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Facebook Security Director Joins Bitcoin Startup Coinbase

125 points by ssclafani 13y ago

trendspotter 13y ago
I recommend to use Blockchain.info or BitGo or GreenAddress over Coinbase if you already have Bitcoin. With those services you hold the keys to your Bitcoin, not Coinbase. With Coinbase they are in control over your Bitcoin, not you. GreenAddress is the only wallet for Bitcoin with a 2-2 model Multisig offering a Bip0032 wallet with nLocktime on the Bitcoin blockchain. * https://greenaddress.it/en/ https://greenaddress.it/en/
- hendzen 13y ago
  Coinbase as a wallet is pretty terrible, I agree. But its a good place to convert $ <-> BTC for consumers.
- gnaritas 13y ago
  Most people aren't going to want to hold their own keys as most people can't stop their computers from being constantly infected by malware. Just as people don't want to keep large amounts of cash in their safe, they will want someone else to take the responsibility of securing their coin. Pretty much only the tech savvy will care to even understand what a key is or care to hold their own. Bitcoin isn't a political movement to the masses, it's just a useful new technology; they aren't using it to kill banks or government and they don't care about the politics of the early adopters.
  - huangc10 13y ago
    agreed. but coinbase isn't a bank/authority. it's like letting some random company holding your money. meh.
    - nemothekid 13y ago
      The same could be said for Paypal I guess.
    - gnaritas 13y ago
      That's fine, I never said anything about Coinbase.
    - jdangu 13y ago
      Less random than paypal when it originally started. States had to come up with laws designed just for paypal, because an e-wallet was something completely new. “We’re in uncharted territory, so hard to say if this stuff falls under a particular state’s MTL [money transmitting license] statutes,” says co-founder Fred Ehrsam. “We’re still talking to states to figure out how each responds, but Coinbase is prepared to get licensed where a regulator deems it’s necessary.” In the meantime, he is continuing to do business, relying on the fact that Coinbase has its AML and KYC processes established. [1] http://www.coindesk.com/coinbase-gmail-bitcoin/ http://www.coindesk.com/coinbase-gmail-bitcoin/ (Oct 28 2013)
      - teacup50 13y ago
        Paypal isn't pretending to be a cryptocurrency. It's not much of a cryptocurrency if you hand the plaintext keys over.
    - ivanca 13y ago
      Google is a "random" company holding all your emails, Facebook is another one holding all the photos -and many interactions- of your lifetime (maybe not yet, but very soon), Apple is one holding all your music; etc etc.
      - teacup50 13y ago
        > Google is a "random" company holding all your emails Yes, that's a problem, and it's not even money. I don't use GMail, and it irks me that so many people willingly share our mutual correspondence with Google on my behalf. Now, what if Google was holding my savings account and the only thing protecting me was ... what? A digital key, which they hold in escrow?
  - teacup50 13y ago
    Bitcoin with central key escrow is completely and utterly pointless, unless the goal is to generate a lot of waste heat from servers. > Most people aren't going to want to hold their own keys as most people can't stop their computers from being constantly infected by malware. We have cheap, secure hardware crypto tokens that rely on two-factor auth. You don't need to keep millions of dollars on a Windows PC. > Just as people don't want to keep large amounts of cash in their safe, they will want someone else to take the responsibility of securing their coin. "Someone else" is called a bank. The bank is FDIC insured, and they and the federal government guarantee that your money will be there. They use a huge number of human, automated, and physical processes to keep money secure, and they don't just keep their entire holdings lying around in digital gold bars. Unless Coinbase et al are going to become (heavily regulated) banks, then they're just another Paypal, and the crypto doesn't even matter.
    - kylebrown 13y ago
      I don't see how the regulation level of Coinbase affects anything. Some people will store their keys on Coinbase. Paranoid users will use hardware wallets like Trezor. And there's a lot of options in between. The point is that its that choice (for starters) which differentiates bitcoin from Paypal. What if Paypal were to adopt bitcoin as a deposit/withdrawal method, right next to credit card and bank transfer? That won't change the public-private key nature of bitcoin crypto. The blockchain won't go anywhere. Coin mixers and dark markets will still be there. Coinbase isn't going to take over bitcoin any more than MtGox did. I don't quite understand what you're worried about.
      - teacup50 13y ago
        > I don't see how the regulation level of Coinbase affects anything. There's no point to a crypto-currency with insecure crypto. If you have insecure crypto, you need centralized regulation. If you have centralized regulation, you don't need crypto-currency. > The point is that its that choice (for starters) which differentiates bitcoin from Paypal. Paypal moves money in a lot of currencies, and there are lots of choices other than Paypal to move currency. > Coinbase isn't going to take over bitcoin any more than MtGox did. I don't quite understand what you're worried about. I think the analogy you're actually looking for is: "Coinbase isn't going to take over bitcoin any more than Google took over e-mail" The decentralized nature of bitcoin is the entire point. If it's co-opted by cloud key escrow services, there's no point.
  - sodastream 13y ago
    use a 2of2 or 2of3 wallet with multisig and two factor. Even better with an anti tampering hardware wallet talking to a service provider for 2FA for most security
- arasmussen 13y ago
  I am incredibly sick of hearing this. This is like saying "I recommend you stuff all your cash under your mattress instead of using a bank. With a bank, they are in control over your money, not you". It simply isn't scalable. Sure, people who are on their computers 24/7 (eg. anyone who works in tech) might have the technical knowhow to deal with this, but for those who are very non-technical, Coinbase is a great way to invest in/hold Bitcoins without having to get into the technical nitty gritty.
- BrokenPipe 13y ago
  Hi, GreenAddress founder here ;) If you are interested we have an open source unminified client with independent blockchain data verification via the electrum network as well as a a quick video infographics. The client can also verify that the P2SH belong to your HD seed and GreenAddress' all while not being identifiable as from GreenAddress externally unless explicitly requested in a coming feature within the payment protocol. Lots of questions and links here: http://www.reddit.com/r/Bitcoin/comments/20puhg/while_blockchaininfo_is_down_what_about_testing/ http://www.reddit.com/r/Bitcoin/comments/20puhg/while_blockc... Please feel free to ask any question or to suggest any feature. Source code https://github.com/greenaddress/ https://github.com/greenaddress/ Cheers!
  - somberi 13y ago
    Looked at GreenAddress. Very cool. I have some relevant questions, that may be OT in this thread. Can we chat? I am at kalepune (google's email). Thanks
- teacup50 13y ago
  Most of these services fail to clarify whether they are web-based and rely on so-called "secure" javascript crypto: eg, where their servers are sending the ephemeral JavaScript code that they claim -- but can not under any circumstances guarantee should they be compromised -- will not send your private keys to the server. Compare this to signed, native applications produced by third-parties who do not run the service in question, where code signing guarantees that the code distributed to you was validated by a responsible building party, and the signing key is not accessible from compromised front-end web servers.
  - BrokenPipe 13y ago
    Our FAQ https://greenaddress.it/faq https://greenaddress.it/faq we have a chrome app non minified and open source on github. That client is local and no JS can be injected as it connects via ws. Furthermore it verifies data against the electrum network and provides nLocktime transaction unlocking your funds.
    - teacup50 13y ago
      1) Chrome apps can be silently updated; it's a huge security hole in Chrome's distribution model, as it removes all human oversight from the process of software distribution. 2) You control the distribution keys for the silently updating Chrome app, and your signing key, which means all you need is the end-user's signing key to empty people's wallets -- which you (or any adversary that compromises you!) can get by pushing a Chrome app update. 3) Unless you are actually pushing users to use externally downloaded, NON-AUTOUPDATING, code signed applications by default, you're making users insecure by default. An open source client on GitHub doesn't do anyone any good if your default is to strip away crypto-currency's security. This is no different than Microsoft's previous policy of shipping insecure services enabled by default. Essentially, this boils down to "trust us" -- you control the infrastructure that protects one half of the signing keys, and you already have access to the other half. It'd make a helluva lot more sense if a locally installed client was maintained by a trusted third-party, and it was the default user mode. Cloud-focused web people are undermining the promise of bitcoin by simply not understanding why the cloud is so dangerous, whether we're talking about user data (creating a vast treasure trove for the government), or money.
rdl 13y ago
Wow, that's a pretty big hire -- congtratulations!
arasmussen 13y ago
This is huge. Congratulations to Coinbase and to the Bitcoin community in general. To the latter because the risk he's taking means he believes a lot in Bitcoin which is exactly what the currency needs to survive.
hendzen 13y ago
I'll be honest, I am a Bitcoin fan. But I realize there is a relatively large chance that it might just fail entirely (or only be used by criminals and just be regulated to death). Venture Capital investment in Bitcoin has been fairly massive - and from many top tier VCs e.g. a16z, USV & Accel (but notably not Sequoia nor Greylock). Some key investments: 75m for Coinbase, 20m for Xapo, 9m for Circle (still haven't launched) and many smaller investments. VCs have also been putting massive amounts of money in to BTC itself. If Bitcoin fails, SV will collectively look pretty silly. Its going to be interesting to see what happens when either the US economy takes a dump, or interest rates rise and VC funding dries up...
- Curmudgel 13y ago
  > Its going to be interesting to see what happens when either the US economy takes a dump, or interest rates rise and VC funding dries up... We just had a financial crisis 6 years ago in which the U.S economy "took a dump" and caused a global panic/recession/depression (pick your favorite euphemism). Investors poured their money into Treasury bills, and in such numbers that in 2008, monthly T-bill rates were actually negative. Don't count on people rushing to Bitcoin during the next financial crisis.
  - hendzen 13y ago
    My point was that during the next financial crisis, everyone might just sell all their Bitcoin, not that everyone would run to it.
    - kylebrown 13y ago
      And everyone might stop using Facebook. Or WhatsApp. Then Mark Zuckerberg would look silly. Like AOL did after buying MySpace. Is there a deeper point here which I'm not gleaning?
      - dragonwriter 13y ago
        Didn't AOL buy MySpace after everyone stopped using it?
astrowilliam 13y ago
I'm a fan of BTC and use coinbase as my central wallet of choice. Super excited about this news. I recently switched from regular banner advertisements on my site ( http://www.spaceindustrynews.com http://www.spaceindustrynews.com ) - cheap plug - to taking BTC donations. The BTC community has been amazingly supportive throughout the whole thing.
- sillysaurus3 13y ago
  I'm a fan of BTC and use coinbase as my central wallet of choice. Please transfer your BTC to a wallet under your control immediately. Run, don't walk. Take it from me: it's a terrible feeling to lose your money because someone else lost it on your behalf.
  - SkyMarshal 13y ago
    You mean a wallet on your own hardware, or your own wallet on someone else's hardware like Blockchain.info?
    - sillysaurus3 13y ago
      Under no circumstances should you trust anyone to have access to your bitcoin. Do whatever it takes to accomplish that goal. Philosophically, that's one of the core reasons bitcoin is a big deal, because at no point in history has it been possible to do that until now. If I had followed the above advice, then I wouldn't have lost a lot of money. Given the nature of human greed, what do you think the chances are that someone who has access to >10% of a currency will simply let it sit there and do nothing with it? Given the nature of computer security, what do you think the chances are that Coinbase is impregnable under every imaginable circumstance? What about a rogue employee? What if the founder himself steals? Now, the question is, what's the best way to accomplish the goal of "Don't let anyone else have access to your bitcoin, ever"? There are solutions. Find one, use it. Please. Don't make my mistake.
      - hendzen 13y ago
consz 13y ago
I hope he gets them off MongoDB. I still can't believe they let me double sell without even contacting me afterwards (I sold ~10 bitcoins when it was around $800 and the site was exceptionally busy -- had USD in my Coinbase account afterwards and the bitcoins never left, and I was able to transfer both the USD and BTC out afterwards).
- noname123 13y ago
  Can you tell me if you know the technical limitation of MongoDB that allows a double-sell? Is it because it doesn't have transaction integrity?
  - SomeoneWeird 13y ago
    Mongo shouldn't be used for financial applications, it doesn't have ACID support.
    - mbesto 13y ago
      Why, today, people refuse to use trusted SQL RDBMS's still boggles my mind...
      - gnu8 13y ago
        SQL isn't buzzword compliant. It's ironic really. MongoDB is the new Oracle, while Oracle would actually be a reasonable solution here.
    - tzs 13y ago
      I think the problem is more with the architects of the applications than with Mongo. You can safely use a non-ACID database for financial applications. You just have to take care of the parts of ACID you need yourself. It's tricky to get that right, though, so most developers would be much better off picking a database that does it for them.
    - jasondc 13y ago
      I've worked on a few large scale financial databases and none of the ones I've worked on use transactions (using Oracle). Most of them are insert only with bi-temporal data: http://en.wikipedia.org/wiki/Bitemporal_Modeling http://en.wikipedia.org/wiki/Bitemporal_Modeling
RegW 13y ago
Does Mr McGeehan's move signal a move by FB into currency exchange? Just imagine what FB would know: when and where you were born; who you are related to; who you know; where you shop; what you buy; how much you paid and how much money you have got left. Basically, your whole credit history is up for grabs. That's got to be the most lucrative data set ever. Damn - too late again. Back to the day job ...
exelius 13y ago
I was initially not a Bitcoin fan. But I saw Fred Ehrsam (one of the founders of Coinbase) speak at SXSW, and it's clear that he gets it: he said one of the biggest things harming perception of Bitcoin is that the media keeps calling it a "currency", which it clearly is not. He seems to view it as a better transaction process that's more efficient than credit cards (the justification being that a credit card transaction cost is 1.5-3.0%, while Bitcoin is closer to 0.5-1.0%). Viewed in this manner, Bitcoin starts to make sense to me. When all you're doing for a transaction is USD->BTC->USD, it doesn't matter what the price or volatility of BTC is. You're buying $30 worth of BTC which the seller is going to almost immediately convert it back to USD. It's cheaper than credit cards for two reasons: one, the risk of loss in the event a vendor is compromised is limited to the amount of the transaction, and two, the blockchain makes it really easy to automate transaction auditing. Ehrsam was also pretty adamant that Bitcoin isn't a way around existing laws. The first generation of Bitcoin firms were run by amateurs; the second gen (which he considered Coinbase a part of) are run by people who have spent their lives working in banking and securities. This means they will operate a lot more like banks, which includes complying with all the legal regulations as well as the operational processes like outside auditing and information security. This also means that governments will still be able to restrict the flow of Bitcoin: if China decides that BTC->CNY transactions are forbidden, no trustworthy Bitcoin exchange is going to process them. Any that do are likely to be flagged as money laundering operations by the US Govt which will make it very hard for them to do business with a legitimate bank. Again, when you look at it like this, Bitcoin is a disruptive new technology -- but it's not revolutionary. As always, the guys making the big money in a gold rush aren't the gold miners, it's the guys selling the shovels...
- TeMPOraL 13y ago
  > Ehrsam was also pretty adamant that Bitcoin isn't a way around existing laws. The first generation of Bitcoin firms were run by amateurs; the second gen (...) are run by people who have spent their lives working in banking and securities. (...) As always, the guys making the big money in a gold rush aren't the gold miners, it's the guys selling the shovels... This. Anarchists (crypto- and not) developed Bitcoin environment as a way to go around the laws, but now as it matures into a real tool, it's being taken over by people who are serious about making money. It's both a victory and a failure of Bitcoin - we have a potentially interesting new financial tool, but all the promises that "Central Banking / Feds can shove it" remain unfulfilled.
habosa 13y ago
Does Coinbase make money by speculating in the bitcoin purchase/sell interval? For instance, when I buy 1BTC at $600 they have ~4 days to get it to me. I assume that if they believe Bitcoin is trending down, they will wait to buy at $550 or lower and then give me the "cheaper" Bitcoin and take home the spread. I haven't heard any confirmation of this but I'd assume they are doing this. Does anyone know for sure?
- sputknick 13y ago
  Brian Armstrong said "no" in a talk he did with Kevin Rose. He basically said they make money on that as often as they lose money on it, so not counting it as a profit center and assuming in the end it will all even out. http://www.youtube.com/watch?v=ZwG1roO70co http://www.youtube.com/watch?v=ZwG1roO70co

125 points by ssclafani 13y ago

I recommend to use Blockchain.info or BitGo or GreenAddress over Coinbase if you already have Bitcoin. With those services you hold the keys to your Bitcoin, not Coinbase. With Coinbase they are in control over your Bitcoin, not you. GreenAddress is the only wallet for Bitcoin with a 2-2 model Multisig offering a Bip0032 wallet with nLocktime on the Bitcoin blockchain. * https://greenaddress.it/en/ https://greenaddress.it/en/

hendzen 13y ago
Coinbase as a wallet is pretty terrible, I agree. But its a good place to convert $ <-> BTC for consumers.
gnaritas 13y ago
Most people aren't going to want to hold their own keys as most people can't stop their computers from being constantly infected by malware. Just as people don't want to keep large amounts of cash in their safe, they will want someone else to take the responsibility of securing their coin. Pretty much only the tech savvy will care to even understand what a key is or care to hold their own. Bitcoin isn't a political movement to the masses, it's just a useful new technology; they aren't using it to kill banks or government and they don't care about the politics of the early adopters.
- huangc10 13y ago
  agreed. but coinbase isn't a bank/authority. it's like letting some random company holding your money. meh.
  - nemothekid 13y ago
    The same could be said for Paypal I guess.
  - gnaritas 13y ago
    That's fine, I never said anything about Coinbase.
  - jdangu 13y ago
    Less random than paypal when it originally started. States had to come up with laws designed just for paypal, because an e-wallet was something completely new. “We’re in uncharted territory, so hard to say if this stuff falls under a particular state’s MTL [money transmitting license] statutes,” says co-founder Fred Ehrsam. “We’re still talking to states to figure out how each responds, but Coinbase is prepared to get licensed where a regulator deems it’s necessary.” In the meantime, he is continuing to do business, relying on the fact that Coinbase has its AML and KYC processes established. [1] http://www.coindesk.com/coinbase-gmail-bitcoin/ http://www.coindesk.com/coinbase-gmail-bitcoin/ (Oct 28 2013)
    - teacup50 13y ago
      Paypal isn't pretending to be a cryptocurrency. It's not much of a cryptocurrency if you hand the plaintext keys over.
  - ivanca 13y ago
    Google is a "random" company holding all your emails, Facebook is another one holding all the photos -and many interactions- of your lifetime (maybe not yet, but very soon), Apple is one holding all your music; etc etc.
    - teacup50 13y ago
      > Google is a "random" company holding all your emails Yes, that's a problem, and it's not even money. I don't use GMail, and it irks me that so many people willingly share our mutual correspondence with Google on my behalf. Now, what if Google was holding my savings account and the only thing protecting me was ... what? A digital key, which they hold in escrow?
- teacup50 13y ago
  Bitcoin with central key escrow is completely and utterly pointless, unless the goal is to generate a lot of waste heat from servers. > Most people aren't going to want to hold their own keys as most people can't stop their computers from being constantly infected by malware. We have cheap, secure hardware crypto tokens that rely on two-factor auth. You don't need to keep millions of dollars on a Windows PC. > Just as people don't want to keep large amounts of cash in their safe, they will want someone else to take the responsibility of securing their coin. "Someone else" is called a bank. The bank is FDIC insured, and they and the federal government guarantee that your money will be there. They use a huge number of human, automated, and physical processes to keep money secure, and they don't just keep their entire holdings lying around in digital gold bars. Unless Coinbase et al are going to become (heavily regulated) banks, then they're just another Paypal, and the crypto doesn't even matter.
  - kylebrown 13y ago
    I don't see how the regulation level of Coinbase affects anything. Some people will store their keys on Coinbase. Paranoid users will use hardware wallets like Trezor. And there's a lot of options in between. The point is that its that choice (for starters) which differentiates bitcoin from Paypal. What if Paypal were to adopt bitcoin as a deposit/withdrawal method, right next to credit card and bank transfer? That won't change the public-private key nature of bitcoin crypto. The blockchain won't go anywhere. Coin mixers and dark markets will still be there. Coinbase isn't going to take over bitcoin any more than MtGox did. I don't quite understand what you're worried about.
    - teacup50 13y ago
      > I don't see how the regulation level of Coinbase affects anything. There's no point to a crypto-currency with insecure crypto. If you have insecure crypto, you need centralized regulation. If you have centralized regulation, you don't need crypto-currency. > The point is that its that choice (for starters) which differentiates bitcoin from Paypal. Paypal moves money in a lot of currencies, and there are lots of choices other than Paypal to move currency. > Coinbase isn't going to take over bitcoin any more than MtGox did. I don't quite understand what you're worried about. I think the analogy you're actually looking for is: "Coinbase isn't going to take over bitcoin any more than Google took over e-mail" The decentralized nature of bitcoin is the entire point. If it's co-opted by cloud key escrow services, there's no point.
- sodastream 13y ago
  use a 2of2 or 2of3 wallet with multisig and two factor. Even better with an anti tampering hardware wallet talking to a service provider for 2FA for most security
arasmussen 13y ago
I am incredibly sick of hearing this. This is like saying "I recommend you stuff all your cash under your mattress instead of using a bank. With a bank, they are in control over your money, not you". It simply isn't scalable. Sure, people who are on their computers 24/7 (eg. anyone who works in tech) might have the technical knowhow to deal with this, but for those who are very non-technical, Coinbase is a great way to invest in/hold Bitcoins without having to get into the technical nitty gritty.
BrokenPipe 13y ago
Hi, GreenAddress founder here ;) If you are interested we have an open source unminified client with independent blockchain data verification via the electrum network as well as a a quick video infographics. The client can also verify that the P2SH belong to your HD seed and GreenAddress' all while not being identifiable as from GreenAddress externally unless explicitly requested in a coming feature within the payment protocol. Lots of questions and links here: http://www.reddit.com/r/Bitcoin/comments/20puhg/while_blockchaininfo_is_down_what_about_testing/ http://www.reddit.com/r/Bitcoin/comments/20puhg/while_blockc... Please feel free to ask any question or to suggest any feature. Source code https://github.com/greenaddress/ https://github.com/greenaddress/ Cheers!
- somberi 13y ago
  Looked at GreenAddress. Very cool. I have some relevant questions, that may be OT in this thread. Can we chat? I am at kalepune (google's email). Thanks
teacup50 13y ago
Most of these services fail to clarify whether they are web-based and rely on so-called "secure" javascript crypto: eg, where their servers are sending the ephemeral JavaScript code that they claim -- but can not under any circumstances guarantee should they be compromised -- will not send your private keys to the server. Compare this to signed, native applications produced by third-parties who do not run the service in question, where code signing guarantees that the code distributed to you was validated by a responsible building party, and the signing key is not accessible from compromised front-end web servers.
- BrokenPipe 13y ago
  Our FAQ https://greenaddress.it/faq https://greenaddress.it/faq we have a chrome app non minified and open source on github. That client is local and no JS can be injected as it connects via ws. Furthermore it verifies data against the electrum network and provides nLocktime transaction unlocking your funds.
  - teacup50 13y ago
    1) Chrome apps can be silently updated; it's a huge security hole in Chrome's distribution model, as it removes all human oversight from the process of software distribution. 2) You control the distribution keys for the silently updating Chrome app, and your signing key, which means all you need is the end-user's signing key to empty people's wallets -- which you (or any adversary that compromises you!) can get by pushing a Chrome app update. 3) Unless you are actually pushing users to use externally downloaded, NON-AUTOUPDATING, code signed applications by default, you're making users insecure by default. An open source client on GitHub doesn't do anyone any good if your default is to strip away crypto-currency's security. This is no different than Microsoft's previous policy of shipping insecure services enabled by default. Essentially, this boils down to "trust us" -- you control the infrastructure that protects one half of the signing keys, and you already have access to the other half. It'd make a helluva lot more sense if a locally installed client was maintained by a trusted third-party, and it was the default user mode. Cloud-focused web people are undermining the promise of bitcoin by simply not understanding why the cloud is so dangerous, whether we're talking about user data (creating a vast treasure trove for the government), or money.

rdl 13y ago

Wow, that's a pretty big hire -- congtratulations!

arasmussen 13y ago

This is huge. Congratulations to Coinbase and to the Bitcoin community in general. To the latter because the risk he's taking means he believes a lot in Bitcoin which is exactly what the currency needs to survive.

hendzen 13y ago

I'll be honest, I am a Bitcoin fan. But I realize there is a relatively large chance that it might just fail entirely (or only be used by criminals and just be regulated to death). Venture Capital investment in Bitcoin has been fairly massive - and from many top tier VCs e.g. a16z, USV & Accel (but notably not Sequoia nor Greylock). Some key investments: 75m for Coinbase, 20m for Xapo, 9m for Circle (still haven't launched) and many smaller investments. VCs have also been putting massive amounts of money in to BTC itself. If Bitcoin fails, SV will collectively look pretty silly. Its going to be interesting to see what happens when either the US economy takes a dump, or interest rates rise and VC funding dries up...

Curmudgel 13y ago
> Its going to be interesting to see what happens when either the US economy takes a dump, or interest rates rise and VC funding dries up... We just had a financial crisis 6 years ago in which the U.S economy "took a dump" and caused a global panic/recession/depression (pick your favorite euphemism). Investors poured their money into Treasury bills, and in such numbers that in 2008, monthly T-bill rates were actually negative. Don't count on people rushing to Bitcoin during the next financial crisis.
- hendzen 13y ago
  My point was that during the next financial crisis, everyone might just sell all their Bitcoin, not that everyone would run to it.
  - kylebrown 13y ago
    And everyone might stop using Facebook. Or WhatsApp. Then Mark Zuckerberg would look silly. Like AOL did after buying MySpace. Is there a deeper point here which I'm not gleaning?
    - dragonwriter 13y ago
      Didn't AOL buy MySpace after everyone stopped using it?

astrowilliam 13y ago

I'm a fan of BTC and use coinbase as my central wallet of choice. Super excited about this news. I recently switched from regular banner advertisements on my site ( http://www.spaceindustrynews.com http://www.spaceindustrynews.com ) - cheap plug - to taking BTC donations. The BTC community has been amazingly supportive throughout the whole thing.

sillysaurus3 13y ago
I'm a fan of BTC and use coinbase as my central wallet of choice. Please transfer your BTC to a wallet under your control immediately. Run, don't walk. Take it from me: it's a terrible feeling to lose your money because someone else lost it on your behalf.
- SkyMarshal 13y ago
  You mean a wallet on your own hardware, or your own wallet on someone else's hardware like Blockchain.info?
  - sillysaurus3 13y ago
    Under no circumstances should you trust anyone to have access to your bitcoin. Do whatever it takes to accomplish that goal. Philosophically, that's one of the core reasons bitcoin is a big deal, because at no point in history has it been possible to do that until now. If I had followed the above advice, then I wouldn't have lost a lot of money. Given the nature of human greed, what do you think the chances are that someone who has access to >10% of a currency will simply let it sit there and do nothing with it? Given the nature of computer security, what do you think the chances are that Coinbase is impregnable under every imaginable circumstance? What about a rogue employee? What if the founder himself steals? Now, the question is, what's the best way to accomplish the goal of "Don't let anyone else have access to your bitcoin, ever"? There are solutions. Find one, use it. Please. Don't make my mistake.
    - hendzen 13y ago

consz 13y ago

I hope he gets them off MongoDB. I still can't believe they let me double sell without even contacting me afterwards (I sold ~10 bitcoins when it was around $800 and the site was exceptionally busy -- had USD in my Coinbase account afterwards and the bitcoins never left, and I was able to transfer both the USD and BTC out afterwards).

noname123 13y ago
Can you tell me if you know the technical limitation of MongoDB that allows a double-sell? Is it because it doesn't have transaction integrity?
- SomeoneWeird 13y ago
  Mongo shouldn't be used for financial applications, it doesn't have ACID support.
  - mbesto 13y ago
    Why, today, people refuse to use trusted SQL RDBMS's still boggles my mind...
    - gnu8 13y ago
      SQL isn't buzzword compliant. It's ironic really. MongoDB is the new Oracle, while Oracle would actually be a reasonable solution here.
  - tzs 13y ago
    I think the problem is more with the architects of the applications than with Mongo. You can safely use a non-ACID database for financial applications. You just have to take care of the parts of ACID you need yourself. It's tricky to get that right, though, so most developers would be much better off picking a database that does it for them.
  - jasondc 13y ago
    I've worked on a few large scale financial databases and none of the ones I've worked on use transactions (using Oracle). Most of them are insert only with bi-temporal data: http://en.wikipedia.org/wiki/Bitemporal_Modeling http://en.wikipedia.org/wiki/Bitemporal_Modeling

RegW 13y ago

Does Mr McGeehan's move signal a move by FB into currency exchange? Just imagine what FB would know: when and where you were born; who you are related to; who you know; where you shop; what you buy; how much you paid and how much money you have got left. Basically, your whole credit history is up for grabs. That's got to be the most lucrative data set ever. Damn - too late again. Back to the day job ...

exelius 13y ago

I was initially not a Bitcoin fan. But I saw Fred Ehrsam (one of the founders of Coinbase) speak at SXSW, and it's clear that he gets it: he said one of the biggest things harming perception of Bitcoin is that the media keeps calling it a "currency", which it clearly is not. He seems to view it as a better transaction process that's more efficient than credit cards (the justification being that a credit card transaction cost is 1.5-3.0%, while Bitcoin is closer to 0.5-1.0%). Viewed in this manner, Bitcoin starts to make sense to me. When all you're doing for a transaction is USD->BTC->USD, it doesn't matter what the price or volatility of BTC is. You're buying $30 worth of BTC which the seller is going to almost immediately convert it back to USD. It's cheaper than credit cards for two reasons: one, the risk of loss in the event a vendor is compromised is limited to the amount of the transaction, and two, the blockchain makes it really easy to automate transaction auditing. Ehrsam was also pretty adamant that Bitcoin isn't a way around existing laws. The first generation of Bitcoin firms were run by amateurs; the second gen (which he considered Coinbase a part of) are run by people who have spent their lives working in banking and securities. This means they will operate a lot more like banks, which includes complying with all the legal regulations as well as the operational processes like outside auditing and information security. This also means that governments will still be able to restrict the flow of Bitcoin: if China decides that BTC->CNY transactions are forbidden, no trustworthy Bitcoin exchange is going to process them. Any that do are likely to be flagged as money laundering operations by the US Govt which will make it very hard for them to do business with a legitimate bank. Again, when you look at it like this, Bitcoin is a disruptive new technology -- but it's not revolutionary. As always, the guys making the big money in a gold rush aren't the gold miners, it's the guys selling the shovels...

TeMPOraL 13y ago
> Ehrsam was also pretty adamant that Bitcoin isn't a way around existing laws. The first generation of Bitcoin firms were run by amateurs; the second gen (...) are run by people who have spent their lives working in banking and securities. (...) As always, the guys making the big money in a gold rush aren't the gold miners, it's the guys selling the shovels... This. Anarchists (crypto- and not) developed Bitcoin environment as a way to go around the laws, but now as it matures into a real tool, it's being taken over by people who are serious about making money. It's both a victory and a failure of Bitcoin - we have a potentially interesting new financial tool, but all the promises that "Central Banking / Feds can shove it" remain unfulfilled.

habosa 13y ago

Does Coinbase make money by speculating in the bitcoin purchase/sell interval? For instance, when I buy 1BTC at $600 they have ~4 days to get it to me. I assume that if they believe Bitcoin is trending down, they will wait to buy at $550 or lower and then give me the "cheaper" Bitcoin and take home the spread. I haven't heard any confirmation of this but I'd assume they are doing this. Does anyone know for sure?

sputknick 13y ago
Brian Armstrong said "no" in a talk he did with Kevin Rose. He basically said they make money on that as often as they lose money on it, so not counting it as a profit center and assuming in the end it will all even out. http://www.youtube.com/watch?v=ZwG1roO70co http://www.youtube.com/watch?v=ZwG1roO70co