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Coinbase opens its crypto index fund to accredited U.S. investors
- trophycase 8y agoSadly they've added crap like ETC which greatly reduces the appeal of investing in such an index.
- mike00632 8y agoI know. Isn't ETC's most prominent miner suspected to be connected to the theft that spawned the coin's creation?
- pavlov 8y agoETC isn't the coin that was created to fix a perceived theft — ETH is.
- decentralised 8y agoNo, ETH is the token of the original chain which we agreed by social consensus to fork because of an attacker. A public blockchain is a network of people, and the vast majority of the community is in Ethereum. That's what legitimises it. Another example is BTC vs BCH. BCH is the original bitcoin code, but BTC is the original Bitcoin community.
- diakritikal 8y ago>Another example is BTC vs BCH. BCH is the original bitcoin code, but BTC is the original Bitcoin community. I think that's a rather disingenuous if not patently misleading statement. BCH is factually and unequivocally a fork of bitcoin code and blockchain.
- decentralised 8y agoAt the time of the segwit implementation, BCH kept the old protocol version. edit: I think you may have a point but I don't see it and you don't make it clear in your comment either. My point is clear and factual and doesn't need your approval.
- pavlov 8y agoETC is the original blockchain data. Whether that means it’s the original coin depends on the definition of “coin”, I guess.
- decentralised 8y agoETH and ETC both have the original blockchain data, but one corrected a criminal act by social consensus because we are normal people and we can discuss and reach agreements just like anybody else.
- pavlov 8y agoWas a police report ever made about the theft? What was the result of the police investigation?
- decentralised 8y agoI'm not sure if a report was made because it was possible to make reparations. I can ask around at Europol next time I'm there.
- pavlov 8y agoSounds like the value of the stolen property was $0 if it can be recovered by simply saying "We'll just give our money back to ourselves". I imagine the police wouldn't be very interested in such a case. Maybe the crime was hacking into a computer system? But the perpetrator was using the system's public interfaces exactly as intended. Is it criminal to call a method on a smart contract on a public distributed ledger? There's no criminal act. The Ethereum community just wants to see themselves as victims instead of accepting that they were hoisted with their own Turing-complete petard.
- jsutton 8y agoIn a strict technical view, that's correct. ETH is the continuation of the original coin, however, which most of the community (including the most important members/developers) decided to support.
- blondie9x 8y agoI'm surprised they actually moved forward with this idea. From the time this index was announced and tracked on March 6th until the sales began the GDAX index has fallen by ~50% in a bit less than a few months.
- mrb 8y agoI'm surprised you think the price matters. It doesn't. It's an index fund. Crypto traders will trade it regardless if it's low or high. In fact it's probably even better to launch it now (low price = buying opportunity.)
- JumpCrisscross 8y ago> I'm surprised you think the price matters. It doesn't. It's an index fund. Volatility increases tracking error; this benefits traders but hurts investors. Furthermore, AUM is not delta neutral. When an asset goes up its ETF attracts capital; when it goes down the ETF tends to lose capital. Since ETF economics are a measure on assets under management (AUM), ETF sponsors generally want their ETF to go up.
- deleted 8y ago[deleted]
- evanpw 8y agoI know you said "generally", but there are some significant exceptions (like VXX): https://finance.yahoo.com/chart/VXX#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 https://finance.yahoo.com/chart/VXX#eyJpbnRlcnZhbCI6IndlZWsi... Even the prospectus says "The long term expected value of your ETNs is zero": http://www.ipathetn.com/US/16/en/details.app?instrumentId=259118 http://www.ipathetn.com/US/16/en/details.app?instrumentId=25...
- drdrey 8y agoThe set of people who can dump $250k in crypto assets is a tiny subset of accredited investors, one would think
- JumpCrisscross 8y agoThis product is almost certainly targeting RIAs.
- adjkant 8y agoHad to look up what an RIA is, so for others: https://riabiz.com/a/2011/10/4/what-exactly-is-an-ria https://riabiz.com/a/2011/10/4/what-exactly-is-an-ria
- neals 8y agoWhich, according to the link, is a "registered financial advisor"...
- patio11 8y agoThat's an interesting thought. To expand on it: there exists an ecosystem of regulated RIAs, which are largely sales agents for investment opportunities who have some advisory and custodial functions. (Most would not describe themselves that way but...) You can find one in your local office park. They exist at a wide range of firm sizes, but suffice it to say that one value of typical might be "100 clients, $50 million total assets under management, 2 advisors + 3~6 support staff." The prototypical customer is a mid-career dentist or middle-class retiree. For that firm, some of their clients are accredited investors and some aren't, but the offering to them is, basically, "You've had people tell you in meetings for the last year I-want-to-be-in-on-Bitcoin. You've had to say no, because clearly you have no business doing Bitcoin custody and your lawyer/accountant would have a fit. We would happily let you buy ~$1 million of our basically-runs-itself Bitcoin product, which you'll move $15k here and $50k there to some of your client base. Your business model continues to be charging 1% of assets under management per year. Client need: satisfied. Impact to your firm: minimal. Future asset outflow to cryptocurrency: zero."
- null0pointer 8y agoWhat is an "accredited investor" anyway? And why does this index fund need to only be available to them?
- freddie_mercury 8y agoLet me Google that for you......
- 1ba9115454 8y agoIt's actually a thing. https://en.wikipedia.org/wiki/Accredited_investor https://en.wikipedia.org/wiki/Accredited_investor
- JumpCrisscross 8y ago> What is an "accredited investor" anyway? "Accredited investor" is defined in Rule 501 of Regulation D [1]. For natural persons, it means someone with more than $1 million in net worth (excluding one's primary residence) or $200,000 in annual income [2]. > why does this index fund need to only be available to them? reply Accredited investors can afford lawyers, to do diligence as well as enforce their claims. They are also better placed to lose money. This combination means people marketing securities exclusively to accredited investors have lower disclosure and other requirements than e.g. someone taking a company public. [1] https://www.sec.gov/fast-answers/answers-accredhtm.html https://www.sec.gov/fast-answers/answers-accredhtm.html [2] https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=8edfd12967d69c024485029d968ee737&r=SECTION&n=17y3.0.1.1.12.0.46.176 https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=8edfd12967... Disclaimer: I am not a lawyer. This is not legal advice. Talk to a lawyer if you are seriously considering this question.
- 1ba9115454 8y agoInteresting to think that the private keys for these funds will most likely be split across several pieces of paper (https://en.wikipedia.org/wiki/Shamir%27s_Secret_Sharing https://en.wikipedia.org/wiki/Shamir%27s_Secret_Sharing) and stored in geographically distributed safes. That's the only way I can think of doing it offline. Combining the pieces of paper together to generate the key would need to be done via a signing ceremony. I think coinbase have a patent for this.
- pests 8y agoIs this not basically what the DNS root signing ceremony is?
- kanzure 8y agoDNSSEC signing ceremony is significantly more transparent and public :-) https://www.iana.org/dnssec/ceremonies https://www.iana.org/dnssec/ceremonies
- weiming 8y agoThere is an older post [1] describing how they do this, curious how much it changed since then. [1] https://engineering.coinbase.com/how-coinbase-builds-secure-infrastructure-to-store-bitcoin-in-the-cloud-30a6504e40ba https://engineering.coinbase.com/how-coinbase-builds-secure-...
- JumpCrisscross 8y ago"Coinbase's trading volumes fell 78% from December to April" [1]. Moreover, it appears trading volume fell for each of those months (on a month-to-month basis). If this trend doesn't reverse, they may soon be in a desperate position. [1] https://www.wsj.com/articles/can-the-biggest-u-s-bitcoin-exchange-win-over-wall-street-1527418800 https://www.wsj.com/articles/can-the-biggest-u-s-bitcoin-exc...
- modeless 8y agoThat's a cherry-picked stat if I've ever seen one. There was a huge bubble in December that clearly couldn't continue forever. Look a little further back; they've grown 30x from two years ago. They are unlikely to be in a desperate position anytime soon. Their revenue from the recent bubble alone ought to carry them for years.
- JumpCrisscross 8y ago> There was a huge bubble in December that clearly couldn't continue forever Which is why I mention the continuous month-on-month declines. January trading lower than December is expected. But February lower than January? March than February? April than March? That trend line implies more than just a bubble popping.
- modeless 8y agoNo it doesn't. It takes more than a couple of months for these bubbles to pop all the way, just look at prior ones. Extrapolating the last few months' rate of decline from the bubble popping would be just as silly as extrapolating the rate of increase from the last months of the bubble.
- JumpCrisscross 8y ago> It takes more than a couple of months for these bubbles to pop all the way, just look at prior ones The study of bubbles commonly features exchange failures. A bubble popping doesn't make declining volumes any more comfortable for Coinbase.
- Sanketk 8y agoCoinbase is actually considering ETC enclusion is also a big news
- aczerepinski 8y agoI can’t imagine a world where commerce moves from government backed cash to hundreds of different crypto currencies. Even if <pick your favorite> wins, won’t the majority of these coins go to zero in the long run? That’s a far different proposition than say the S&P 500, where it’s expected that the majority of companies will be worth more 20 years from now than they are today.
- cptskippy 8y agoWhat if share of the S&P 500 were traded in a crypto currency rather than say dollars as they are today? Wouldn't that crypto currency have more intrinsic value than the dollar? Not being tied to gold, the dollar only has value because "we say so". I could see a world where stock exchanges trade in crypto currency <a> and other cryto currencies are pegged to <a> in some way.
- charlesdm 8y agoThe dollar has (disproportionate) value because it's the currency for global commerce (i.e. oil and other commodities). Gold however only has value because we believe it is a store of wealth, and we believe it has value.
- cptskippy 8y ago> The dollar has (disproportionate) value because it's the currency for global commerce Right... and when OPEC says they'll only trade in OilyBoyCoins? > Gold however only has value because we believe it is a store of wealth, and we believe it has value. That use to be true but now it's used heavily in various industries like consumer electronics and demand has been pushing the value upward.
- charlesdm 8y agoOn the second, do you have numbers on how much value comes from demand in consumer electronics? Afaik it is minimal, but I could be wrong.
- stevespang 8y agoAs expected, Coinbase has caved in to the regulators. They are not interested in your privacy at all.
- mrep 8y ago> Investing in Coinbase Index Fund is the easiest way to get exposure to a broad range get of crypto assets. Much cheaper than 2 and 20% charged by most crypto hedge funds, and you get new assets automatically added to the fund as they become available on Coinbase. No rebalancing. [0] From their actual site [1], the fees are 2% a year so barely better than those hedge funds and absolutely atrocious compared to normal index funds. You are effectively being charged 2% fees for them running some scripts every once in a while to re-balance the fund compared to stock market index funds which charge on average around 0.05%. To make matters even worse, their "index" comprises of only 4 coins! That's hardly an index at all. [0]: https://twitter.com/brian_armstrong/status/1006691490272194560?ref_src=twsrc%5Etfw&ref_url=https%3A%2F%2Ftechcrunch.com%2F2018%2F06%2F12%2Fcoinbase-opens-its-crypto-index-fund-to-accredited-u-s-investors%2F https://twitter.com/brian_armstrong/status/10066914902721945... [1]: https://am.coinbase.com/ https://am.coinbase.com/
- haggenballs 8y agoHey guys, Last time this came up, I shared an algo I made to automatically index across the top 20 coins. Since then I made a hosted version so anyone can use. It works on top of Binance. Plus you can automatically rebalance daily, weekly or monthly. I’ll drop a link here if anyone wants to check it out. Right now, it is free. https://www.hodlbot.io https://www.hodlbot.io
- froocpu 8y agoI think the fact that XRP is missing from their platform is another reason for accredited investors to pass this time. With the number of financial institutions who are already using Ripple's products, or at least have heard of Ripple or what XRP is for, you would assume that a significant number of accredited investors are interested in XRP too. I think most of these accredited investors don't particularly care whether XRP is a "true" cryptocurrency, either.
- jeffreyrogers 8y agoI'm not as sure. The 2% fee is a management fee. There's no performance fee. Stock index funds have low management fees because stocks are very liquid and they have people who do the trade executions for them to not move the market very much. Plus, you get lots of investors so you can charge a lower fee and still cover your fixed costs. Given all that, a 2% fee does not seem like it's fleecing investors, but it does seem possible someone else could do it for less.
- Dirlewanger 8y agoWake me when they have an ETF for the lay investor.
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