone who has worked on any half way successful project knows just how hard both uptime and security are and I'm in no way upset at Coinbase for having growth issues. I've done this for years and might not even get an interview with them. They'll be fine, they're just learning how to deal with alot of hard issues all at once. The question was posed, what do you need to do to get institutional money and I answered. To clarify... Coinbase , atleast from a hedge funds perspective has 2 tasks. 1) prime broker or custodian, from this perspective you just can't be hacked and loose anyone's bitcoins. Not sure how a hedge fund would tell its clients that they lost any amount of their funds due to an exchange being hacked, this is just so foreign to the way the markets currently work. I don't think the funds clients would be too accepting of a loss of any amount due to this. 2) as an exchange, This is probably easy for people to understand. When the volume picks up that's when you make your money. If Volume causes the exchange to go down, you can't make money. Again this is very rare for most markets now to go down to volume and when it does it doesn't really matter too much because the concept of having your shares with an exchange doesn't really make sense in the equities market. You'd just start trading at another exchange and none of your shares are actually held with the exchange, nor do you need to send shares to an exchange to trade, you just trade and settle at the end of the day. EDIT END I'll preface this by saying, what I'm asking for is hard, very hard, but being a grown up is hard..... You can't just ask people to invest billions of other peoples money and then claim "best efforts" if your exchange crashes under load. Well what institutional investors want is pretty simple to understand, though very hard to implement. 1) No counterparty risk. Everyone can get hacked, but coinbase being hacked shouldn't every, under any circumstances result in me loosing any bitcoin they hold on my behalf. A hedge fund can't just go to their clients and say sorry, lost all our money, coinbase got hacked, the hedge fund itself and its principles would be sued into oblivion. I mean if the Nasdaq, NYSE or prime broker ever got hacked, no one would expect to suddenly loose all their shares, or cash held with their prime broker. 2) The exchange can't go down, like at all. Once a year for 5 minutes is fine, or every day at midnight for 10 minutes is fine, but during regular trading hours you can't just throw your hand up and say "hey, best efforts here there just alot of volume right now, we'll be up in a few minutes" Hedge funds make their money on volatility, which means the more volatile and busy the exchange is the more they'll want to trade. Going down when times are busy is just can't happen.

brndnmtthws 9y ago
I don't know what reality you operate in, but hedge funds don't provide anywhere close to those types of guarantees. Exchanges do indeed go down, and when they do they shrug their shoulders and say "woops". Source: I work for a hedge fund.
- chollida1 9y ago
  > I don't know what reality you operate in, but hedge funds don't provide anywhere close to those types of guarantees. Strange comment, I think I've confused you. All this was about exchanges and what hedge funds expect from them, not guarantees about what hedge funds provide. And you are right, exchanges do go down, and its news when they do because they are so good at what they do that its very rare. > I don't know what reality you operate in I operate in the US Cash Equities and options markets. What I've asked for is par for the course there, in that no one mentions it because its the very lowest base, must have requirements.:) When was the last time you heard of Goldman Sachs begin hacked and all the hedge funds that use them as a prime loosing all their money?
  - brndnmtthws 9y ago
    Hedge funds do a better job of hiding their failures than something which operates on a public ledger, because everything is done behind closed doors. Furthermore, hedge funds are very good at finding creative ways to lose money, and they have great liberty in doing so. The reporting requirements for hedge funds are relatively lax compared to, say, an index fund.
    - chollida1 9y ago
      I agree with everything you've just said. And yet, it has absolutely nothing to do with what we are talking about:) Which is what exchanges need to do to get institutional investors;)
      - deleted 9y ago
        [deleted]

gwbas1c 9y ago

A good currency is fungible: It has a stable value and allows rapid exchange. Bitcoin does not meet these basic requirements. So many people forget that the original paper clearly states that Bitcoin is an experiment.

once_inc 9y ago
> So many people forget that the original paper clearly states that Bitcoin is an experiment. Where exactly in the white paper does it state this? I've just looked it up, and don't see any reference to Bitcoin being an experiment.
- gwbas1c 9y ago
  The beginning
djsumdog 9y ago
I've wondered about this. I haven't tried paying for any services with BTC, but I suspect many of them would change you the current real price (in euros, usd, gbp) and show you the equivalent btc in today's money. So some of these servers that were wise have only paid everything (servers, wages, etc.) using the real currency that comes in via credit cards and paypal and have just held onto the btc .. which makes it extremely valuable. But people don't set prices in btc. The prices are set in fiat currency and are paid for based on the price of btc that day .. meaning you could have spent 10euro for a service last year in btc that would have been worth 100euro .. or that could be worth 0.01 euro depending on where the market goes. But yes you're right, unless services start pricing actual service in btc, it's not really fungible for goods. It's always going through that translation layer. If anything, if McDonalds started taking mBTC and charged x mBTC for a burger and didn't change that value with the market, you'd start to see bitcoin stabilize (although you might be paying $100 for a burger some days .. if you go by what the exchanges claim the value is).
- Globz 9y ago
  I paid for a VPN service in 2011 for 0.19 BTC / (~5$ USD or something back then) which is now worth over $3300 USD at today's price...to me it shows that we are not dealing with a currency, if all you can do is hold and avoid spending it in fear of "losing" money then it has no real value except selling at the right time so someone else can buy your share, hold it and eventually sell it and so forth..

H99189 9y ago

Coinbase should solve it's coinbase trust issue. I bought a small amount of litecoin almost 2 weeks ago, i'm well past my "delivery by" date, my funds left my bank account over 10 days ago, yet I still don't have my coins in my account.

ryanmarsh 9y ago
Same. Coinbase are in over their heads. There is so much room for competition here. At times I’ve been unable to access my accounts or have transactions complete in a reasonable amount of time. Coinbase closed my account without notice with no explanation other than a mention of their desire to comply with FinCEN. I never got an answer from them as-to what I did “wrong”. I sure as hell wasnt selling heroin or babies on Silk Road. Imagine if Wells Fargo closed an account without notice or explanation after a customer had a few normal deposits and withdrawals. deep rolls eyes
- Joeri 9y ago
  Imagine if Wells Fargo closed an account without notice or explanation after a customer had a few normal deposits and withdrawals. You don't have to imagine. https://consumerist.com/2017/08/21/feds-investigating-wells-fargo-sudden-account-closures/ https://consumerist.com/2017/08/21/feds-investigating-wells-...
  - FireBeyond 9y ago
    At least you have organized, specific recourse. From the first few words of the headline of that article: "Feds Investigating..."
- passwordreset 9y ago
  >Imagine if Wells Fargo closed an account without notice or explanation after a customer had a few normal deposits and withdrawals. BB&T has done this to me in the past. The only recourse is taking your business elsewhere. Coinbase doesn't seem too different in that regard.
9y ago

deleted 9y ago

[deleted]

lawlessone 9y ago

I want coinbase to resolve its segwit issues.

jon_smark 9y ago
Indeed. Considering the volume of transactions going to and from Coinbase, their adoption of Segwit would go a long way towards alleviating the current mempool situation, which would bring lower fees for everyone.
brndnmtthws 9y ago
Underrated. It's pretty amusing that Brian was willing to back an altcoin (B2X) that hadn't even performed basic testing before its spectacular failure, and yet coinbase can't manage to enable segwit. Did they implement their own Bitcoin and decide not to port segwit?
dajohnson89 9y ago
https://blog.blockchain.com/2017/11/15/segwit-bitcoin-cash-update/ https://blog.blockchain.com/2017/11/15/segwit-bitcoin-cash-u...

simonebrunozzi 9y ago

It is not easy to build a company/service like Coinbase; having said that, I think that Coinbase in its current state is slightly better than a joke, starting from their customer support.

cheapsteak 9y ago
Contacted their support 13 days ago about my account somehow being restricted (can't buy or sell). Not a peep besides the automated response. 13 days and counting... Wonder if anyone has an outstanding ticket being ignored that's longer than that
- williw 9y ago
  Don't expect to get an answer. I had an issue as well, hasn't been resolved after 3 months. Their phone support is even a bigger joke. 2 hours of waiting and no answer then they just hang you up. GDAX (owned by Coinbase) is the same, I wasn't able to download the statements because login was suspended for some reason.
- djsumdog 9y ago
  Wow, they sound a lot like Cloud at Cost: http://penguindreams.org/blog/cloud-at-cost-part-ii-the-unsustainable-business-model/ http://penguindreams.org/blog/cloud-at-cost-part-ii-the-unsu...

creeble 9y ago

I like this article, "Bitcoin is none of the things it was supposed to be": https://theoutline.com/post/2592/bitcoin-is-none-of-the-things-it-was-supposed-to-be https://theoutline.com/post/2592/bitcoin-is-none-of-the-thin... Bitcoin can't operate as a currency without having exchanges between it and other currencies, and those exchanges strip all the benefits of bitcoin. Edit: show title of article.

nextstep 9y ago
A few years ago, it was easy to say "well, all the issues are at the BTC <-> USD (or other fiat currency) boundaries". But today's bitcoin is nearly unusable even just within the confines of the bitcoin network. For small amount of bitcoin (less then $15) it is incredible impractical to make a single transaction. Fees are around $5 and often much higher, with confirmation times sometimes reaching 6+ hours. Maybe there is hope with Bitcoin Cash (BCH), because it can piggyback on the existing bitcoin integration infrastructure. Or maybe Ethereum or Monero or some other altcoin will take the place of Bitcoin. But more and more, it's looking like the original cryptocurrency has failed to innovate and solve fundamental scaling issues and it's first-mover advantage won't last. If these altcoins can scale better than bitcoin, they only need to match bitcoin's integrations with the existing financial system to win.

JustAnotherPat 9y ago

Coinbase has been one of the more poorly constructed sites I've used in the past couple years. I don't just mean the inability to handle volume. I saw it riddled with HTML errors, there were buttons that didn't do anything, I got (html) responses that were false, which I only knew was the case because I looked directly at the API response. I remember I 'sold' some litecoin on Coinbase that never sold. Took me to a couple days just to know it wasn't going to mysteriously disappear. I find the fact that they want to add new coins even though they haven't solved any of their current issues very alarming.

jboggan 9y ago
I remember the problem they had a few years ago using MongoDB to do their financial transactions, people reported lots of double and triple withdrawals.

JackFr 9y ago

> In traditional finance, custody banks like State Street Corp. hold securities, keep records and provide other services for investment advisers. A lack of similar offerings in the cryptocurrency world has kept many institutions on the sidelines. >Coinbase has offered a solution: crypto custodial services, slated to roll out next year. Called Coinbase Custody, it'll be available to investors with at least $10 million in deposits. Honestly, WTF?

blhack 9y ago
What about this is WTF? Please explain, in detail, how somebody with $10M in BTC should store it.
- nostrademons 9y ago
  I think the WTF is that the original point of cryptocurrency was that it was supposed to be decentralized, with no big institutions that you must trust. Coinbase Custody is essentially reinventing the exact institutions that bitcoin was supposed to cut out of the loop. You're supposed to store $10M in BTC on the blockchain, which - after all - records ownership of every bitcoin ever mined. And keep access to it in a paper wallet; control of those $10M lies in access to a private key, so if you keep the key secret, nobody can access them (like with Satoshi's $40B or so in Bitcoin). That people don't seem to want to do this is perhaps a lesson in human nature that crypto-anarchists and other aficionados of "trustless completely-distributed systems" should perhaps heed. This same dynamic comes up over and over again, from open-source to the Internet to P2P and now to cryptocurrency.
  - FabHK 9y ago
    Very well put. It is sort of funny, isn't it. Bitcoin maximalist: "Bitcoin, no need to trust evil centralised institutions!" Actual Bitcoin users: "Oh, hey, could you take care of my Bitcoin balance for me, please? And you have password recovery, right?"
    - shanusmagnus 9y ago

btczillionaire 9y ago

I'm sure you all have very insightful comments about why bitcoin is in a bubble and will fail. Meanwhile, I ignored your comments years ago and I'm very, very comfortably retired now. But please, do go on with your smart insightful comments.

someguy112 9y ago
We're all very proud of you.
- deleted 9y ago
  [deleted]
conanbatt 9y ago
It can be both a bubble and make lots of people rich... Also wtf with this comment. Who are you answering to
- dkersten 9y ago
  All bubbles make someone rich.
mancerayder 9y ago
Most of the comments here aren't about Bitcoin being in a bubble and falling, they're about Coinbase and varying aspects of their growing pains (security, scalability, lack of insurance and so forth). Maybe becoming very, very comfortably retired as a bazillionaire has a deleterious effect on reading and attention.
- btczillionaire 9y ago
  Very clever response. I still made money ignoring people like you.
  - 659087 9y ago

empath75 9y ago

Until the situation with bitfinex pumping billions of unbacked tether into the ecosystem is resolved, doing anything involving bitcoin right now is insane. They’ve released almost $200 million worth of tether in the last day.

heurist 9y ago
I've been reading about this but still don't understand the scope. The money might all be fraudulent, but it also seems like the most liquid exchange on the market would also have a huge pile of cash to sit on right now after the last few years appreciation of btc. Did Tether fraud kick off this wave?
- jboggan 9y ago
  If you look at Bitcoin, Litecoin, and Ethereum, all three kicked off their current bull market in April after Tether lost their banking relationships and stopped even trying to show that they had funds in reserve. I absolutely think that the Tether fraud kicked off this wave to the point that the general public would come in and hold the bag.
  - shrimpx 9y ago
    There is zero concrete proof, only people sharing their theories and beliefs so far.
meritt 9y ago
My theory on tether is their goal is to absorb as much downward (selling) pressure as possible on the BTC/USD market and encourage only upward movement of BTC (equally applies to any other crypto) 1) Someone who wants to sell $1M USD of BTC may be happy to take $1M USDT instead for legal/tax purposes. This transaction would have zero impact on the BTC/USD price. 2) Tether receives $1M worth of BTC they can slowly disperse back into the market via their own exchange (since Bitfinex owns Tether) in a controlled manner that doesn't push the price down. 3) With USD in hand they can either put it into their reserves (assuming we trust them) or they could also use the cash to further eliminate any selling pressure on the exchange (with a large buy order "wall") or even generate upward pressure. 4) BTC price becomes stable or only moves upward and attracts more outside money and speculation. Repeat the cycle.

guiomie 9y ago

It's interesting the negativity I read about Coinbase in this thread. Makes me wonder if those who do complain tried other exchanges? I've tried Kraken (down much more often), Bittrex (worst trading UI ever), CAvirtex (they are shutdown) ... Coinbase/ GDAX I have had a much better experience. If you want a fast money wire, pay the price for same day processing (30$), I always do and it usually takes a 2 hours.

FanaHOVA 9y ago
The fact that other exchanges are worse doesn't make Coinbase any better though, that's the problem. It'd be interesting to see what % of coins is held by them. While I don't really care about Coinbase per se, I think that it could hurt the public perception of the whole crypto ecosystem if something went wrong and people were locked out of their accounts, lost funds, etc.

dimillian 9y ago

I think most of you don't realise at what scale Coinbase work. You just have to watch the trade history on GDAX for a few seconds to understand the sheer volume of what is actually happening. The GDAX web socket is very very robust. It's very rarely down for me, and have not been down at all since they did whatever upgrade/maintenance they had to a few days ago.

callmeed 9y ago
Do you realise the scale at which wall street/nasdaq/nyse all work? Have you ever looked at trading volume in large brokerage tools like TD Ameritrade. GDAX isn't there. I think the point most people here are making is–this is the big leagues and if you want to be taken seriously, suspending trading mid-day is unacceptable (happened this week). Nothing to do with web sockets IMO.
physguy1123 9y ago
Yesterday Nasdaq handled ~10 million trades and probably ~1 billion messages so about 30k messages per second over all equities while keeping response times below 100 microseconds for the most part. GDAX is peanuts compared to any of the equities exchanges. Hell, I worked for a startup FX exchange once with a team of 4 devs working on the actual matching pipeline and our beta product handled much more volume with better latency.

socrates1998 9y ago

1) Wallstreet is pretty corrupt, so getting them to help you with trust issues is odd to me. I get that Wallstreet has "legitimacy credentials", so that you will get more old money and institutions investing in you if they saw it's safe. I completely disagree with that. Wallstreet and big banks have lost trillions of dollars investing in "Safe" stuff before. 2) Coinbase needs to make sure they deliver what they say they can deliver. No hacking. No delivery issues. Minor to none technical issues. That's how you build trust long term. Honestly, Wallstreet won't matter if your goal is to be around in 10 or 20 years. 3) This brings me to my last point, if you really are trying to do this thing long term, why would even care about Wallstreet? Asking them for help just screams to me, "We want to make a shit ton of money right now before everything falls apart" I am seriously worried about the large exchanges ability to handle the amount and size of the transactions. Especially the growth.

lucozade 9y ago
> why would even care about Wallstreet? > I am seriously worried about the large exchanges ability to handle the amount and size of the transactions. One approach to solving hard problems is to enlist the help of people who have a great deal of experience in solving the same hard problems. You don't have to, of course. It's possible that having a table tennis table is sufficient to help one muddle on through. But it sounds like Coinbase are taking a more pragmatic path. In the circumstances, that's probably prudent. Unfortunate but prudent.

659087 9y ago

The Bitcoin "community" seems to try very hard to prevent that from happening, even if you ignore all of the shady activity various exchanges are engaged in.

659087 9y ago
Do the downvoters care to explain themselves instead of just trying to bury my post? Do you guys think the constant forks, obvious coordinated market manipulation, constantly changing story about what Bitcoin is supposed to be, and general obnoxiousness and ridiculous behavior of the majority of Bitcoin cultists makes Bitcoin look good to outsiders? As someone who has been involved with and supportive of Bitcoin for several years (I started mining in 2011), the fact that it's impossible to point out any of the negative aspects of Bitcoin and the community surrounding it without just being downvoted or accused of "not holding any Bitcoin and being jealous" is starting to become incredibly tiresome. Denying the negative aspects of this sector is just going to encourage those negatives to continue. You guys are your own worst enemy. I know a number of people who won't touch Bitcoin with a 500ft pole because of this shit. These are people with large sums of money that could be flowing into the sector, who are being chased away by the stupidity and shysterish behavior of the Bitcoin community and shady exchanges.

erentz 9y ago

I’m confused by this bit: > “But first, Coinbase...needs to legitimize itself -- and bring in revenue...” Like it doesn’t have revenue? It’s daily volumes of BTC are around 30k. Sometimes a lot more. Plus ETH. Plus LTC. They must be making at least a million per day in trading fees. They’re a money printing machine at this point.

adamnagel 9y ago
On Dec 9, LTC's creator posted that GDAX/Coinbase made $2MM in fees on LTC alone that day: https://twitter.com/SatoshiLite/status/939476331397390336 https://twitter.com/SatoshiLite/status/939476331397390336
kneath 9y ago
In the context of this article (Coinbase going after Wall Street, looking to join Big Finance), I would guess that $1MM/day isn't significant enough revenue to count. Especially if they have overhead. Lone traders can make as much with a computer and a few subscriptions. For comparison, JPMorgan generates around $280MM/day of revenue and $74MM/day of profit.

artur_makly 9y ago

their ID system had not worked for MONTHs. https://status.coinbase.com/ https://status.coinbase.com/ i cant buy or sell while traveling outside the USA.

temp987654 9y ago
Why do you use the worst service available? There are way better players in this market than Coinbase imo.
- artur_makly 9y ago
  who do u recommend? i need to connect a US bank account but i dont have a US cel or US driver's iD...just a US Passport. everyone seems to ask for a Driver's ID or Cel.

shroom 9y ago

This may be a stupid question but I dont understand every aspect of bitcoin so bear with me. Is Bitcoin access coupled with one private key or multiple? Say someone has 10 bitcoin on their computer and a private key so its only accessible from that computer. That computer holds a lot of value. If the computer gets stolen theyve stolen all the bitcoins with it? Given that the secret to the private key can be broken at some point in the future. Or is there a way for the user to claim back his/ger bitcoin by creating a new key with same secret?

umanwizard 9y ago
Most wallets have a way of deterministically generating private keys from the same pass phrase. So you would enter the same pass phrase, it’d generate the same key, and you’d be fine (assuming the thief hadn’t spent your bitcoins to his own address yet)
diego 9y ago
You don't want to store your private key unencrypted on a computer ever. If someone gets a hold of a private key, they control all the bitcoin under that address. However they acquire the private key doesn't matter.
- shroom 9y ago
  Thanks! Reason Im asking is first ive Never traded btc and second I have friends who started and I can imagine they know anything about crypto, private keys, secrets etc. I might need to point this out to them if they continue with this.
  - nicky0 9y ago
    Most crypto traders don't even hold their own bitcoin. The exchange holds it for them.
superquest 9y ago
Often times you can create a wallet with a "recovery seed" -- which is usually a sequence of 12 words. This seed can be used to recover the secret.

beatboxrevival 9y ago

I've been trying to log into my account for over 3 weeks with no response from Coinbase. They need to handle their own support issue better if they want consumer trust.

dudus 9y ago
Maybe you should handle your own password management issue better if you want Coinbase to provide good support.
mv4 9y ago
In my case, I sent some ETH to "my" ETH wallet at Coinbase, received an email from Coinbase alerting me of the incoming transfer, and then - nothing, that ETH is nowhere to be found except on the blockchain (it's not showing in my ETH Coinbase account, and it's not shown under transactions). Frankly, this (misplacing a transaction) is more concerning to me than delays or verification issues. Losing a transfer like that puts their whole transactional integrity into question. Again, delays (something showing as "pending", etc) I could live with, considering their recent spike in usage. But, when a transaction is simply missing, while the ones before and after it are showing in Coinbase, is scary. I agree with you that they need to handle their support much much better. The bulk of their cases (judging by the publicly visible mentions of @CoinbaseSupport on Twitter) can be handled by simply explaining the situation and telling people to wait. There are only 5 or 6 issue types that can be categorized and routed programmatically even. Instead, they are currently only responding to 0.5% (not a typo) of Support requests on Twitter (not counting DMs). I think that may be the lowest response rate I've ever seen from a company, especially a tech one.
sfennell 9y ago
I had a similar and frustrating issue where my 2 factor auth was re-enabled after I manually disabled when I knew I was giving up my phone. They eventually helped, but it took longer than I would like.

idibidiart 9y ago

Coinbase.Gov

kapauldo 9y ago

Coinbase de-anonymizes bitcoin users, taking away a big bitcoin feature. You'll notice how they also don't disclose transactional versus speculation ratios. That's because Coinbase is largely a speculation platform. I have no problem with speculation, but the big lie that's being told about Bitcoin is that people are using it buy groceries, and it just isn't true.

lechiffre10 9y ago

Their website is often down, can't properly scale up and they expect trust? If you're Canadian, you can buy but can't sell cryptos, that's a red flag anywhere regarding investments.

justifier 9y ago

what is coinbase's stance on the future of cryptographic hash functions? are they just trying to cash in as much as possible, like many of the investors, before the math is settled or do they publicly state that they believe.. meaning without proof.. that p!=np? are they resting their future, and the futures of all of their users.. and here apparently the economy writ large.. on faith?