6 ms·

Coinbase (YC S12), First Crowd Funded Bitcoin Company, Raises Over $600K

72 points by rasengan 14y ago

jboggan 14y ago
I think the first and most expensive hire should be a top-notch security expert. There have been too many screw-ups in the Bitcoin space and a hack at this level of prominence would be disastrous for the community.
- rmc 14y ago
  Agreed. Aside from the obvious "companies dealing with money need much better security", bitcoin itself has a bad rep, being security amateur hour. They need to fight this head on, and show they aren't idiots.
  - waterlesscloud 14y ago
    Their Security page offers some hope in that direction. http://support.coinbase.com/customer/portal/articles/628970-how-do-i-know-you-won-t-get-hacked- http://support.coinbase.com/customer/portal/articles/628970-...
    - jboggan 14y ago
      Yes but the big problem really boils down to "What % of the total bitcoin deposits are in the hot wallet at any given time?" To me bitcoin security should first be concerned with minimizing this number in any way possible. Hacks will happen; the companies involved need to make sure it's never worth their time.
      - toomim 14y ago
        ...and last I heard, coinbase keeps most coins hot! They need to fix this. Brian (ceo) doesn't recommend keeping lots of money there yet for this reason.
      - trotsky 14y ago
        If you want to be taken seriously as an online wallet then do what every other currency depository does - tell the public about your 3rd party deposit insurance, and tell your insurer about your security. Anyone unable or unwilling to secure insurance has essentially made their advertising slogan "we might as well rob you ourselves"
        illuminate 14y ago
        "we might as well rob you ourselves" Which appears to be the motto for most all of the wallet-thefts so far.
- Greynum 14y ago
  I don't think bitcoin related sites have less security than other sites that claim to be secure, it just that they are such a high value target and attract the attention of nearly all criminal hackers. Also nearly all of the thefts that occurred where a result of a compromised email account which eventually led to root level access of the server through a virtual server console. Not as a result of bad programming that led to an exploit.
  - hnolable 14y ago
    All the incidents to date except the first Bitcoinica heist were due to bad security practices one way or another. Even that one could be considered bad security practices by trusting that Linode was secure. That said, I expect we will see some really hardcore Bitcoin security incidents in the future that rival state sponsored hacking. Stealing Bitcoin requires no additional effort to profit. Since Bitcoin is money and easily made anonymous, stealing Bitcoin == profit. Therefore there exists an arbitrage opportunity between the cost of buying 0-day exploits and the Bitcoins that can be stolen by use of those exploits. I expect as Bitcoin goes up in value so will the cost of a certain class of exploit. What kind of software stack would you run if you were operating a Bitcoin bank that held a large amount of funds?
    - mey 14y ago
      This is the downside of Bitcoin's operating in a cash like nature. There is no FDIC for these "banks", the bank walls are digital and porous in ways unknown, and the bank can be robbed across international boundaries. What these companies need is insurance, but that insurance would be very hard/impossible to obtain.
      - Dylan16807 14y ago
        On the plus side, the way transactions work, the vault never needs to be connected to any networks at all. Hot storage is risky but cold storage is extremely safe.
        14y ago
- TallboyOne 14y ago
  That and get a better site design that doesn't use bootstrap. It looks like I'm staring at some early, somewhat-thought out prototype.
- h2s 14y ago
  It is really getting quite silly at this point. People keep building Bitcoin infrastructure in regular data centres as if that's perfectly sufficient. Check out this article about security at a Visa data centre: http://www.usatoday.com/tech/news/story/2012-03-25/visa-data-center/53774904/1 http://www.usatoday.com/tech/news/story/2012-03-25/visa-data... It even has a moat! Here's an article that illustrates the kind of scrutiny faced by banks when it comes to their data protection practices: http://www.finextra.com/news/fullstory.aspx?newsitemid=22595 http://www.finextra.com/news/fullstory.aspx?newsitemid=22595 It's incredibly stringent stuff and banks get fined hard when they fuck it up. By contrast, one of the recent Bitcoin heists was made possible because the hackers requested a password reset for the exchange's Rackspace account. Seriously.
andrewljohnson 14y ago
I just bought 20 bit coins yesterday, in a wallet at CoinBase. I saw YC funding for CoinBase as a fairly strong signal, and I feel buy and hold might be a good investment. The more liquid bitcoins become, the more they will be worth, and they aren't even remotely liquid yet.
- sgornick 14y ago
  You bought them and sent them to your CoinBase wallet, or did you actually buy them from CoinBase? (I didn't think that had started selling coins themselves yet.)
  - andrewljohnson 14y ago
    Bought them elsewhere - a friend of mine who started a local BitCoin drink-up did the buying for me. http://www.meetup.com/BitCoin-Drinkup/ http://www.meetup.com/BitCoin-Drinkup/
alexbosworth 14y ago
They should use that money to buy blockchain.info - i've used both and blockchain.info really knows their stuff
dreamdu5t 14y ago
The problem to solve isn't a nice UI for managing bitcoins... it's how to buy bitcoin with my VISA without it being treated as a trade on an exchange.
Paul_S 14y ago
The best thing about bitcoin is that it's decentralised and under your control. And what all these companies are trying to do is make it centralised and externalised from the users. Despite such wallets being stolen repeatedly people don't seem to get deterred. Bitcoin is safe because it's distributed. Safe from manipulation because no single entity has control over it, and safe from thieves because they'd have to go after each person individually. By centralising it you are making it more vulnerable. Apparently convenience is more important than anything else.
npguy 14y ago
Was the 600K deposited as bitcoins? :-)
adrianwaj 14y ago
Other positive news, Gavin Andresen, Lead Core Bitcoin Developer - "I'm pleased to announce the launch of the Bitcoin Foundation: standardizes, protects and promotes the use of Bitcoin cryptographic money for the benefit of users worldwide. The Bitcoin Foundation is modeled on the Linux Foundation." https://bitcointalk.org/index.php?topic=113400.0 https://bitcointalk.org/index.php?topic=113400.0 https://www.bitcoinfoundation.org/ https://www.bitcoinfoundation.org/
opendomain 14y ago
Coinbase bent the rules to do this - they had a fundraising, but failed to achieve their target before their deadline. So they just added a few weeks. And failed to reach their target again. I guess the third time is the charm. IANAL so changing the dates for crowdfunding may not be illegal but is not a company I want to trust my money to. See http://nosql.com/2012/08/23/crowdfunding-cheating/ http://nosql.com/2012/08/23/crowdfunding-cheating/ for the full story

72 points by rasengan 14y ago

I think the first and most expensive hire should be a top-notch security expert. There have been too many screw-ups in the Bitcoin space and a hack at this level of prominence would be disastrous for the community.

rmc 14y ago
Agreed. Aside from the obvious "companies dealing with money need much better security", bitcoin itself has a bad rep, being security amateur hour. They need to fight this head on, and show they aren't idiots.
- waterlesscloud 14y ago
  Their Security page offers some hope in that direction. http://support.coinbase.com/customer/portal/articles/628970-how-do-i-know-you-won-t-get-hacked- http://support.coinbase.com/customer/portal/articles/628970-...
  - jboggan 14y ago
    Yes but the big problem really boils down to "What % of the total bitcoin deposits are in the hot wallet at any given time?" To me bitcoin security should first be concerned with minimizing this number in any way possible. Hacks will happen; the companies involved need to make sure it's never worth their time.
    - toomim 14y ago
      ...and last I heard, coinbase keeps most coins hot! They need to fix this. Brian (ceo) doesn't recommend keeping lots of money there yet for this reason.
    - trotsky 14y ago
      If you want to be taken seriously as an online wallet then do what every other currency depository does - tell the public about your 3rd party deposit insurance, and tell your insurer about your security. Anyone unable or unwilling to secure insurance has essentially made their advertising slogan "we might as well rob you ourselves"
      - illuminate 14y ago
        "we might as well rob you ourselves" Which appears to be the motto for most all of the wallet-thefts so far.
Greynum 14y ago
I don't think bitcoin related sites have less security than other sites that claim to be secure, it just that they are such a high value target and attract the attention of nearly all criminal hackers. Also nearly all of the thefts that occurred where a result of a compromised email account which eventually led to root level access of the server through a virtual server console. Not as a result of bad programming that led to an exploit.
- hnolable 14y ago
  All the incidents to date except the first Bitcoinica heist were due to bad security practices one way or another. Even that one could be considered bad security practices by trusting that Linode was secure. That said, I expect we will see some really hardcore Bitcoin security incidents in the future that rival state sponsored hacking. Stealing Bitcoin requires no additional effort to profit. Since Bitcoin is money and easily made anonymous, stealing Bitcoin == profit. Therefore there exists an arbitrage opportunity between the cost of buying 0-day exploits and the Bitcoins that can be stolen by use of those exploits. I expect as Bitcoin goes up in value so will the cost of a certain class of exploit. What kind of software stack would you run if you were operating a Bitcoin bank that held a large amount of funds?
  - mey 14y ago
    This is the downside of Bitcoin's operating in a cash like nature. There is no FDIC for these "banks", the bank walls are digital and porous in ways unknown, and the bank can be robbed across international boundaries. What these companies need is insurance, but that insurance would be very hard/impossible to obtain.
    - Dylan16807 14y ago
      On the plus side, the way transactions work, the vault never needs to be connected to any networks at all. Hot storage is risky but cold storage is extremely safe.
      - 14y ago
TallboyOne 14y ago
That and get a better site design that doesn't use bootstrap. It looks like I'm staring at some early, somewhat-thought out prototype.
h2s 14y ago
It is really getting quite silly at this point. People keep building Bitcoin infrastructure in regular data centres as if that's perfectly sufficient. Check out this article about security at a Visa data centre: http://www.usatoday.com/tech/news/story/2012-03-25/visa-data-center/53774904/1 http://www.usatoday.com/tech/news/story/2012-03-25/visa-data... It even has a moat! Here's an article that illustrates the kind of scrutiny faced by banks when it comes to their data protection practices: http://www.finextra.com/news/fullstory.aspx?newsitemid=22595 http://www.finextra.com/news/fullstory.aspx?newsitemid=22595 It's incredibly stringent stuff and banks get fined hard when they fuck it up. By contrast, one of the recent Bitcoin heists was made possible because the hackers requested a password reset for the exchange's Rackspace account. Seriously.

andrewljohnson 14y ago

I just bought 20 bit coins yesterday, in a wallet at CoinBase. I saw YC funding for CoinBase as a fairly strong signal, and I feel buy and hold might be a good investment. The more liquid bitcoins become, the more they will be worth, and they aren't even remotely liquid yet.

sgornick 14y ago
You bought them and sent them to your CoinBase wallet, or did you actually buy them from CoinBase? (I didn't think that had started selling coins themselves yet.)
- andrewljohnson 14y ago
  Bought them elsewhere - a friend of mine who started a local BitCoin drink-up did the buying for me. http://www.meetup.com/BitCoin-Drinkup/ http://www.meetup.com/BitCoin-Drinkup/

alexbosworth 14y ago

They should use that money to buy blockchain.info - i've used both and blockchain.info really knows their stuff

dreamdu5t 14y ago

The problem to solve isn't a nice UI for managing bitcoins... it's how to buy bitcoin with my VISA without it being treated as a trade on an exchange.

Paul_S 14y ago

The best thing about bitcoin is that it's decentralised and under your control. And what all these companies are trying to do is make it centralised and externalised from the users. Despite such wallets being stolen repeatedly people don't seem to get deterred. Bitcoin is safe because it's distributed. Safe from manipulation because no single entity has control over it, and safe from thieves because they'd have to go after each person individually. By centralising it you are making it more vulnerable. Apparently convenience is more important than anything else.

npguy 14y ago

Was the 600K deposited as bitcoins? :-)

adrianwaj 14y ago

Other positive news, Gavin Andresen, Lead Core Bitcoin Developer - "I'm pleased to announce the launch of the Bitcoin Foundation: standardizes, protects and promotes the use of Bitcoin cryptographic money for the benefit of users worldwide. The Bitcoin Foundation is modeled on the Linux Foundation." https://bitcointalk.org/index.php?topic=113400.0 https://bitcointalk.org/index.php?topic=113400.0 https://www.bitcoinfoundation.org/ https://www.bitcoinfoundation.org/

opendomain 14y ago

Coinbase bent the rules to do this - they had a fundraising, but failed to achieve their target before their deadline. So they just added a few weeks. And failed to reach their target again. I guess the third time is the charm. IANAL so changing the dates for crowdfunding may not be illegal but is not a company I want to trust my money to. See http://nosql.com/2012/08/23/crowdfunding-cheating/ http://nosql.com/2012/08/23/crowdfunding-cheating/ for the full story