10 ms·

Aye, in theory, but in practice technology has to fit into social context and coinbase is the result you get. If you don’t like the result, you need to redesig

Aye, in theory, but in practice technology has to fit into social context and coinbase is the result you get. If you don’t like the result, you need to redesign the technology so it works within the real world that exists. And it don’t.

mudrockbestgirl 4y ago
There is nothing wrong with Coinbase. It's an easy-to-use onramp and offramp, which is a valuable service. But people need to realize that Coinbase has nothing to do with the promise of crypto. You can trade crypto assets without ever using Coinbase or any other centralized exchange. Lots of people do that. Once you use Coinbase, you are out of the self-custodial crypto ecosystem and you pay a price for it. You give up all control over your assets. In return you gain convenience and the security of something backed by the US government. For some people that tradeoff is worth it, for other it isn't. The point of crypto is that you have the option to not do that. Nobody ever forces you to use centralized exchanges.
- graeme 4y ago
  > the security of something backed by the US government. What do you mean? If Coinbase goes bust or steals your assets you’re just an unsecured creditor. It isn’t like a brokerage in regulated markets or a bank, which have specific rules protecting your money.
  - mudrockbestgirl 4y ago
    Crypto assets may not be FDIC insured, but Coinbase can't just steal and run away with your assets without facing legal ramifications in the U.S. And that would also mean founders/shareholders face consequences (look at Theranos). Of course they can still go bankrupt. But then, again, the U.S. courts would decide what happens to their assets and yours. In either case it's up to the U.S. legal system, i.e. government. That's very different from managing your own keys. Nobody can take anything from you. But you also have zero legal protection against an attacker stealing your keys. In other words, you are in full control, for better or worse.
    - entropy47 4y ago
      > The U.S. legal system, i.e. government I agree with your overall point, but these two things are not the same.
    - paywallasinbeer 4y ago
      > Coinbase can't just steal and run away with your assets That seems hard to believe in light of Coinbase's own recent disclosure: https://www.barrons.com/articles/coinbase-customers-crypto-bankruptcy-51652302126 https://www.barrons.com/articles/coinbase-customers-crypto-b...
      - danuker 4y ago
        > Coinbase: Customers Could Lose Crypto if It Ever Went Bankrupt Investment funds suffer from the same problem. And so do banks, for amounts exceeding the FDIC insurance.
        JumpCrisscross 4y ago
        > Investment funds suffer from the same problem. And so do banks, for amounts exceeding the FDIC insurance. This hand-waves away a century of banking and investment protections everyone with assets at Coinbase willingly waives. Your funds at Fidelity are insured up to $500k by the SIPC [1]. Every person at Chase is insured up to $250k by the U.S. government, which backs the FDIC with its full “faith and credit” [2], a number which happily doubles with your account at Bank of America. (People concerned about this sweep [3] their money across multiple banks.) When Lehman went bankrupt, customers’ assets were ringfenced [4]. A private equity firm can’t buy a bank, lever it up and gamble away customers’ deposits and assets. None of the above apply to Coinbase. Nor should they. Everyone in crypto opted out of that system. [1] https://www.sipc.org/for-investors/what-sipc-protects https://www.sipc.org/for-investors/what-sipc-protects [2] https://www.fdic.gov/resources/ https://www.fdic.gov/resources/ [3] https://en.m.wikipedia.org/wiki/Sweep_account https://en.m.wikipedia.org/wiki/Sweep_account [4] https://corpgov.law.harvard.edu/wp-content/uploads/2008/10/092608-overview-fdicasconvervator-receiver.pdf https://corpgov.law.harvard.edu/wp-content/uploads/2008/10/0...
  - tlb 4y ago
    Being an unsecured creditor under US law is much better than the law of the jungle, where rug-pulls are just tough luck. Unsecured creditors are still ahead of stockholders in the event of a bankruptcy.
    - graeme 4y ago
      That’s very cold comfort. As an unsecured creditor you’re back of the line among creditors in a situation when there manifestly are not enough assets to pay creditors
- yunohn 4y ago
  > It's an easy-to-use onramp and offramp > You can trade crypto assets without ever using Coinbase or any other centralized exchange Do tell, how do you expect the average person to convert fiat to cryptocoins?
  - fsflover 4y ago
    It's a similar question to "do tell how the average person is going to benefit from the right to repair?", or "do tell how the average person is going to benefit from free software?". All these three questions have the same answer: By relying on the free market competition, by paying someone sufficient money, or by learning to use the technical tools. Crypto can be exchanged locally and anonymously with your friends, too.
    - yunohn 4y ago
      Cool, so do explain. This is HN, I’m sure we’d all like to understand.
  - jwhiles 4y ago
    I'm interested in approaches for this, bearing in mind that I don't know people in real life who I can give cash for crypto, and can't mine coins. I wanted to buy some tokens to set up a side project, but the prospect of giving all my details to Coinbase or some other exchange is unappealing.
    - jhugo 4y ago
      There are various p2p platforms for meeting people with whom you can exchange fiat for crypto (and vice-versa) directly. Some of these platforms include an escrow system (LocalBitcoins is the most well-known of that type, but I think it has KYC requirements), others rely on a 'web of trust' style system, etc.
- DebtDeflation 4y ago
  >You can trade crypto assets without ever using Coinbase or any other centralized exchange. I'm genuinely curious how one could do this at scale. I'm not talking about buying $1,000 of BTC on a P2P marketplace so you can then use it to buy drugs somewhere. I'm talking about someone wanting to buy $1 Million worth of BTC, then exchange half of it for ETH, then convert all of the BTC and ETH for fiat. How would one do this quickly and cost effectively without the use of any sort of exchange?
  - Yizahi 4y ago
    Easy, you take your tokens on a flash drive and fly to the Bahamas, where you meet in a back alley with Giancarlo and Paolo, who give you the keys from a dump truck full of unmarked twenties. And there reverse is possible of course - you get the dollars to Giancarlo, end he gives you his IGUs (it's like IOUs, but without "O", because he officially doesn't "owe" you anything, as per terms of service). This is called "institutional investors". It is fun to stay rich :)
  - rglullis 4y ago
    Why would you do that (the fiat)? Remove the fiat part from the equation, and the way to answer is easy, you can trade crypto-tokens in the many decentralized exchanges. And if you just want to hold volatile currency, you can trade the BTC or ETH for some stable token (like DAI, synthetix USD if you don't want to rely on fintech-backed tokens. If you are fine with using tokens backed by more credible institutions, you can hold USDC or Gemini USD)
    - mensetmanusman 4y ago
      Because you still have to buy food with Fiat
      - rglullis 4y ago
        OP was not asking how to buy $1M worth of food. OP was asking how to trade large amounts at scale. (It's amazing how inconsistent the skeptics are, when they are only trying to score some cheap points against what they don't like)
- chris123 4y ago
  Coinbase is not backed by the US government
  - junofan 4y ago
    Neither is my bank. Only banks and government agencies have accounts with the central bank.
- ada1981 4y ago
  Is it possible to acquire crytpo through a non-centralized way? Beyond mining, how do I exchange $100 of USD for Crypto without going through a trusted party to ensure my $$ gets me BTC?
  - junofan 4y ago
    You and counterparty agree on source of truth (e.g. some bank’s database) and use some sort of proof framework. It’s just an off-chain computation.
    - Koshkin 4y ago
      I don’t think an average person would understand a word of what you just wrote.
      - pc86 4y ago
        Just use a proof framework and off-chain computation, you dolt! Monads are just burritos!
  - bavell 4y ago
    Sure, ask a friend or someone in your local crypto community. P2P is the default in crypto.
  - matheusmoreira 4y ago
    Mining is the solution to this problem. It's a simple USD -> electricity -> computer -> cryptocurrency process.
    - ada1981 4y ago
      That’s interesting. It’s essentially a push right? Do not wildly profitable to mine; but you can untraceably convert USD to crypto via mining. Curious what it looks like to do this with large sums of cash.
- smaryjerry 4y ago
  Centralized exchanges are a necessity. Who can you trust to trade into and out of fiat? Who can you trust to make a exchange? Who can you trust to use security that works with your wallet? Sure there are decentralized exchanges but how much does anyone trust those, and how decentralized are they really? What happens if those go down? Hell most people don’t buy their own crypto just because they don’t trust random websites that claim to have secure wallets let alone that if they make a non-reversible transaction that the other party will come through. There needs to be an enforcer, most likely a government, that adds threats if someone breaks any of the trust above. There needs to be a centralized exchange to facilitate all these activities. It isn’t forced but anything else is just not as practical, so the majority of people won’t do it outside of an exchange.
  - matheusmoreira 4y ago
    The whole point of cryptocurrencies was to use them for everything without converting to fiat currency. There should be no need to trade into or out of fiat in the first place. Everything that's wrong with cryptocurrencies today can be traced back to exchanges showing up.
  - gfodor 4y ago
    You can repeat these claims all you want but ultimately we're going to just find out if this is true. It seems to me more likely its not true. At least, that a hypothetical future with minimal centralized exchange activity is also one where crypto is one of if not the predominant forms of held capital.
  - mudrockbestgirl 4y ago
    I don't think you have an understanding of how Ethereum or DeFi works. What you are saying makes no sense except for one point (see below). The whole purpose of DeFi and chains like Ethereum is that you don't need to trust decentralized exchanges or apps on top of Ethereum. The system is trustless. These exchanges don't have any control over your assets. They can't "go down" or disappear with your assets because they don't have access to them in the first place. There also is no counterparty risk and wallet security is a totally different thing that's unrelated to any application. I looked at your comment history and you vehemently argue against DeFi but your posts show that you have little understanding of any technology behind it. Where you ARE right is that centralized exchanges/entities are needed as a fiat on-ramp and off-ramp. There is no way to get around interacting with centralized governments if you want to use government-issued fiat currency.
- axus 4y ago
  What is the advantage of crypto over dollars when using Coinbase? Why not just use a traditional bank and dollars to trade goods and services?
- danans 4y ago
  > In return you gain convenience and the security of something backed by the US government. Crypto holdings in Coinbase are backed by the US government? By what mechanism?
- randomsearch 4y ago
  Coinbase has _everything_ to do with Crypto, and that is precisely my point.
michaelt 4y ago
Eh, I'm not sure it's possible to redesign "anonymous, unregulated internet money, great for drug sales, scams and cryptolocker payments" to fit into the social context "financial system under strict government control, absolutely no anonymous payments, protect people from scams, freeze out small-time crime (and Wikileaks)"
- ls15 4y ago
  True, crypto and totalitarianism don't mix well.
tim333 4y ago
In practice if you want to do something private with your crypto just send it from Coinbase to your own wallet and thence to something like a privacy coin like Monero. Privacy tech exists, it's just not Coinbase.
TameAntelope 4y ago
Coinbase is a result, but not the only result. Coinbase is how your grandmother can operate on the blockchain, but it doesn't need to be how you operate on the blockchain, and the more liquid the Bitcoin market is, the better off everyone involved is, as prices will be less volatile.

mudrockbestgirl 4y ago

There is nothing wrong with Coinbase. It's an easy-to-use onramp and offramp, which is a valuable service. But people need to realize that Coinbase has nothing to do with the promise of crypto. You can trade crypto assets without ever using Coinbase or any other centralized exchange. Lots of people do that. Once you use Coinbase, you are out of the self-custodial crypto ecosystem and you pay a price for it. You give up all control over your assets. In return you gain convenience and the security of something backed by the US government. For some people that tradeoff is worth it, for other it isn't. The point of crypto is that you have the option to not do that. Nobody ever forces you to use centralized exchanges.

graeme 4y ago
> the security of something backed by the US government. What do you mean? If Coinbase goes bust or steals your assets you’re just an unsecured creditor. It isn’t like a brokerage in regulated markets or a bank, which have specific rules protecting your money.
- mudrockbestgirl 4y ago
  Crypto assets may not be FDIC insured, but Coinbase can't just steal and run away with your assets without facing legal ramifications in the U.S. And that would also mean founders/shareholders face consequences (look at Theranos). Of course they can still go bankrupt. But then, again, the U.S. courts would decide what happens to their assets and yours. In either case it's up to the U.S. legal system, i.e. government. That's very different from managing your own keys. Nobody can take anything from you. But you also have zero legal protection against an attacker stealing your keys. In other words, you are in full control, for better or worse.
  - entropy47 4y ago
    > The U.S. legal system, i.e. government I agree with your overall point, but these two things are not the same.
  - paywallasinbeer 4y ago
    > Coinbase can't just steal and run away with your assets That seems hard to believe in light of Coinbase's own recent disclosure: https://www.barrons.com/articles/coinbase-customers-crypto-bankruptcy-51652302126 https://www.barrons.com/articles/coinbase-customers-crypto-b...
    - danuker 4y ago
      > Coinbase: Customers Could Lose Crypto if It Ever Went Bankrupt Investment funds suffer from the same problem. And so do banks, for amounts exceeding the FDIC insurance.
      - JumpCrisscross 4y ago
        > Investment funds suffer from the same problem. And so do banks, for amounts exceeding the FDIC insurance. This hand-waves away a century of banking and investment protections everyone with assets at Coinbase willingly waives. Your funds at Fidelity are insured up to $500k by the SIPC [1]. Every person at Chase is insured up to $250k by the U.S. government, which backs the FDIC with its full “faith and credit” [2], a number which happily doubles with your account at Bank of America. (People concerned about this sweep [3] their money across multiple banks.) When Lehman went bankrupt, customers’ assets were ringfenced [4]. A private equity firm can’t buy a bank, lever it up and gamble away customers’ deposits and assets. None of the above apply to Coinbase. Nor should they. Everyone in crypto opted out of that system. [1] https://www.sipc.org/for-investors/what-sipc-protects https://www.sipc.org/for-investors/what-sipc-protects [2] https://www.fdic.gov/resources/ https://www.fdic.gov/resources/ [3] https://en.m.wikipedia.org/wiki/Sweep_account https://en.m.wikipedia.org/wiki/Sweep_account [4] https://corpgov.law.harvard.edu/wp-content/uploads/2008/10/092608-overview-fdicasconvervator-receiver.pdf https://corpgov.law.harvard.edu/wp-content/uploads/2008/10/0...
- tlb 4y ago
  Being an unsecured creditor under US law is much better than the law of the jungle, where rug-pulls are just tough luck. Unsecured creditors are still ahead of stockholders in the event of a bankruptcy.
  - graeme 4y ago
    That’s very cold comfort. As an unsecured creditor you’re back of the line among creditors in a situation when there manifestly are not enough assets to pay creditors
yunohn 4y ago
> It's an easy-to-use onramp and offramp > You can trade crypto assets without ever using Coinbase or any other centralized exchange Do tell, how do you expect the average person to convert fiat to cryptocoins?
- fsflover 4y ago
  It's a similar question to "do tell how the average person is going to benefit from the right to repair?", or "do tell how the average person is going to benefit from free software?". All these three questions have the same answer: By relying on the free market competition, by paying someone sufficient money, or by learning to use the technical tools. Crypto can be exchanged locally and anonymously with your friends, too.
  - yunohn 4y ago
    Cool, so do explain. This is HN, I’m sure we’d all like to understand.
- jwhiles 4y ago
  I'm interested in approaches for this, bearing in mind that I don't know people in real life who I can give cash for crypto, and can't mine coins. I wanted to buy some tokens to set up a side project, but the prospect of giving all my details to Coinbase or some other exchange is unappealing.
  - jhugo 4y ago
    There are various p2p platforms for meeting people with whom you can exchange fiat for crypto (and vice-versa) directly. Some of these platforms include an escrow system (LocalBitcoins is the most well-known of that type, but I think it has KYC requirements), others rely on a 'web of trust' style system, etc.
DebtDeflation 4y ago
>You can trade crypto assets without ever using Coinbase or any other centralized exchange. I'm genuinely curious how one could do this at scale. I'm not talking about buying $1,000 of BTC on a P2P marketplace so you can then use it to buy drugs somewhere. I'm talking about someone wanting to buy $1 Million worth of BTC, then exchange half of it for ETH, then convert all of the BTC and ETH for fiat. How would one do this quickly and cost effectively without the use of any sort of exchange?
- Yizahi 4y ago
  Easy, you take your tokens on a flash drive and fly to the Bahamas, where you meet in a back alley with Giancarlo and Paolo, who give you the keys from a dump truck full of unmarked twenties. And there reverse is possible of course - you get the dollars to Giancarlo, end he gives you his IGUs (it's like IOUs, but without "O", because he officially doesn't "owe" you anything, as per terms of service). This is called "institutional investors". It is fun to stay rich :)
- rglullis 4y ago
  Why would you do that (the fiat)? Remove the fiat part from the equation, and the way to answer is easy, you can trade crypto-tokens in the many decentralized exchanges. And if you just want to hold volatile currency, you can trade the BTC or ETH for some stable token (like DAI, synthetix USD if you don't want to rely on fintech-backed tokens. If you are fine with using tokens backed by more credible institutions, you can hold USDC or Gemini USD)
  - mensetmanusman 4y ago
    Because you still have to buy food with Fiat
    - rglullis 4y ago
      OP was not asking how to buy $1M worth of food. OP was asking how to trade large amounts at scale. (It's amazing how inconsistent the skeptics are, when they are only trying to score some cheap points against what they don't like)
chris123 4y ago
Coinbase is not backed by the US government
- junofan 4y ago
  Neither is my bank. Only banks and government agencies have accounts with the central bank.
ada1981 4y ago
Is it possible to acquire crytpo through a non-centralized way? Beyond mining, how do I exchange $100 of USD for Crypto without going through a trusted party to ensure my $$ gets me BTC?
- junofan 4y ago
  You and counterparty agree on source of truth (e.g. some bank’s database) and use some sort of proof framework. It’s just an off-chain computation.
  - Koshkin 4y ago
    I don’t think an average person would understand a word of what you just wrote.
    - pc86 4y ago
      Just use a proof framework and off-chain computation, you dolt! Monads are just burritos!
- bavell 4y ago
  Sure, ask a friend or someone in your local crypto community. P2P is the default in crypto.
- matheusmoreira 4y ago
  Mining is the solution to this problem. It's a simple USD -> electricity -> computer -> cryptocurrency process.
  - ada1981 4y ago
    That’s interesting. It’s essentially a push right? Do not wildly profitable to mine; but you can untraceably convert USD to crypto via mining. Curious what it looks like to do this with large sums of cash.
smaryjerry 4y ago
Centralized exchanges are a necessity. Who can you trust to trade into and out of fiat? Who can you trust to make a exchange? Who can you trust to use security that works with your wallet? Sure there are decentralized exchanges but how much does anyone trust those, and how decentralized are they really? What happens if those go down? Hell most people don’t buy their own crypto just because they don’t trust random websites that claim to have secure wallets let alone that if they make a non-reversible transaction that the other party will come through. There needs to be an enforcer, most likely a government, that adds threats if someone breaks any of the trust above. There needs to be a centralized exchange to facilitate all these activities. It isn’t forced but anything else is just not as practical, so the majority of people won’t do it outside of an exchange.
- matheusmoreira 4y ago
  The whole point of cryptocurrencies was to use them for everything without converting to fiat currency. There should be no need to trade into or out of fiat in the first place. Everything that's wrong with cryptocurrencies today can be traced back to exchanges showing up.
- gfodor 4y ago
  You can repeat these claims all you want but ultimately we're going to just find out if this is true. It seems to me more likely its not true. At least, that a hypothetical future with minimal centralized exchange activity is also one where crypto is one of if not the predominant forms of held capital.
- mudrockbestgirl 4y ago
  I don't think you have an understanding of how Ethereum or DeFi works. What you are saying makes no sense except for one point (see below). The whole purpose of DeFi and chains like Ethereum is that you don't need to trust decentralized exchanges or apps on top of Ethereum. The system is trustless. These exchanges don't have any control over your assets. They can't "go down" or disappear with your assets because they don't have access to them in the first place. There also is no counterparty risk and wallet security is a totally different thing that's unrelated to any application. I looked at your comment history and you vehemently argue against DeFi but your posts show that you have little understanding of any technology behind it. Where you ARE right is that centralized exchanges/entities are needed as a fiat on-ramp and off-ramp. There is no way to get around interacting with centralized governments if you want to use government-issued fiat currency.
axus 4y ago
What is the advantage of crypto over dollars when using Coinbase? Why not just use a traditional bank and dollars to trade goods and services?
danans 4y ago
> In return you gain convenience and the security of something backed by the US government. Crypto holdings in Coinbase are backed by the US government? By what mechanism?
randomsearch 4y ago
Coinbase has _everything_ to do with Crypto, and that is precisely my point.

michaelt 4y ago

Eh, I'm not sure it's possible to redesign "anonymous, unregulated internet money, great for drug sales, scams and cryptolocker payments" to fit into the social context "financial system under strict government control, absolutely no anonymous payments, protect people from scams, freeze out small-time crime (and Wikileaks)"

ls15 4y ago
True, crypto and totalitarianism don't mix well.

tim333 4y ago

In practice if you want to do something private with your crypto just send it from Coinbase to your own wallet and thence to something like a privacy coin like Monero. Privacy tech exists, it's just not Coinbase.

TameAntelope 4y ago

Coinbase is a result, but not the only result. Coinbase is how your grandmother can operate on the blockchain, but it doesn't need to be how you operate on the blockchain, and the more liquid the Bitcoin market is, the better off everyone involved is, as prices will be less volatile.