21 ms·

Coinbase Wants to Be Too Big to Fail

202 points by chuhnk 8y ago

komali2 8y ago
>Armstrong belongs to a generation of evangelists who view digital currencies, and the blockchain technology on which they’re based, as tools that will make investing, borrowing, and saving money faster, cheaper, and more egalitarian. My main question about cryptocurrencies has always been the "faster, cheaper" thing. Last I heard it was pretty expensive to do a bitcoin transaction, and slow. The quote thrown around: >The networks that Visa and Mastercard use process, in aggregate, “more than 5,000 transactions per second with capacity to process volumes multiple times that number. Bitcoin in contrast takes 10 minutes to clear and settle a single transaction vs. Ethereum that takes 15 seconds.” https://www.marketwatch.com/story/why-bitcoin-wont-displace-visa-or-mastercard-soon-2017-12-15 https://www.marketwatch.com/story/why-bitcoin-wont-displace-... I wonder what someone as heavily invested as Armstrong would say to that?
- ericol 8y ago
  I haven't really measured it, but the last time i transferred BTC (from Localbitcoin to my personal wallet) it seemed almost instantaneus. Obviously wasn't really looking at it (And I'm too lazy to go check now) but it was fast, in the order of seconds. And credit cards - so far - allow to send money in 1 diurection only, plus merchant's costs are way too high compared to BTC. Thought companies like Revolut are trying to change that.
  - gamblor956 8y ago
    plus merchant's costs are way too high compared to BTC The BTC fee, in USD, is in the double digits--and occasionally bumps into the triple digits. Credit card fees, in contrast, are swallowed by the merchant, meaning that effectively they are free to consumers. Moreover, the basic fundamentals of capitalism guarantee that merchants can't simply raise their prices because other merchants can than compete with them on the basis of absolute price. While I sympathize with the merchants, credit card fees are also miniscule in comparison to the costs of handling paper cash securely, so the ultimate economic case is squarely for accepting credit cards.
    - nicky0 8y ago
      Things have changed in recent months. Right now the typical BTC fee is single digits or less.
- imgabe 8y ago
  It takes Visa and Mastercard a few seconds to record a transaction, but that transaction remains "pending" for several days afterward. I don't know what the transaction volume is on the Bitcoin network right now, but it's surely much more than one every 10 minutes.
- robertAngst 8y ago
  Faster and Cheaper for Bitcoin? If you use offchain, its actually incredible. (Shift Debit cards and Coinbase email are free and instant) Onchain is a disaster for literally every blockchain that exists. Nothing is scaling. (maybe DAG, but that is not blockchain) You need to understand the mindset of bitcoiners. There are 21,000,000 Bitcoin ever ever ever. The government only prints more money. Bitcoin is already accepted around the world. Its supposed to free us from government currency.
  - Retric 8y ago
    I don't really understand that mindset. That's the current rules, but as with all human endeavors it's up in the air how long they last. EX: Miners could decide that every wallet must have one transaction per month or the cost of 1 transaction is deducted from that account. Thus avoiding a free rider problem.
    - deleted 8y ago
      [deleted]
    - nicky0 8y ago
      Miners attemptig to change anything against the broad consensus would find themselves using their expensive mining hardware to mine worthless blocks accepted by no-one.
      - dnomad 8y ago
        No they wouldn't. People would follow the mining power if they actually want to have a secure chain.
        sparkie 8y ago
        People would only follow mining power that represents their interests. They don't care about individual miners. If a majority of miners were not representing the interests of the users, the users would find a way to push those miners out and will carry on as before. Miners can only generate revenue by mining a coin that people want to use. They want to use it because it is secured by a distribution of miners, such that no collaboration of miners can attack it. If the premise is that a group of miners can attack it, because that group of miners want to push their rules, then the concept is broken. Total hash power is not the deciding factor. What matters is that honest participants have more hash power than dishonest ones. The honest ones can adapt far more easily than large miners, who have too much invested to handle something like a proof-of-work adjustment.
- dangrossman 8y ago
  Probably that the Bitcoin ledger itself will be more akin to a ledger of inter-bank transfers than to VisaNet. Visa processes 5,000 transactions per second, but they only actually move money between banks to settle those transactions once a day, 5 days a week. Visa-like products can be built on top of Bitcoin or other digital currencies rather than people exchanging the coins directly.
  - TheSoftwareGuy 8y ago
    But don't you lose the whole decentralized thing at that point?
    - sparkie 8y ago
      The decentralization is that anyone can participate, and anyone can be the bank. There is no authority and you do not need to ask permission. You do not require any large investment because the resources require to run the node are minimal, and you can even do it with some level of anonymity through the Tor network.
  - bobthepanda 8y ago
    That destroys the point of the whole "decentralized systems" thing. Crypto has always kind of looked like a solution in search of a problem, IMO. What is it solving that isn't some sort of political science question?
    - sparkie 8y ago
      It's solving the problem that currency, up until now, has never had a finite supply, and that even currencies with limited supply could be forged, seized or inflated until they became worthless. Bitcoin is the first money ever, which nobody can create beyond the very predictable initial distribution programmed into the system. Gresham's law roughly states that when two kinds of money exist, people will stash the good money, and will trade with the bad money until it becomes useless. It's been proven time over throughout history. You only need to look at the gold rush that happened during the last financial crisis. Given that Bitcoin is the best money that has ever existed, then anyone who is paying attention is stashing it while they're trading with anything else. The next recession won't be a rush for gold.
- olalonde 8y ago
  My opinion is that Bitcoin is first and foremost a currency. Theoretically, nothing should stop Visa or Mastercard from adding it to the already large amount of currencies they support.
- sparkie 8y ago
  The problem with the comparison to Visa and Mastercard, is that settlement is never really final with those services. A transaction can be reversed even 6 months down the line, as anyone who runs a business probably knows. The cost of fraud-protection offered by these companies is the reason Bitcoin was proposed as a cheaper alternative. By making transactions final, the cost of fraud protection is put on the participants between each transaction, and not on every network user as a whole. Bitcoin can be expensive to transact small volumes when the network is busy. This is due to a limitation in the amount of transaction data that can fit into a block, and blocks are limited to 10 minutes on average. A transaction fee however, is not measured as a percentage of the value being transferred, but is measured in the bytes occupied in a block. Since the transaction amount is just a 64-bit value, the transaction fees are the same whether you're transferring $1 or $1M. In the latter case, it will be far cheaper than existing payment processors and banking settlement systems. This is why Bitcoin has emerged to become a settlement layer for larger value transactions, because block space is valuable (it costs money to replicate and store over hundreds of thousands of machines). People looking for a cheap payment processor for smaller value transactions are looking at solutions other than Bitcoin. The trade-off is that to scale their own blockchains, they deprioritize decentralization (fundamental to Bitcoin), or they print own currency (undermining the idea of finite supply). Since anyone can do this, it becomes difficult to tell which are scams. As more and more blockchains exist, the value accrued in each blockchain will become less and less as it gets shared between them. The logical conclusion is that the value of tokens in this myriad of chains will converge to nothing. On the other hand, if you could make a payment processor which does not undermine Bitcoin's decentralization or limited supply, then perhaps this would enable small, cheap transactions at a global scale. This is what the Lightning Network, among other solutions, are aiming to provide.
  - landryraccoon 8y ago
    > A transaction can be reversed even 6 months down the line, as anyone who runs a business probably knows. This is a feature, not a bug. I'd want to see evidence that the total cost of fraud in crypto is less per user than the cost of fraud in traditional credit. I would guess that the cost of fraud in traditional credit is actually far lower because reversibility reduces the incentive to commit fraud. It's very difficult to steal money from someone's account because they can dispute the charge and get it back. Compare that to the case where your crypto account is hacked. There is zero recourse, the thief generally gets away with it scott free, so the incentives to commit fraud are huge.
- alcio 8y ago
  Mastercard/Visa do thousands of transactions per second and charge a single digit percentage fee on top. Bitcoin does 3 to 5 transactions per second and charges a fixed fee per byte of transaction space. Which is fairer? Speed has a cost that many people ignore.
  - r32a_ 8y ago
    You cannot compare Bitcoin transaction to a visa/mastercard transaction. A Bitcoin transaction is closer to me giving you a gold bar than doing a credit card transaction. The payments layer is being developed and it's called the Lightning network. Which is faster than Visa/Mastercard and cheaper and can scale much greater and have a better resilience than Visa.
  - PeterisP 8y ago
    Comparing CC prices against Bitcoin prices is also a bit apples of oranges - the CC fees are larger but CC users are getting a significantly "larger" service as well. A BTC transaction is just the initial money transfer, but a CC transaction is a package of money transfer + fraud insurance + some money-back for the payer; if you'd want to compare prices then you'd need to look at something like BTC transaction + an escrow service fee. Just technically executing the transaction is a minority of the problem and a minority of the cost; if you'd do BTC transactions with a proper consumer protection service then that part would be far more costly than just the transaction.
- nivexous 8y ago
  Many early Bitcoiners support Bitcoin Cash today which is closer to the original design of Bitcoin and does not have these issues you mentioned. Bitcoin was always meant to scale on-chain, and BTC's fees are entirely self-imposed by the Core developers who refuse to increase the block size. Bitcoin Cash (BCH) increased the block size, and now fees on BCH are a fraction of a penny. Speed of payments too is not an issue on BCH, and 0-conf instant transactions are acceptable for many types of purchases. The main argument against BCH is that home users won't be able to run their own full nodes, but these nodes do nothing useful and do not deserve subsidization. This was actually demonstrated in the Bitcoin bug CVE-2018-17144 (discovered by Bitcoin Cash developers, mind you) where 80% of the network (ie. home users) didn't upgrade their full node with the patch and the network remained secure. Armstrong has suggested he supports BCH's scaling path in several places.
  - xorcist 8y ago
    If the original design of Bitcoin is important to you, why not study the orginal design and motivation in depth? Most of the early development work is still out there for everyone to see. You will find that questions about scaling was, and still is, the first thing that comes to mind for most people who hear about a plantary scale distributed ledger, and that payment channels was first suggested by Satoshi himself, if such provenance is considered important now.
    - nil_pointer 8y ago
      Unfortunately the current state of Blockstream's Bitcoin project does not align at all with Satoshi's whitepaper.
      - r32a_ 8y ago
        This is FUD. Blockstream does not own Bitcoin Core and does not even sponsor a majority of the developers. Their "influence" has actually dropped since the departure of Maxwell as CTO
    - nivexous 8y ago
- deleted 8y ago
  [deleted]
- wellboy 8y ago
  Yes Bitcoin is slow. We already have blockchains that are near infinitely scalable and decentralized with Elastos, IOTA (at scale) and Holochain with its agent-centric architecture instead of data-centric architecture as most blockchains have it, which is launching in a couple of months. Nano is also very, very good and decentralized, has even instant transactions through its block-lattice architecture, but it isn't near infinitely scalable to billions of TPS yet or at least not yet.
- lavezzi 8y ago
  If we are doing Visa/Mastercard comparisons, then no fee, instant transfer cryptocurrencies like NANO should be part of the conversation.
  - etherael 8y ago
    Different beast altogether, nano is dpos, not proof of work. The consensus mechanism and assurances are very different from something like BCH.
- MithrilTuxedo 8y ago
  To put some numbers to it, it cost me $0.07 to send someone >$10k worth of BTC. It cost my girlfriend $40 to send someone $400 via wire transfer through Bank of America.
  - simias 8y ago
    For very large amount it seems rather obvious that BTC wins, the problem is that the cost of (on-chain) BTC transactions is not indexed on the amount being transfered but on the size in bytes of the transaction. So you can send $10k for $0.07 but you could also send $1 for $200 if you use many inputs or outputs. That's a problem for day-to-day purchases which tend to involve small amounts (especially if you follow the good practice to use disposable addresses for every transaction, meaning that you'll often have to combine multiple inputs to spend your money). It doesn't help that you have to wait for the transaction to be mined at least once before you can be reasonably sure that it's been validated. That's what off-chain solutions are supposed to fix, although they come with their own caveats.
    - DINKDINK 8y ago
      >That's what off-chain solutions are supposed to fix, although they come with their own caveats. L1-enforceable L2 bitcoin transactions have risks for the recipients. If you're the sender, you don't care.
      - eudora 8y ago
        Mind elaborating on these risks?
        DINKDINK 8y ago
        State of the art in L2 transactions means that you can send a payment without needing to issue a L1 transaction. There's a small, defensible risk that the sending party could try to broadcast outdated state in the L2 transaction (trying to roll back the state) but the protocol is designed with counter measures to deter that. Basically if the receiver isn't online or all the miners DoS the counter measure (retribution transaction) then the receiver is at risk. It's very small but still ought to be known.
- deleted 8y ago
  [deleted]
- DINKDINK 8y ago
  >Bitcoin in contrast takes 10 minutes to clear and settle a single transaction vs. Ethereum that takes 15 seconds.” This is a misconception in the cryptocurrency space. There is no such thing as a irreversible payment only variance of the reversibility given the number of confirmations it has. The only criteria that governs if a transaction is safe is if it costs more to reorg it than the transaction is worth. 0 conf transactions are trivial to "reorg" or double spend. The time between blocks doesn't change this (why ethereum or other chains marketing on high block frequency is a scam). See the double spend costs of various chains here: https://www.crypto51.app/ https://www.crypto51.app/ e.g. any payment on ethereum that is more than $745 [1] is at risk at one block. Conversely, on bitcoin any payment below $78,000 is at risk at one block. The analogy to use is: Ethereum seats you at the restaurant faster but takes 100X longer to bring you the bill. Ethereum is no better than paypal because (practically) no one can run a node that determines if a transaction has completed, because their blockchain is so poorly designed to make it onerous. Their entire marketplace is reliant on trusted third parties to verify transactions. [1] 179e3/60/4 [2] 470e3/6
  - xur17 8y ago
    > e.g. any payment on ethereum that is more than $745 [1] is at risk at one block. The attack cost is based on extrapolated hashing power rental costs from NiceHash. NiceHash has 4% of the necessary hashing power needed to carry out an attack on Ethereum, so you would not be able to complete an attack for this cost. From the 'Learn More' page: > Note that the attack cost does not include the block rewards that the miner will receive for mining. In some cases this can be quite significant, and reduce the attack cost by up to 80%. I made this website a few months back, and the goal wasn't to show the cost to attack Bitcoin, Ethereum, etc - it actually shows the exact opposite - it would be incredibly hard to pull off an attack without buying a ton of equipment since there isn't enough hashing power available for rent. The point was to show the large risk that smaller coins have to being attacked.
    - DINKDINK 8y ago
      Thanks for the site and correction.
- illumin8 8y ago
  I've sent many Bitcoin transactions into the 6 figures of USD recently, and never paid more than $0.25 for a transaction fee. Think about this: What does your bank charge for a wire transfer? Mine wants to charge $37. And how long does it take to complete? Mine takes days. Compare this to $0.25 and a 10 minute delivery time. It's honestly not even close.
  - smaili 8y ago
    To be fair, at peak BTC I recall seeing people claiming confirmation times of in the hours.
    - illumin8 8y ago
      You're taking almost 10 years of fast Bitcoin confirmation times and focusing on a narrowly small number of weeks or months that things were congested...
  - kalleboo 8y ago
    > What does your bank charge for a wire transfer? Free > And how long does it take to complete? Seconds
    - illumin8 8y ago
      I wish I lived in Europe... /sigh
  - richardknop 8y ago
    As another poster mentioned, this is argument against your bank, not for Bitcoin. Many banks (for example most EU banks) charge zero fees and wire transfers are instant. It's just incompetence of banking system that this is not supported more widely but there are no technical reasons why it cannot be like this globally for all banks. So this is not a long term moat for BTC as banks can just become competent one day and this advantage disappears.
    - 8y ago
- blueprint 8y ago
  > My main question about cryptocurrencies has always been the "faster, cheaper" thing. Last I heard it was pretty expensive to do a bitcoin transaction, and slow. The quote thrown around: It's not about global network tps – it's about being able to dependably move money anywhere in the world in a timely fashion without having to rely on another party to take custody of it and greenlight it, regardless of amount.
- CryoLogic 8y ago
  IOTA is the only crypto I am aware of with a decent TPS. It handles around 1k TPS right now.
  - hylianwarrior 8y ago
    Nano as well.
    - badge 8y ago
      Raiblocks aka Nano is a scam. "Distribution is complete" - how was the supply created and distributed? Hint, the supply was "premined" and a the creator chose to gift a very small percent of the supply out to users in order to incentivize them to promote it. You can not mine or create nano (raiblocks), you must purchase it from the dev who created the supply. https://raiblocks.net/page/frontiers.php?limit=100 https://raiblocks.net/page/frontiers.php?limit=100
  - badge 8y ago
    IOTA is a well known fraud, highly distrusted and discredited among anyone following cryptocoins. https://medium.com/andreas-tries-blockchain/iota-cannot-be-used-for-iot-loss-of-funds-may-occur-e45b1ed9dd6b https://medium.com/andreas-tries-blockchain/iota-cannot-be-u... The network is centralized and unusable. There is no real world use case, and additionally the architecture is optimized for Trinary which is weird for IOT hardware because it's not mass produced to the scale of normal binary hardware. https://en.wikipedia.org/wiki/Ternary_computer https://en.wikipedia.org/wiki/Ternary_computer
    - jki275 8y ago
      "not mass produced to the scale of normal binary hardware" is the understatement of the century -- other than that completely agree, IOTA is an absolute fraud.
- vagab0nd 8y ago
  Before I fully understood bitcoin's Lightning Network, I had the same doubt. For people who are familiar with the Futex concept in operating systems, I can draw an analogy with the Lightning Network. If the transaction doesn't need to be settled on the main chain (if there's no locking contention), then it can be settled offchain (lock can be taken in user space), which is almost instant, with much (much) lower cost, and has the same trust model as the main chain transactions. Last time I checked there were some pending technical issues that needed to be worked out. But there's no reason to believe that it has no chance of getting there.
  - badge 8y ago
    If you understand computer science and design, there are some claims the LN team makes which will never be possible. The lightening network inherently suffers from limitations on transaction rates and an inability to scale up. https://en.wikipedia.org/wiki/Race_condition https://en.wikipedia.org/wiki/Race_condition It's one of the most basic computer bugs, and LN design is incompatible with a fix for race conditions due to decentralization. There's also the aspect that the Lightening Network's design inevitably turns it into a banking network, designed to extract fees for the wealthy. https://youtu.be/Ug8NH67_EfE?t=623 https://youtu.be/Ug8NH67_EfE?t=623 Compounding the already highly centralized wealth of Bitcoin oligarchs who took control of the supply for pennies on the dollar and need new users to dump their nearly free coins out for real money in fiat, where they would be able actually buy property. https://howmuch.net/articles/bitcoin-wealth-distribution https://howmuch.net/articles/bitcoin-wealth-distribution
    - eudora 8y ago
      You've made this race condition claim multiple times in this thread, and haven't backed it up with any detail whatsoever and no evidence. Could you back it up? You've literally only linked the race condition article and not provided any detail, like which race condition under which circumstances and why it can't be dealt with. The fact that you're claiming this multiple times with 0 detail and no evidence makes me think you're someone with an interest in something against Bitcoin.
- dylkil 8y ago
  bitcoin transaction are now expensive because the devs will not raise the block size limit (currently limited to 2500tx per block), which creates a market where users compete to be in the next block with a higher and higher fee. bitcoin cash devs have raised this limit to allow 86,000 tx per block ( and will remove the limit in the future). This means the median cost of transactions on bitcoin cash is $0.001. https://bitinfocharts.com/comparison/median_transaction_fee-btc-bch.html https://bitinfocharts.com/comparison/median_transaction_fee-...
  - buboard 8y ago
    what happens with mining profitability if the limit is raised? Will it become massively unprofitable, causing a drop in the network's integrity/security? What will happen to all those antminers, will they have resale value? How long would it take for it to become economically viable again? in the end , the block size decision seems to be driven by economic motives.
    - etherael 8y ago
      Profitability goes up, because more fee paying transactions can go into the chain. Meanwhile back on the broken BTC chain, every time it's been operating as designed it's lost 20% of market dominance per month. There's no mystery about it, BTC is a failure, BCH is the only way the original Bitcoin will ever work, if it will ever work.
    - dylkil 8y ago
      two things, firstly, currently there is a block reward for finding a block, this was and still is the main incentive for miners. Currently the reward is 12.5 BCH per block found. every few years this reward halves (next in 2020) and in the year 2140 the reward will be gone altogether (very long time from now). By the time it runs out, the idea is that the network will be supporting hundreds of millions of transactions per day, and all fees, even if only th equivlalent of 1 cent, will be worth alot to miners.
- hazz99 8y ago
  > Last I heard it was pretty expensive to do a bitcoin transaction, and slow. There are more modern cryptocurrencies (e.g. Nano, Iota) that are instant & feeless. Nano, iirc, is either infinitely scalable or has an 7000 transactions-per-second upper bound.
- bufferoverflow 8y ago
  That's a red herring though. Bitcoin sucks indeed, their refusal to increase the block size made it a lot less useful. But there are many other alternatives, which are fast and very cheap to transfer.
- puranjay 8y ago
  I'm always surprised when I read the argument about speed. Don't most countries already have protocols to facilitate immediate transfers? Here in India, we have multiple protocols for instant money transfers. With one popular protocol, IMPS, I can send money to an account and receive it within seconds, all for a fixed transaction fee of Rs. 5 (~$0.07). All you need is a bank account. There are other mobile-first protocols that require just a phone number. This seems like a problem that has already been mostly solved
  - CaptainZapp 8y ago
    Within the EU (and some associated countries) there's SEPA [1] I can send my brother in Belgium Euros from Switzerland and the transfer is effectively free (depends on the bank. Some banks charge marginal fees, usually < 1EUR). Before that it was rather expensive to transfer money to bank accounts in different countries. This seems like a problem that has already been mostly solved I agree. But apparently not for people who see governments as evil and fiat money issued as essentially worthless. And yes, I scratch my head about those folks. [1] https://en.wikipedia.org/wiki/Single_Euro_Payments_Area https://en.wikipedia.org/wiki/Single_Euro_Payments_Area
- malgregator 8y ago
  cryptocurrency maximalist would say that you are misunderstood that the Visa / MAstercart / whatever are fiat processors. Cryptocurrencies are currencies.
- csomar 8y ago
  I did a transaction yesterday. It cost around $0.08 and was confirmed in 15 minutes. However, given how very unlikely it is to reverse a transaction (you'll need to double spend, not an easy trick to pull when you are paying for coffee), the guy just acknowledged the transaction. So yes: It is cheaper. Speed? Yes, it is faster. If you send me money through PayPal or another gateway and I don't trust that one. I'll need to withdraw that money to my bank account. That's another few days. So bitcoin is faster is that it gives you your money (cash). A credit card ATM withdrawal can also be just as fast.
  - blackbrokkoli 8y ago
    This is just deliberately "well-technically" misinformation. Here, let me buy a steam game: Store Page. Yes, buy for myself. Yes, accept. Yes, PayPal Oneclick, accept. Yes, thanks. Conformation via email on phone, game starts downloading. Not even 20 seconds. Yeah, maybe the mills of the old COBOL databases of my local bank who is probably already calling it a day this time on a friday might grind a few days before there is an 'actual' transaction or whatever. Point is, me representing the average day-to-day money user, this system, backed by reciproc trust is completely sufficient for the VAST majority of transaction the VAST majority of people will ever do. I'm not saying cryptocurrency is useless. Au contraire, I think it has great potential. But claiming that it's easier, safer, faster, cheaper or less likely to fuck you over at this very point in time for the Otto-Normal customer is just plain wrong.
drawkbox 8y ago
Armstrong said the Bitcoin paper came out in 2010, it actually came out in November 2008 and the first implementation of it was in January 2009 [1][2]. Bitcoin and cryptocurrencies correlated with the Great Recession so that added fuel to the desire to have a safe currency if a national fiat failed suddenly. > The domain name "bitcoin.org" was registered on 18 August 2008. In November 2008, a link to a paper authored by Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System was posted to a cryptography mailing list. Nakamoto implemented the bitcoin software as open source code and released it in January 2009. The identity of Nakamoto remains unknown. > In January 2009, the bitcoin network was created when Nakamoto mined the first block of the chain, known as the genesis block. Embedded in the coinbase of this block was the following text: > > The Times 03/Jan/2009 Chancellor on brink of second bailout for banks. [1] https://web.archive.org/web/20140320135003/https://bitcoin.org/bitcoin.pdf https://web.archive.org/web/20140320135003/https://bitcoin.o... [2] https://en.wikipedia.org/wiki/Bitcoin https://en.wikipedia.org/wiki/Bitcoin
- beaner 8y ago
  FTA: > While surfing the web at his parents’ house on Christmas of 2009, he encountered a nine-page paper written by a pseudonymous author named Satoshi Nakamoto.
  - drawkbox 8y ago
    Yeah the article has it correct. In the video on the article he opens with talking about the paper and said it came out in 2010. Maybe he first saw it then. Part of Bitcoin/crypto success was due to the sketchiness of the Great Recession (Sept 15, 2008 the markets fell off a cliff and the paper came out two months later in November 2008) and fears of being tied to into a fiat nationalized currency. I don't know if bitcoin/blockchain would have been as big a hit without coupling with the Great Recession, that at least gave bitcoin massive fuel. The Great Recession was 'good for bitcoin' as they say.
    - canoebuilder 8y ago
      coupling with the Great Recession, that at least gave bitcoin massive fuel Whatever fuel that contributed, it probably pales in comparison to the fuel contributed by Mark Karpeles' market manipulation at MtGox. That's what really caught people's attention, and after that was when large scale VC money started to flow in, because the market manipulation and subsequent price spikes gave the impression that this was a growth market worthy of deploying capital into. After the collapse of MtGox, and what was going on behind the scenes became apparent, you had lots of people with money invested under the false pretence of great interest and demand for this new thing. So they had to decide were they going to take the loss, or pickup the torch from MtGox, and thus we got blockchain fever. Whatever utility there is in blockchain crypto-currencies, the game to this point has been "Hey I'm gonna buy some of this stuff, then convince other people to do the same, because it is magic internet money! (please don't be too specific in your questions, or ask me to think if what I propose is actually workable)"
whoisjuan 8y ago
There's nothing too big to fail. Especially something tethered to a space that is so volatile and unpredictable. Remember WorldCom?
- undersuit 8y ago
  Then that was not too big to fail.
  - seba_dos1 8y ago
    Big things usually are too big to fail until they fail.
    - undersuit 8y ago
      Then that big thing was not too big to fail.
      - seba_dos1 8y ago
        Nothing is, but you learn that only when it finally fails ;)
paulpauper 8y ago
I have read nothing but bad things about coinbase: non-existent customer service, poor security against hackers (esp. sms/phone hackers), no reimbursement for hack victims, withholding of funds for arbitrary and unfounded reasons, etc. All exchanges have problems, but coverage of coinbase is so negative
- fipple 8y ago
  It's because top dogs get more criticism. There are simply more people interested in reading criticism of Apple and Donald Trump's than of Dell or Mike Pence.
- mythrwy 8y ago
  My main complain with coinbase is long holds (like 2 weeks) on cryptocurrency after they have taken the money from a bank account. That just seems shady. Although to be fair they do credit the account with the coin at time of purchase so it goes up and down with market. You just can't move it out. Really like Square Cash App for purchasing BTC. Have it nearly instantly, easy to move.
  - andreygrehov 8y ago
    You should deposit money first and then buy with a fraction of a microsecond through Coinbase Pro.
  - mastermojo 8y ago
    The only reason this exists is to prevent people with stolen bank credentials from purchasing a bunch of bitcoins and then running off with them.
- h1d 8y ago
  Do you even know how many customers they have? Do you even hear bad things about small countries? That doesn't mean they have ace governments.
  - kalleboo 8y ago
kyleblarson 8y ago
TBTF == too big to exist
- MrMorden 8y ago
  But until the government starts breaking them up, "too big to fail" will be the goal of every large financial firm.
lf275 8y ago
I'm currently looking for a lawyer to pursue a lawsuit against Coinbase. It's been over a year, and I still haven't received my bitcoin cash, which was previously in a multi-signature account at the time of the split. I had tried to retrieve my bitcoin before the split, but it took several months because of a delay on Coinbase's part. Coinbase has failed to act despite sending multiple messages over the past year, and they have recently become completely unresponsive. If anybody is interested in joining the lawsuit, please message me to see if we could join efforts.
- dabockster 8y ago
  Did you remember to file the SAR paperwork? It's required by US law if you're trying to withdraw more than $3K within 30 days.
  - lf275 8y ago
    Sorry, I'm not familiar with this paperwork. Could you point me in the right direction? Its been over a year since I first asked for my BCH (in fact, I asked to receive my bitcoin from the multi-signature account months before that, but it was delayed due to technical issues with Coinbase's system at the time). Coinbase's agents initially told me that the engineers would eventually work on the issue, and I took them at their word. However, I've waited for more than a year (far beyond a reasonable timeline), and they have gone radio silent since my message to them over 2 months ago. I've only recently started looking into taking steps to find a lawyer and actually bring Coinbase to court. Edit: I will probably file a CFTC complaint in the coming days. Not sure how helpful it will be though.
    - projohnson 8y ago
      There is a long list of people who have been scammed by coinbase and the many other exchanges. I had about 12 btc in a bittrex (another "safe" us based exchange) account that I signed up for with a pseudonym. Then one day around the time btc was at $19k they decided to lock my account until I give them a selfie showing my passport and other scans of id. They know this is impossible and will not let me change my basic details (citing some sentence in their ToS and how they are trying to protect me). I went the lawyer route but it turns out there is nothing you can do legally if wording in the ToS says any deposits belong to them, they are not responsible for anything, can't be sued etc. Also no one really cares about bitcoin or other cryptocurrencies in the legal sense. So good luck trying to get your bch. This turns out to be a double edge sword because since then I have made use of some of the exploitable bugs in several cryptocurrency wallets held on exchanges and have transferred back the amount I lost plus much more. Didn't even bother to use a proxy or anything because I know there is nothing that anyone can do about it, go ahead and send the internet police to my house maybe that way I can finally get in contact with them to investigate the btc that was stolen from me.
AndrewKemendo 8y ago
Realistically, if any alternative currency starts giving a sovereign currency any real competition inside a sovereign controlled market, it will get shut down more or less immediately. If X% of Americans or [insert nation] are doing their transactions with bitcoin and the Treasury is losing a measurable percentage of income stream it's game over. Best case, it gets nationalized and [new currency] will be mandated to be pegged to the sovereign currency and taxed appropriately. The existential political aspect is what these folks seem to not understand.
- nradov 8y ago
  Bitcoin is a commodity, not a currency. Bartering commodities is already a taxable event and the IRS handles that just fine. There's nothing really new here.
  - AndrewKemendo 8y ago
    While it's true that Federal courts have ruled that cryptocurrencies are commodities, I'm addressing what the coinbase founder and team are stating as their desired goal. If you read the foundational paper from Satoshi, stateless decentralized currency was always the end goal. Philosophical proponents, like the coinbase founder, continue to state that it's still the goal which is what I'm addressing.
    - nradov 8y ago
      The goals of the Coinbase founder and Satoshi are entirely irrelevant. Power comes from the barrel of a gun.
      - rataata_jr 8y ago
        Called the government.
        dang 8y ago
        Could you please stop posting unsubstantive comments to Hacker News? We ban accounts that mostly do that. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
chris_wot 8y ago
That's funny, I want Coinbase to fail to be too big. Subtle difference.
teekert 8y ago
Don't we all! We all want to grow for the love of capitalism! But when we fail, we want socialism! Save me with public money! I don't want to pay insurance! But I want to be saved when I have cancer! Screw the social safety net, we are millionaires! Oh, the market crashes... Can I get some of that tax-payers money please!
m-i-l 8y ago
"Right now, Coinbase's most promising project, say Johnson and others, involves a new class of investments known as security tokens" I used to think security tokens were going to be one of the useful things to come out of the crypto asset space, for the reasons in the article, e.g. it does make a lot of sense being able to automate ownership and transactions and so on so easily. But now I'm not sure - it puts the success of your company/asset entirely in the hands of your chosen platform (which might crash and burn) and the wider crypto asset market (which again may have an uncertain future). It would be a bit like deciding to float your company on the Venezuelan stock market and price your stock in Venezualan Bolivar - even if you were one of the successful companies in the world your stock is probably going to do pretty badly. I have a suspicion that its all part of the plan by the small number of people who have accumulated almost all the wealth to draw more people into the scheme to prop up the pyramid a bit longer.
ohiovr 8y ago
You can send money with no fees with zelle instantly and fdic insurance is free. The dollar is going to outlive bitcoin as you have to pay utilities with the dollar and without utilities bitcoin is useless! Bitcoin has become the ultimate heist, just own the exchange and disappear! And con the public to make customers whole? Sorry charlie dodd frank forbids that happening with actual legitimate financial institutions. They will bail in instead! So nothing at all changes! The bank robs you just like bitcoin exchanges do all the time! So then which would you rather have in a depression? The kind no one ever thinks will show up on their watch?

202 points by chuhnk 8y ago

>Armstrong belongs to a generation of evangelists who view digital currencies, and the blockchain technology on which they’re based, as tools that will make investing, borrowing, and saving money faster, cheaper, and more egalitarian. My main question about cryptocurrencies has always been the "faster, cheaper" thing. Last I heard it was pretty expensive to do a bitcoin transaction, and slow. The quote thrown around: >The networks that Visa and Mastercard use process, in aggregate, “more than 5,000 transactions per second with capacity to process volumes multiple times that number. Bitcoin in contrast takes 10 minutes to clear and settle a single transaction vs. Ethereum that takes 15 seconds.” https://www.marketwatch.com/story/why-bitcoin-wont-displace-visa-or-mastercard-soon-2017-12-15 https://www.marketwatch.com/story/why-bitcoin-wont-displace-... I wonder what someone as heavily invested as Armstrong would say to that?

ericol 8y ago
I haven't really measured it, but the last time i transferred BTC (from Localbitcoin to my personal wallet) it seemed almost instantaneus. Obviously wasn't really looking at it (And I'm too lazy to go check now) but it was fast, in the order of seconds. And credit cards - so far - allow to send money in 1 diurection only, plus merchant's costs are way too high compared to BTC. Thought companies like Revolut are trying to change that.
- gamblor956 8y ago
  plus merchant's costs are way too high compared to BTC The BTC fee, in USD, is in the double digits--and occasionally bumps into the triple digits. Credit card fees, in contrast, are swallowed by the merchant, meaning that effectively they are free to consumers. Moreover, the basic fundamentals of capitalism guarantee that merchants can't simply raise their prices because other merchants can than compete with them on the basis of absolute price. While I sympathize with the merchants, credit card fees are also miniscule in comparison to the costs of handling paper cash securely, so the ultimate economic case is squarely for accepting credit cards.
  - nicky0 8y ago
    Things have changed in recent months. Right now the typical BTC fee is single digits or less.
imgabe 8y ago
It takes Visa and Mastercard a few seconds to record a transaction, but that transaction remains "pending" for several days afterward. I don't know what the transaction volume is on the Bitcoin network right now, but it's surely much more than one every 10 minutes.
robertAngst 8y ago
Faster and Cheaper for Bitcoin? If you use offchain, its actually incredible. (Shift Debit cards and Coinbase email are free and instant) Onchain is a disaster for literally every blockchain that exists. Nothing is scaling. (maybe DAG, but that is not blockchain) You need to understand the mindset of bitcoiners. There are 21,000,000 Bitcoin ever ever ever. The government only prints more money. Bitcoin is already accepted around the world. Its supposed to free us from government currency.
- Retric 8y ago
  I don't really understand that mindset. That's the current rules, but as with all human endeavors it's up in the air how long they last. EX: Miners could decide that every wallet must have one transaction per month or the cost of 1 transaction is deducted from that account. Thus avoiding a free rider problem.
  - deleted 8y ago
    [deleted]
  - nicky0 8y ago
    Miners attemptig to change anything against the broad consensus would find themselves using their expensive mining hardware to mine worthless blocks accepted by no-one.
    - dnomad 8y ago
      No they wouldn't. People would follow the mining power if they actually want to have a secure chain.
      - sparkie 8y ago
        People would only follow mining power that represents their interests. They don't care about individual miners. If a majority of miners were not representing the interests of the users, the users would find a way to push those miners out and will carry on as before. Miners can only generate revenue by mining a coin that people want to use. They want to use it because it is secured by a distribution of miners, such that no collaboration of miners can attack it. If the premise is that a group of miners can attack it, because that group of miners want to push their rules, then the concept is broken. Total hash power is not the deciding factor. What matters is that honest participants have more hash power than dishonest ones. The honest ones can adapt far more easily than large miners, who have too much invested to handle something like a proof-of-work adjustment.
dangrossman 8y ago
Probably that the Bitcoin ledger itself will be more akin to a ledger of inter-bank transfers than to VisaNet. Visa processes 5,000 transactions per second, but they only actually move money between banks to settle those transactions once a day, 5 days a week. Visa-like products can be built on top of Bitcoin or other digital currencies rather than people exchanging the coins directly.
- TheSoftwareGuy 8y ago
  But don't you lose the whole decentralized thing at that point?
  - sparkie 8y ago
    The decentralization is that anyone can participate, and anyone can be the bank. There is no authority and you do not need to ask permission. You do not require any large investment because the resources require to run the node are minimal, and you can even do it with some level of anonymity through the Tor network.
- bobthepanda 8y ago
  That destroys the point of the whole "decentralized systems" thing. Crypto has always kind of looked like a solution in search of a problem, IMO. What is it solving that isn't some sort of political science question?
  - sparkie 8y ago
    It's solving the problem that currency, up until now, has never had a finite supply, and that even currencies with limited supply could be forged, seized or inflated until they became worthless. Bitcoin is the first money ever, which nobody can create beyond the very predictable initial distribution programmed into the system. Gresham's law roughly states that when two kinds of money exist, people will stash the good money, and will trade with the bad money until it becomes useless. It's been proven time over throughout history. You only need to look at the gold rush that happened during the last financial crisis. Given that Bitcoin is the best money that has ever existed, then anyone who is paying attention is stashing it while they're trading with anything else. The next recession won't be a rush for gold.
olalonde 8y ago
My opinion is that Bitcoin is first and foremost a currency. Theoretically, nothing should stop Visa or Mastercard from adding it to the already large amount of currencies they support.
sparkie 8y ago
The problem with the comparison to Visa and Mastercard, is that settlement is never really final with those services. A transaction can be reversed even 6 months down the line, as anyone who runs a business probably knows. The cost of fraud-protection offered by these companies is the reason Bitcoin was proposed as a cheaper alternative. By making transactions final, the cost of fraud protection is put on the participants between each transaction, and not on every network user as a whole. Bitcoin can be expensive to transact small volumes when the network is busy. This is due to a limitation in the amount of transaction data that can fit into a block, and blocks are limited to 10 minutes on average. A transaction fee however, is not measured as a percentage of the value being transferred, but is measured in the bytes occupied in a block. Since the transaction amount is just a 64-bit value, the transaction fees are the same whether you're transferring $1 or $1M. In the latter case, it will be far cheaper than existing payment processors and banking settlement systems. This is why Bitcoin has emerged to become a settlement layer for larger value transactions, because block space is valuable (it costs money to replicate and store over hundreds of thousands of machines). People looking for a cheap payment processor for smaller value transactions are looking at solutions other than Bitcoin. The trade-off is that to scale their own blockchains, they deprioritize decentralization (fundamental to Bitcoin), or they print own currency (undermining the idea of finite supply). Since anyone can do this, it becomes difficult to tell which are scams. As more and more blockchains exist, the value accrued in each blockchain will become less and less as it gets shared between them. The logical conclusion is that the value of tokens in this myriad of chains will converge to nothing. On the other hand, if you could make a payment processor which does not undermine Bitcoin's decentralization or limited supply, then perhaps this would enable small, cheap transactions at a global scale. This is what the Lightning Network, among other solutions, are aiming to provide.
- landryraccoon 8y ago
  > A transaction can be reversed even 6 months down the line, as anyone who runs a business probably knows. This is a feature, not a bug. I'd want to see evidence that the total cost of fraud in crypto is less per user than the cost of fraud in traditional credit. I would guess that the cost of fraud in traditional credit is actually far lower because reversibility reduces the incentive to commit fraud. It's very difficult to steal money from someone's account because they can dispute the charge and get it back. Compare that to the case where your crypto account is hacked. There is zero recourse, the thief generally gets away with it scott free, so the incentives to commit fraud are huge.
alcio 8y ago
Mastercard/Visa do thousands of transactions per second and charge a single digit percentage fee on top. Bitcoin does 3 to 5 transactions per second and charges a fixed fee per byte of transaction space. Which is fairer? Speed has a cost that many people ignore.
- r32a_ 8y ago
  You cannot compare Bitcoin transaction to a visa/mastercard transaction. A Bitcoin transaction is closer to me giving you a gold bar than doing a credit card transaction. The payments layer is being developed and it's called the Lightning network. Which is faster than Visa/Mastercard and cheaper and can scale much greater and have a better resilience than Visa.
- PeterisP 8y ago
  Comparing CC prices against Bitcoin prices is also a bit apples of oranges - the CC fees are larger but CC users are getting a significantly "larger" service as well. A BTC transaction is just the initial money transfer, but a CC transaction is a package of money transfer + fraud insurance + some money-back for the payer; if you'd want to compare prices then you'd need to look at something like BTC transaction + an escrow service fee. Just technically executing the transaction is a minority of the problem and a minority of the cost; if you'd do BTC transactions with a proper consumer protection service then that part would be far more costly than just the transaction.
nivexous 8y ago
Many early Bitcoiners support Bitcoin Cash today which is closer to the original design of Bitcoin and does not have these issues you mentioned. Bitcoin was always meant to scale on-chain, and BTC's fees are entirely self-imposed by the Core developers who refuse to increase the block size. Bitcoin Cash (BCH) increased the block size, and now fees on BCH are a fraction of a penny. Speed of payments too is not an issue on BCH, and 0-conf instant transactions are acceptable for many types of purchases. The main argument against BCH is that home users won't be able to run their own full nodes, but these nodes do nothing useful and do not deserve subsidization. This was actually demonstrated in the Bitcoin bug CVE-2018-17144 (discovered by Bitcoin Cash developers, mind you) where 80% of the network (ie. home users) didn't upgrade their full node with the patch and the network remained secure. Armstrong has suggested he supports BCH's scaling path in several places.
- xorcist 8y ago
  If the original design of Bitcoin is important to you, why not study the orginal design and motivation in depth? Most of the early development work is still out there for everyone to see. You will find that questions about scaling was, and still is, the first thing that comes to mind for most people who hear about a plantary scale distributed ledger, and that payment channels was first suggested by Satoshi himself, if such provenance is considered important now.
  - nil_pointer 8y ago
    Unfortunately the current state of Blockstream's Bitcoin project does not align at all with Satoshi's whitepaper.
    - r32a_ 8y ago
      This is FUD. Blockstream does not own Bitcoin Core and does not even sponsor a majority of the developers. Their "influence" has actually dropped since the departure of Maxwell as CTO
  - nivexous 8y ago
deleted 8y ago
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wellboy 8y ago
Yes Bitcoin is slow. We already have blockchains that are near infinitely scalable and decentralized with Elastos, IOTA (at scale) and Holochain with its agent-centric architecture instead of data-centric architecture as most blockchains have it, which is launching in a couple of months. Nano is also very, very good and decentralized, has even instant transactions through its block-lattice architecture, but it isn't near infinitely scalable to billions of TPS yet or at least not yet.
lavezzi 8y ago
If we are doing Visa/Mastercard comparisons, then no fee, instant transfer cryptocurrencies like NANO should be part of the conversation.
- etherael 8y ago
  Different beast altogether, nano is dpos, not proof of work. The consensus mechanism and assurances are very different from something like BCH.
MithrilTuxedo 8y ago
To put some numbers to it, it cost me $0.07 to send someone >$10k worth of BTC. It cost my girlfriend $40 to send someone $400 via wire transfer through Bank of America.
- simias 8y ago
  For very large amount it seems rather obvious that BTC wins, the problem is that the cost of (on-chain) BTC transactions is not indexed on the amount being transfered but on the size in bytes of the transaction. So you can send $10k for $0.07 but you could also send $1 for $200 if you use many inputs or outputs. That's a problem for day-to-day purchases which tend to involve small amounts (especially if you follow the good practice to use disposable addresses for every transaction, meaning that you'll often have to combine multiple inputs to spend your money). It doesn't help that you have to wait for the transaction to be mined at least once before you can be reasonably sure that it's been validated. That's what off-chain solutions are supposed to fix, although they come with their own caveats.
  - DINKDINK 8y ago
    >That's what off-chain solutions are supposed to fix, although they come with their own caveats. L1-enforceable L2 bitcoin transactions have risks for the recipients. If you're the sender, you don't care.
    - eudora 8y ago
      Mind elaborating on these risks?
      - DINKDINK 8y ago
        State of the art in L2 transactions means that you can send a payment without needing to issue a L1 transaction. There's a small, defensible risk that the sending party could try to broadcast outdated state in the L2 transaction (trying to roll back the state) but the protocol is designed with counter measures to deter that. Basically if the receiver isn't online or all the miners DoS the counter measure (retribution transaction) then the receiver is at risk. It's very small but still ought to be known.
deleted 8y ago
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DINKDINK 8y ago
>Bitcoin in contrast takes 10 minutes to clear and settle a single transaction vs. Ethereum that takes 15 seconds.” This is a misconception in the cryptocurrency space. There is no such thing as a irreversible payment only variance of the reversibility given the number of confirmations it has. The only criteria that governs if a transaction is safe is if it costs more to reorg it than the transaction is worth. 0 conf transactions are trivial to "reorg" or double spend. The time between blocks doesn't change this (why ethereum or other chains marketing on high block frequency is a scam). See the double spend costs of various chains here: https://www.crypto51.app/ https://www.crypto51.app/ e.g. any payment on ethereum that is more than $745 [1] is at risk at one block. Conversely, on bitcoin any payment below $78,000 is at risk at one block. The analogy to use is: Ethereum seats you at the restaurant faster but takes 100X longer to bring you the bill. Ethereum is no better than paypal because (practically) no one can run a node that determines if a transaction has completed, because their blockchain is so poorly designed to make it onerous. Their entire marketplace is reliant on trusted third parties to verify transactions. [1] 179e3/60/4 [2] 470e3/6
- xur17 8y ago
  > e.g. any payment on ethereum that is more than $745 [1] is at risk at one block. The attack cost is based on extrapolated hashing power rental costs from NiceHash. NiceHash has 4% of the necessary hashing power needed to carry out an attack on Ethereum, so you would not be able to complete an attack for this cost. From the 'Learn More' page: > Note that the attack cost does not include the block rewards that the miner will receive for mining. In some cases this can be quite significant, and reduce the attack cost by up to 80%. I made this website a few months back, and the goal wasn't to show the cost to attack Bitcoin, Ethereum, etc - it actually shows the exact opposite - it would be incredibly hard to pull off an attack without buying a ton of equipment since there isn't enough hashing power available for rent. The point was to show the large risk that smaller coins have to being attacked.
  - DINKDINK 8y ago
    Thanks for the site and correction.
illumin8 8y ago
I've sent many Bitcoin transactions into the 6 figures of USD recently, and never paid more than $0.25 for a transaction fee. Think about this: What does your bank charge for a wire transfer? Mine wants to charge $37. And how long does it take to complete? Mine takes days. Compare this to $0.25 and a 10 minute delivery time. It's honestly not even close.
- smaili 8y ago
  To be fair, at peak BTC I recall seeing people claiming confirmation times of in the hours.
  - illumin8 8y ago
    You're taking almost 10 years of fast Bitcoin confirmation times and focusing on a narrowly small number of weeks or months that things were congested...
- kalleboo 8y ago
  > What does your bank charge for a wire transfer? Free > And how long does it take to complete? Seconds
  - illumin8 8y ago
    I wish I lived in Europe... /sigh
- richardknop 8y ago
  As another poster mentioned, this is argument against your bank, not for Bitcoin. Many banks (for example most EU banks) charge zero fees and wire transfers are instant. It's just incompetence of banking system that this is not supported more widely but there are no technical reasons why it cannot be like this globally for all banks. So this is not a long term moat for BTC as banks can just become competent one day and this advantage disappears.
  - 8y ago
blueprint 8y ago
> My main question about cryptocurrencies has always been the "faster, cheaper" thing. Last I heard it was pretty expensive to do a bitcoin transaction, and slow. The quote thrown around: It's not about global network tps – it's about being able to dependably move money anywhere in the world in a timely fashion without having to rely on another party to take custody of it and greenlight it, regardless of amount.
CryoLogic 8y ago
IOTA is the only crypto I am aware of with a decent TPS. It handles around 1k TPS right now.
- hylianwarrior 8y ago
  Nano as well.
  - badge 8y ago
    Raiblocks aka Nano is a scam. "Distribution is complete" - how was the supply created and distributed? Hint, the supply was "premined" and a the creator chose to gift a very small percent of the supply out to users in order to incentivize them to promote it. You can not mine or create nano (raiblocks), you must purchase it from the dev who created the supply. https://raiblocks.net/page/frontiers.php?limit=100 https://raiblocks.net/page/frontiers.php?limit=100
- badge 8y ago
  IOTA is a well known fraud, highly distrusted and discredited among anyone following cryptocoins. https://medium.com/andreas-tries-blockchain/iota-cannot-be-used-for-iot-loss-of-funds-may-occur-e45b1ed9dd6b https://medium.com/andreas-tries-blockchain/iota-cannot-be-u... The network is centralized and unusable. There is no real world use case, and additionally the architecture is optimized for Trinary which is weird for IOT hardware because it's not mass produced to the scale of normal binary hardware. https://en.wikipedia.org/wiki/Ternary_computer https://en.wikipedia.org/wiki/Ternary_computer
  - jki275 8y ago
    "not mass produced to the scale of normal binary hardware" is the understatement of the century -- other than that completely agree, IOTA is an absolute fraud.
vagab0nd 8y ago
Before I fully understood bitcoin's Lightning Network, I had the same doubt. For people who are familiar with the Futex concept in operating systems, I can draw an analogy with the Lightning Network. If the transaction doesn't need to be settled on the main chain (if there's no locking contention), then it can be settled offchain (lock can be taken in user space), which is almost instant, with much (much) lower cost, and has the same trust model as the main chain transactions. Last time I checked there were some pending technical issues that needed to be worked out. But there's no reason to believe that it has no chance of getting there.
- badge 8y ago
  If you understand computer science and design, there are some claims the LN team makes which will never be possible. The lightening network inherently suffers from limitations on transaction rates and an inability to scale up. https://en.wikipedia.org/wiki/Race_condition https://en.wikipedia.org/wiki/Race_condition It's one of the most basic computer bugs, and LN design is incompatible with a fix for race conditions due to decentralization. There's also the aspect that the Lightening Network's design inevitably turns it into a banking network, designed to extract fees for the wealthy. https://youtu.be/Ug8NH67_EfE?t=623 https://youtu.be/Ug8NH67_EfE?t=623 Compounding the already highly centralized wealth of Bitcoin oligarchs who took control of the supply for pennies on the dollar and need new users to dump their nearly free coins out for real money in fiat, where they would be able actually buy property. https://howmuch.net/articles/bitcoin-wealth-distribution https://howmuch.net/articles/bitcoin-wealth-distribution
  - eudora 8y ago
    You've made this race condition claim multiple times in this thread, and haven't backed it up with any detail whatsoever and no evidence. Could you back it up? You've literally only linked the race condition article and not provided any detail, like which race condition under which circumstances and why it can't be dealt with. The fact that you're claiming this multiple times with 0 detail and no evidence makes me think you're someone with an interest in something against Bitcoin.
dylkil 8y ago
bitcoin transaction are now expensive because the devs will not raise the block size limit (currently limited to 2500tx per block), which creates a market where users compete to be in the next block with a higher and higher fee. bitcoin cash devs have raised this limit to allow 86,000 tx per block ( and will remove the limit in the future). This means the median cost of transactions on bitcoin cash is $0.001. https://bitinfocharts.com/comparison/median_transaction_fee-btc-bch.html https://bitinfocharts.com/comparison/median_transaction_fee-...
- buboard 8y ago
  what happens with mining profitability if the limit is raised? Will it become massively unprofitable, causing a drop in the network's integrity/security? What will happen to all those antminers, will they have resale value? How long would it take for it to become economically viable again? in the end , the block size decision seems to be driven by economic motives.
  - etherael 8y ago
    Profitability goes up, because more fee paying transactions can go into the chain. Meanwhile back on the broken BTC chain, every time it's been operating as designed it's lost 20% of market dominance per month. There's no mystery about it, BTC is a failure, BCH is the only way the original Bitcoin will ever work, if it will ever work.
  - dylkil 8y ago
    two things, firstly, currently there is a block reward for finding a block, this was and still is the main incentive for miners. Currently the reward is 12.5 BCH per block found. every few years this reward halves (next in 2020) and in the year 2140 the reward will be gone altogether (very long time from now). By the time it runs out, the idea is that the network will be supporting hundreds of millions of transactions per day, and all fees, even if only th equivlalent of 1 cent, will be worth alot to miners.
hazz99 8y ago
> Last I heard it was pretty expensive to do a bitcoin transaction, and slow. There are more modern cryptocurrencies (e.g. Nano, Iota) that are instant & feeless. Nano, iirc, is either infinitely scalable or has an 7000 transactions-per-second upper bound.
bufferoverflow 8y ago
That's a red herring though. Bitcoin sucks indeed, their refusal to increase the block size made it a lot less useful. But there are many other alternatives, which are fast and very cheap to transfer.
puranjay 8y ago
I'm always surprised when I read the argument about speed. Don't most countries already have protocols to facilitate immediate transfers? Here in India, we have multiple protocols for instant money transfers. With one popular protocol, IMPS, I can send money to an account and receive it within seconds, all for a fixed transaction fee of Rs. 5 (~$0.07). All you need is a bank account. There are other mobile-first protocols that require just a phone number. This seems like a problem that has already been mostly solved
- CaptainZapp 8y ago
  Within the EU (and some associated countries) there's SEPA [1] I can send my brother in Belgium Euros from Switzerland and the transfer is effectively free (depends on the bank. Some banks charge marginal fees, usually < 1EUR). Before that it was rather expensive to transfer money to bank accounts in different countries. This seems like a problem that has already been mostly solved I agree. But apparently not for people who see governments as evil and fiat money issued as essentially worthless. And yes, I scratch my head about those folks. [1] https://en.wikipedia.org/wiki/Single_Euro_Payments_Area https://en.wikipedia.org/wiki/Single_Euro_Payments_Area
malgregator 8y ago
cryptocurrency maximalist would say that you are misunderstood that the Visa / MAstercart / whatever are fiat processors. Cryptocurrencies are currencies.
csomar 8y ago
I did a transaction yesterday. It cost around $0.08 and was confirmed in 15 minutes. However, given how very unlikely it is to reverse a transaction (you'll need to double spend, not an easy trick to pull when you are paying for coffee), the guy just acknowledged the transaction. So yes: It is cheaper. Speed? Yes, it is faster. If you send me money through PayPal or another gateway and I don't trust that one. I'll need to withdraw that money to my bank account. That's another few days. So bitcoin is faster is that it gives you your money (cash). A credit card ATM withdrawal can also be just as fast.
- blackbrokkoli 8y ago
  This is just deliberately "well-technically" misinformation. Here, let me buy a steam game: Store Page. Yes, buy for myself. Yes, accept. Yes, PayPal Oneclick, accept. Yes, thanks. Conformation via email on phone, game starts downloading. Not even 20 seconds. Yeah, maybe the mills of the old COBOL databases of my local bank who is probably already calling it a day this time on a friday might grind a few days before there is an 'actual' transaction or whatever. Point is, me representing the average day-to-day money user, this system, backed by reciproc trust is completely sufficient for the VAST majority of transaction the VAST majority of people will ever do. I'm not saying cryptocurrency is useless. Au contraire, I think it has great potential. But claiming that it's easier, safer, faster, cheaper or less likely to fuck you over at this very point in time for the Otto-Normal customer is just plain wrong.

drawkbox 8y ago

Armstrong said the Bitcoin paper came out in 2010, it actually came out in November 2008 and the first implementation of it was in January 2009 [1][2]. Bitcoin and cryptocurrencies correlated with the Great Recession so that added fuel to the desire to have a safe currency if a national fiat failed suddenly. > The domain name "bitcoin.org" was registered on 18 August 2008. In November 2008, a link to a paper authored by Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System was posted to a cryptography mailing list. Nakamoto implemented the bitcoin software as open source code and released it in January 2009. The identity of Nakamoto remains unknown. > In January 2009, the bitcoin network was created when Nakamoto mined the first block of the chain, known as the genesis block. Embedded in the coinbase of this block was the following text: > > The Times 03/Jan/2009 Chancellor on brink of second bailout for banks. [1] https://web.archive.org/web/20140320135003/https://bitcoin.org/bitcoin.pdf https://web.archive.org/web/20140320135003/https://bitcoin.o... [2] https://en.wikipedia.org/wiki/Bitcoin https://en.wikipedia.org/wiki/Bitcoin

beaner 8y ago
FTA: > While surfing the web at his parents’ house on Christmas of 2009, he encountered a nine-page paper written by a pseudonymous author named Satoshi Nakamoto.
- drawkbox 8y ago
  Yeah the article has it correct. In the video on the article he opens with talking about the paper and said it came out in 2010. Maybe he first saw it then. Part of Bitcoin/crypto success was due to the sketchiness of the Great Recession (Sept 15, 2008 the markets fell off a cliff and the paper came out two months later in November 2008) and fears of being tied to into a fiat nationalized currency. I don't know if bitcoin/blockchain would have been as big a hit without coupling with the Great Recession, that at least gave bitcoin massive fuel. The Great Recession was 'good for bitcoin' as they say.
  - canoebuilder 8y ago
    coupling with the Great Recession, that at least gave bitcoin massive fuel Whatever fuel that contributed, it probably pales in comparison to the fuel contributed by Mark Karpeles' market manipulation at MtGox. That's what really caught people's attention, and after that was when large scale VC money started to flow in, because the market manipulation and subsequent price spikes gave the impression that this was a growth market worthy of deploying capital into. After the collapse of MtGox, and what was going on behind the scenes became apparent, you had lots of people with money invested under the false pretence of great interest and demand for this new thing. So they had to decide were they going to take the loss, or pickup the torch from MtGox, and thus we got blockchain fever. Whatever utility there is in blockchain crypto-currencies, the game to this point has been "Hey I'm gonna buy some of this stuff, then convince other people to do the same, because it is magic internet money! (please don't be too specific in your questions, or ask me to think if what I propose is actually workable)"

whoisjuan 8y ago

There's nothing too big to fail. Especially something tethered to a space that is so volatile and unpredictable. Remember WorldCom?

undersuit 8y ago
Then that was not too big to fail.
- seba_dos1 8y ago
  Big things usually are too big to fail until they fail.
  - undersuit 8y ago
    Then that big thing was not too big to fail.
    - seba_dos1 8y ago
      Nothing is, but you learn that only when it finally fails ;)

paulpauper 8y ago

I have read nothing but bad things about coinbase: non-existent customer service, poor security against hackers (esp. sms/phone hackers), no reimbursement for hack victims, withholding of funds for arbitrary and unfounded reasons, etc. All exchanges have problems, but coverage of coinbase is so negative

fipple 8y ago
It's because top dogs get more criticism. There are simply more people interested in reading criticism of Apple and Donald Trump's than of Dell or Mike Pence.
mythrwy 8y ago
My main complain with coinbase is long holds (like 2 weeks) on cryptocurrency after they have taken the money from a bank account. That just seems shady. Although to be fair they do credit the account with the coin at time of purchase so it goes up and down with market. You just can't move it out. Really like Square Cash App for purchasing BTC. Have it nearly instantly, easy to move.
- andreygrehov 8y ago
  You should deposit money first and then buy with a fraction of a microsecond through Coinbase Pro.
- mastermojo 8y ago
  The only reason this exists is to prevent people with stolen bank credentials from purchasing a bunch of bitcoins and then running off with them.
h1d 8y ago
Do you even know how many customers they have? Do you even hear bad things about small countries? That doesn't mean they have ace governments.
- kalleboo 8y ago

kyleblarson 8y ago

TBTF == too big to exist

MrMorden 8y ago
But until the government starts breaking them up, "too big to fail" will be the goal of every large financial firm.

lf275 8y ago

I'm currently looking for a lawyer to pursue a lawsuit against Coinbase. It's been over a year, and I still haven't received my bitcoin cash, which was previously in a multi-signature account at the time of the split. I had tried to retrieve my bitcoin before the split, but it took several months because of a delay on Coinbase's part. Coinbase has failed to act despite sending multiple messages over the past year, and they have recently become completely unresponsive. If anybody is interested in joining the lawsuit, please message me to see if we could join efforts.

dabockster 8y ago
Did you remember to file the SAR paperwork? It's required by US law if you're trying to withdraw more than $3K within 30 days.
- lf275 8y ago
  Sorry, I'm not familiar with this paperwork. Could you point me in the right direction? Its been over a year since I first asked for my BCH (in fact, I asked to receive my bitcoin from the multi-signature account months before that, but it was delayed due to technical issues with Coinbase's system at the time). Coinbase's agents initially told me that the engineers would eventually work on the issue, and I took them at their word. However, I've waited for more than a year (far beyond a reasonable timeline), and they have gone radio silent since my message to them over 2 months ago. I've only recently started looking into taking steps to find a lawyer and actually bring Coinbase to court. Edit: I will probably file a CFTC complaint in the coming days. Not sure how helpful it will be though.
  - projohnson 8y ago
    There is a long list of people who have been scammed by coinbase and the many other exchanges. I had about 12 btc in a bittrex (another "safe" us based exchange) account that I signed up for with a pseudonym. Then one day around the time btc was at $19k they decided to lock my account until I give them a selfie showing my passport and other scans of id. They know this is impossible and will not let me change my basic details (citing some sentence in their ToS and how they are trying to protect me). I went the lawyer route but it turns out there is nothing you can do legally if wording in the ToS says any deposits belong to them, they are not responsible for anything, can't be sued etc. Also no one really cares about bitcoin or other cryptocurrencies in the legal sense. So good luck trying to get your bch. This turns out to be a double edge sword because since then I have made use of some of the exploitable bugs in several cryptocurrency wallets held on exchanges and have transferred back the amount I lost plus much more. Didn't even bother to use a proxy or anything because I know there is nothing that anyone can do about it, go ahead and send the internet police to my house maybe that way I can finally get in contact with them to investigate the btc that was stolen from me.

AndrewKemendo 8y ago

Realistically, if any alternative currency starts giving a sovereign currency any real competition inside a sovereign controlled market, it will get shut down more or less immediately. If X% of Americans or [insert nation] are doing their transactions with bitcoin and the Treasury is losing a measurable percentage of income stream it's game over. Best case, it gets nationalized and [new currency] will be mandated to be pegged to the sovereign currency and taxed appropriately. The existential political aspect is what these folks seem to not understand.

nradov 8y ago
Bitcoin is a commodity, not a currency. Bartering commodities is already a taxable event and the IRS handles that just fine. There's nothing really new here.
- AndrewKemendo 8y ago
  While it's true that Federal courts have ruled that cryptocurrencies are commodities, I'm addressing what the coinbase founder and team are stating as their desired goal. If you read the foundational paper from Satoshi, stateless decentralized currency was always the end goal. Philosophical proponents, like the coinbase founder, continue to state that it's still the goal which is what I'm addressing.
  - nradov 8y ago
    The goals of the Coinbase founder and Satoshi are entirely irrelevant. Power comes from the barrel of a gun.
    - rataata_jr 8y ago
      Called the government.
      - dang 8y ago
        Could you please stop posting unsubstantive comments to Hacker News? We ban accounts that mostly do that. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

chris_wot 8y ago

That's funny, I want Coinbase to fail to be too big. Subtle difference.

teekert 8y ago

Don't we all! We all want to grow for the love of capitalism! But when we fail, we want socialism! Save me with public money! I don't want to pay insurance! But I want to be saved when I have cancer! Screw the social safety net, we are millionaires! Oh, the market crashes... Can I get some of that tax-payers money please!

m-i-l 8y ago

"Right now, Coinbase's most promising project, say Johnson and others, involves a new class of investments known as security tokens" I used to think security tokens were going to be one of the useful things to come out of the crypto asset space, for the reasons in the article, e.g. it does make a lot of sense being able to automate ownership and transactions and so on so easily. But now I'm not sure - it puts the success of your company/asset entirely in the hands of your chosen platform (which might crash and burn) and the wider crypto asset market (which again may have an uncertain future). It would be a bit like deciding to float your company on the Venezuelan stock market and price your stock in Venezualan Bolivar - even if you were one of the successful companies in the world your stock is probably going to do pretty badly. I have a suspicion that its all part of the plan by the small number of people who have accumulated almost all the wealth to draw more people into the scheme to prop up the pyramid a bit longer.

ohiovr 8y ago

You can send money with no fees with zelle instantly and fdic insurance is free. The dollar is going to outlive bitcoin as you have to pay utilities with the dollar and without utilities bitcoin is useless! Bitcoin has become the ultimate heist, just own the exchange and disappear! And con the public to make customers whole? Sorry charlie dodd frank forbids that happening with actual legitimate financial institutions. They will bail in instead! So nothing at all changes! The bank robs you just like bitcoin exchanges do all the time! So then which would you rather have in a depression? The kind no one ever thinks will show up on their watch?