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>"We will be depositing funds into your account equal to the value of the currency improperly removed from your account at the time of the incident. Some custom

>"We will be depositing funds into your account equal to the value of the currency improperly removed from your account at the time of the incident. Some customers have already been reimbursed -- we will ensure all customers affected receive the full value of what you lost. You should see this reflected in your account no later than today." I sympathize with the "Not your keys, not your coins" crowd, but you have to admit that you are far more likely to be compensated in the event of an attack if you are using a large exchange. Not guaranteed, of course, but Coinbase has an image to maintain. I also believe, personally, that a large exchange has much better security than anything I could muster with a hot wallet. Yes, I know I can airgap a cold wallet but I like the ability to quickly sell some amount of crypto at market rates without having to transfer from a paper wallet. I also worry about physical security since my home has been burglarized before. Therefore, I keep my coins on exchanges and follow good practices with 2FA across my accounts (no SMS for any) and have withdrawal delays / whitelisting active.

CPLX 5y ago
Wonder how many people follow this reasoning to the next logical conclusion and realize that there is literally nothing to differentiate the coins at all from regular banking except for the lure of speculation.
- ekianjo 5y ago
  > differentiate the coins at all from regular banking Apart from the fact that you can save value over time? Because the dollar is only going down.
  - NineStarPoint 5y ago
    You can verify that one bitcoin you have today will not be diluted by more than a certain amount tomorrow. Value is based on people’s value of the object though, and I wouldn’t necessarily bet on Bitcoin keeping that over the long term.
    - ekianjo 5y ago
      > and I wouldn’t necessarily bet on Bitcoin keeping that over the long term. You can however bet 100% that your dollar is going to be worth WAY less in 20 years than now.
  - make3 5y ago
    people invest their money into appreciating assets like stocks
- JohnJamesRambo 5y ago
  Many cryptocurrencies are deflationary and/or have fixed supply; I cannot say the same for the dollars in my bank account. https://fred.stlouisfed.org/series/MABMM301USM189S https://fred.stlouisfed.org/series/MABMM301USM189S
  - threevox 5y ago
    That's why you don't store money in your bank account, you keep it in investment vehicles which also appreciate in value over the long run (not the best inflation foil, but an OK one)
    - JohnJamesRambo 5y ago
      Investment vehicles like the stock market are being propped up by the money printing, so I don’t consider that a good alternative. That’s just a game of musical chairs that stops and usually the poor people and those furthest from the money printer are the ones without a chair.
  - CPLX 5y ago
    > Many > fixed supply Perhaps we've identified a small crack in this otherwise bulletproof logic.
  - rchaud 5y ago
    Bitcoin's near infinite divisibility weakens the fixed supply argument, does it not? The smallest possible fraction of a dollar is $0.01. You can transact BTC in denominations with a lot more zeros behind the decimal point.
    - JohnJamesRambo 5y ago
      Read more about Bitcoin and what fixed supply means. There will only be 21 million Bitcoin ever, but the dollars keep being printed en masse. This makes each Bitcoin continually worth more and each dollar continually worth less. https://www.visualcapitalist.com/purchasing-power-of-the-u-s-dollar-over-time/ https://www.visualcapitalist.com/purchasing-power-of-the-u-s...
- BitwiseFool 5y ago
  I am a cryptocurrency enthusiast/advocate, but I've come to the realization that "being your own bank" is actually a terrifying and merciless burden. One small mistake has the potential to wipe you out and there is no way to get your funds back. Despite all the criticisms that come with "the banking system", banks do provide a lot of value to individuals. It is completely understandable that people would want to wrap their decentralized currency inside of a centralized system (exchanges, custodianship, IRAs, etc.) for the benefits that having a bank-like organization can provide.
  - CPLX 5y ago
    The benefits of the banking system I would propose to be self-explanatory, though your parent comment recaps them well. It's the reason to do the crypto part at all that's more confusing. Unless of course we all just admit that gambling is unbelievably popular and fun and has been a continued hit throughout human history.
  - nybble41 5y ago
    There are hybrid systems which offer the best of both worlds. For example, the open source Muun wallet uses a 2-of-2 key system[0] in which Muun only has access to one of the two keys so, unlike a traditional bank or a custodial exchange like Coinbase, they can't spend any funds without your signature. Your Muun wallet app also only has one key, so authentication with the Muun service is necessary to complete transactions—this allows Muun to disable the wallet in the event the phone is lost or stolen, by refusing to countersign its payments. A recovery code kept offline, on paper, allows you to set up a new Muun wallet and recover your funds in the event that the phone holding the original wallet becomes unavailable for any reason. Finally, for complete self-custody you can export a PDF with encrypted versions of both keys plus some additional data ("output descriptors") which, together with the offline recovery code, can be used in an emergency to transfer your funds to a new wallet without any involvement from Muun. This does involve using a centralized service to an extent, but the amount of trust you are asked to extend is limited. They can't unilaterally take your funds, and they can't stop you from moving them to another wallet which you fully control. At the same time, you can safely use the wallet online with the additional convenience and safeguards provided by Muun, and it would be difficult to lose your funds permanently from "one small mistake". [0] https://blog.muun.com/muuns-multisig-model/ https://blog.muun.com/muuns-multisig-model/
- izzydata 5y ago
  This seems like an egregious use of the word "literally" I think you should look up the use cases for decentralized finance.
  - CPLX 5y ago
    There are two spectacular use cases: gambling and illicit transactions That's not snark, those are great use cases, both have thousands of years of popularity behind them and tons of demand. Hence my parent comment, which points out that when you use the more heavily regulated centralized exchanges like coinbase the one remaining use case is gambling.
  - pgwhalen 5y ago
    In all seriousness, in what way is defi interacting with the non-defi world right now to provide value? I'm not too informed about the space, but from a distance it seems like every defi innovation so far is just building on top of something else in the defi space. Classic answers like "banking the unbanked in third world countries" don't seem to be shaking out yet.
    - knownjorbist 5y ago
      To ask a different question of traditional banks - where can you do what you can do in DeFi today in traditional finance - without either being an investment bank or a HNW individual?
      - pgwhalen 5y ago
        I think you garbled some words, can you rephrase the question?
        knownjorbist 5y ago
        Does that help? You cannot walk into a bank and ask to put your money to work in the same way that they are already putting your money to work just by holding it in an account with them. At least, not for average people.
- snotrockets 5y ago
  And lack of KYC, which enables it to be used for ransomware payments
- ftlio 5y ago
  I can write code that trades bitcoins without having to ask anyone for permission. Without getting into what Bitcoin will change about banking, I'd say that's pretty different from regular banking.
- poiuiopkj 5y ago
  That is the logical conclusion of the institutions, since they are basically crypto banks. However the underlying coins are very different from the underlying asset in a bank, even if their use cases haven't come to fruition and the most common use case is speculation. The use cases that currently exist and are important, though probably not to users in this forum, are borderless transference and the ability to truly own your assets without a governing body or third party institution able to touch them. A significant portion of the world either: lacks institutional banking or is under an authoritarian / corrupt government that could seize their assets just because. Which means the current use cases are incredibly valuable to those individuals. For most users here coins are probably a novelty used for speculation or asset diversification.
- knownjorbist 5y ago
  If you know what DeFi is, I don't know how you can arrive at this conclusion. At this moment, you as an average person can not profit with your money in the same way that banks profit with your money. You know what the money in your checking and savings account is actually doing right now, right?
sneak 5y ago
> you have to admit that you are far more likely to be compensated in the event of an attack if you are using a large exchange This is only a recent phenomenon, and I don’t think it holds for all “large exchange[s]”.
- Kaytaro 5y ago
  Yeah, Mt. Gox used to be considered a large exchange, the largest at the time in fact.
  - zalebz 5y ago
    I just recently found out about a great cybersecurity podcast called Darknet Diaries (and having been binging it ever since). Episode 9 covers Mt Gox and it goes into detail of timeline of the developers and the numerous breaches. Highly recommended. All that is to say that Coinbase and Mt Gox were operating in completely different leagues of sophistication.
bb88 5y ago
There's still no FDIC insurance -- and never will be. If people make a run on the BTC Bank, and your value drops by 40%, CoinBase isn't going to refund you the losses.
- kupopuffs 5y ago
  I don't get it. BTC is not USD
- yuuu 5y ago
  ... ? Fidelity isn't going to refund me losses on the stocks I purchase. What's your point?
Thorrez 5y ago
Coinbase is reimbursing people because there was a flaw in Coinbase. If an individual's computer gets hacked and the hacker drains the user's account, I doubt Coinbase would reimburse.

CPLX 5y ago

Wonder how many people follow this reasoning to the next logical conclusion and realize that there is literally nothing to differentiate the coins at all from regular banking except for the lure of speculation.

ekianjo 5y ago
> differentiate the coins at all from regular banking Apart from the fact that you can save value over time? Because the dollar is only going down.
- NineStarPoint 5y ago
  You can verify that one bitcoin you have today will not be diluted by more than a certain amount tomorrow. Value is based on people’s value of the object though, and I wouldn’t necessarily bet on Bitcoin keeping that over the long term.
  - ekianjo 5y ago
    > and I wouldn’t necessarily bet on Bitcoin keeping that over the long term. You can however bet 100% that your dollar is going to be worth WAY less in 20 years than now.
- make3 5y ago
  people invest their money into appreciating assets like stocks
JohnJamesRambo 5y ago
Many cryptocurrencies are deflationary and/or have fixed supply; I cannot say the same for the dollars in my bank account. https://fred.stlouisfed.org/series/MABMM301USM189S https://fred.stlouisfed.org/series/MABMM301USM189S
- threevox 5y ago
  That's why you don't store money in your bank account, you keep it in investment vehicles which also appreciate in value over the long run (not the best inflation foil, but an OK one)
  - JohnJamesRambo 5y ago
    Investment vehicles like the stock market are being propped up by the money printing, so I don’t consider that a good alternative. That’s just a game of musical chairs that stops and usually the poor people and those furthest from the money printer are the ones without a chair.
- CPLX 5y ago
  > Many > fixed supply Perhaps we've identified a small crack in this otherwise bulletproof logic.
- rchaud 5y ago
  Bitcoin's near infinite divisibility weakens the fixed supply argument, does it not? The smallest possible fraction of a dollar is $0.01. You can transact BTC in denominations with a lot more zeros behind the decimal point.
  - JohnJamesRambo 5y ago
    Read more about Bitcoin and what fixed supply means. There will only be 21 million Bitcoin ever, but the dollars keep being printed en masse. This makes each Bitcoin continually worth more and each dollar continually worth less. https://www.visualcapitalist.com/purchasing-power-of-the-u-s-dollar-over-time/ https://www.visualcapitalist.com/purchasing-power-of-the-u-s...
BitwiseFool 5y ago
I am a cryptocurrency enthusiast/advocate, but I've come to the realization that "being your own bank" is actually a terrifying and merciless burden. One small mistake has the potential to wipe you out and there is no way to get your funds back. Despite all the criticisms that come with "the banking system", banks do provide a lot of value to individuals. It is completely understandable that people would want to wrap their decentralized currency inside of a centralized system (exchanges, custodianship, IRAs, etc.) for the benefits that having a bank-like organization can provide.
- CPLX 5y ago
  The benefits of the banking system I would propose to be self-explanatory, though your parent comment recaps them well. It's the reason to do the crypto part at all that's more confusing. Unless of course we all just admit that gambling is unbelievably popular and fun and has been a continued hit throughout human history.
- nybble41 5y ago
  There are hybrid systems which offer the best of both worlds. For example, the open source Muun wallet uses a 2-of-2 key system[0] in which Muun only has access to one of the two keys so, unlike a traditional bank or a custodial exchange like Coinbase, they can't spend any funds without your signature. Your Muun wallet app also only has one key, so authentication with the Muun service is necessary to complete transactions—this allows Muun to disable the wallet in the event the phone is lost or stolen, by refusing to countersign its payments. A recovery code kept offline, on paper, allows you to set up a new Muun wallet and recover your funds in the event that the phone holding the original wallet becomes unavailable for any reason. Finally, for complete self-custody you can export a PDF with encrypted versions of both keys plus some additional data ("output descriptors") which, together with the offline recovery code, can be used in an emergency to transfer your funds to a new wallet without any involvement from Muun. This does involve using a centralized service to an extent, but the amount of trust you are asked to extend is limited. They can't unilaterally take your funds, and they can't stop you from moving them to another wallet which you fully control. At the same time, you can safely use the wallet online with the additional convenience and safeguards provided by Muun, and it would be difficult to lose your funds permanently from "one small mistake". [0] https://blog.muun.com/muuns-multisig-model/ https://blog.muun.com/muuns-multisig-model/
izzydata 5y ago
This seems like an egregious use of the word "literally" I think you should look up the use cases for decentralized finance.
- CPLX 5y ago
  There are two spectacular use cases: gambling and illicit transactions That's not snark, those are great use cases, both have thousands of years of popularity behind them and tons of demand. Hence my parent comment, which points out that when you use the more heavily regulated centralized exchanges like coinbase the one remaining use case is gambling.
- pgwhalen 5y ago
  In all seriousness, in what way is defi interacting with the non-defi world right now to provide value? I'm not too informed about the space, but from a distance it seems like every defi innovation so far is just building on top of something else in the defi space. Classic answers like "banking the unbanked in third world countries" don't seem to be shaking out yet.
  - knownjorbist 5y ago
    To ask a different question of traditional banks - where can you do what you can do in DeFi today in traditional finance - without either being an investment bank or a HNW individual?
    - pgwhalen 5y ago
      I think you garbled some words, can you rephrase the question?
      - knownjorbist 5y ago
        Does that help? You cannot walk into a bank and ask to put your money to work in the same way that they are already putting your money to work just by holding it in an account with them. At least, not for average people.
snotrockets 5y ago
And lack of KYC, which enables it to be used for ransomware payments
ftlio 5y ago
I can write code that trades bitcoins without having to ask anyone for permission. Without getting into what Bitcoin will change about banking, I'd say that's pretty different from regular banking.
poiuiopkj 5y ago
That is the logical conclusion of the institutions, since they are basically crypto banks. However the underlying coins are very different from the underlying asset in a bank, even if their use cases haven't come to fruition and the most common use case is speculation. The use cases that currently exist and are important, though probably not to users in this forum, are borderless transference and the ability to truly own your assets without a governing body or third party institution able to touch them. A significant portion of the world either: lacks institutional banking or is under an authoritarian / corrupt government that could seize their assets just because. Which means the current use cases are incredibly valuable to those individuals. For most users here coins are probably a novelty used for speculation or asset diversification.
knownjorbist 5y ago
If you know what DeFi is, I don't know how you can arrive at this conclusion. At this moment, you as an average person can not profit with your money in the same way that banks profit with your money. You know what the money in your checking and savings account is actually doing right now, right?

sneak 5y ago

> you have to admit that you are far more likely to be compensated in the event of an attack if you are using a large exchange This is only a recent phenomenon, and I don’t think it holds for all “large exchange[s]”.

Kaytaro 5y ago
Yeah, Mt. Gox used to be considered a large exchange, the largest at the time in fact.
- zalebz 5y ago
  I just recently found out about a great cybersecurity podcast called Darknet Diaries (and having been binging it ever since). Episode 9 covers Mt Gox and it goes into detail of timeline of the developers and the numerous breaches. Highly recommended. All that is to say that Coinbase and Mt Gox were operating in completely different leagues of sophistication.

bb88 5y ago

There's still no FDIC insurance -- and never will be. If people make a run on the BTC Bank, and your value drops by 40%, CoinBase isn't going to refund you the losses.

kupopuffs 5y ago
I don't get it. BTC is not USD
yuuu 5y ago
... ? Fidelity isn't going to refund me losses on the stocks I purchase. What's your point?

Thorrez 5y ago

Coinbase is reimbursing people because there was a flaw in Coinbase. If an individual's computer gets hacked and the hacker drains the user's account, I doubt Coinbase would reimburse.