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Coinbase is just another company in the Bitcoin ecosystem, them being successful does not mean Bitcoin cannot have other faces or uses. Nobody condemns email fo

by Mahn 12y ago

Coinbase is just another company in the Bitcoin ecosystem, them being successful does not mean Bitcoin cannot have other faces or uses. Nobody condemns email for being too centralized because Gmail is popular, people who care for decentralization can and do set up their own email server.

vectorpush 12y ago
Well said, though, I think there is reason to be concerned about the continued centralization of bitcoin payment processors. In a world where bitpay and coinbase are processing the vast majority of bitcoin payments, it's easy to imagine how a coordinated denial of service attack could temporarily cripple the bitcoin economy from the consumer's perspective.
- Mahn 12y ago
  Sure, but then again, it's hard to picture the "consumerization" of bitcoin happening without services like BitPay or Coinbase in the first place. Plus, if there's a future where bitcoin actually has a respectable market share in consumer payments, surely there would be more competing companies in the space trying to get a slice of the pie.
- ThomPete 12y ago
  The big difference is that you don't need to be certified and so it doesn't exclude anyone from getting into this game. Compare that with banking which is basically impossible to even get started with properly. The interesting thing here is that it's build on an open protocol rather than on legislation and so this I believe will at least give the opportunity to create all sorts of interesting solutions that are currently impossible to do within the current banking system because technology moves faster than legislation. So even if we are talking centralization or clustering as I like to call it, we are not talking exclusion.
  - vectorpush 12y ago
    Sure, the barrier to entry is lower, but that may not always be the case, especially once the big players start to push towards regulating competition out of the market. Even existing regulations are already a show-stopper for any company without the considerable capital necessary to tackle the morass of money transmission laws and licencing concerns that vary from state to state. There is also a big first mover advantage in payment processing because there isn't very much room to innovate beyond lower fees (hard to beat bitpay's 0%) and a reputable brand. I think there is a real risk that we'll see bitcoin processing completely swallowed up by these big players.
    - ThomPete 12y ago
      How can they push toward regulation? Honest question? I could set up wherever i want i the world right?
      - vectorpush 12y ago
        Yes, you can setup wherever you want, but if you want to process payments for U.S. businesses then you need to act in accordance with U.S. money transmission laws, otherwise, nobody will do business with you. Currently, bitcoin payment processors do not fall under the purview of MSB or MTB classification, but that could easily change, especially because cryptocurrencies are still a relatively new concept.
        ThomPete 12y ago
        But then it's the US businesses that will not be in compliance right? Not me?
        sushid 12y ago
        Right, but if US (et al.) merchants are not using your service because using your service means they're not in compliance, you won't be much of a competitor in that field.
- oco101 12y ago
  Well that is only one problem, the other is that 58% of the hasrate is controlled by only 5 pools .
matthewowen 12y ago
I actually think that this comment highlights that centralization can come in quite sneakily. Email's a great example. You could set up your own email server, but doing so in such a way that you don't harm your ability to get emails into people's inboxes is problematic in all sorts of ways: you've got a good chance of being classified as spam. So even though the system is decentralized, the fact that most users are centralized within a few big players means that those parties can unilaterally impose rules that cut off users who don't participate in the centralized ecosystem. In short: if Coinbase becomes sufficiently large, they could have the de facto power to disadvantage people who choose to use bitcoin outside of major centralized services. This isn't to say that a system can't tend more or less to centralization: sure, it can, and Bitcoin could have a strong tendency to make unilaterally enforced centralization hard. But even good technical solutions are vulnerable to social forces, and social forces can be very powerful.
- Meekro 12y ago
  I think you're overstating how much private mail servers are penalized. I've run several on colocated machines, and delivering emails to the major providers has never been a problem. You have to make sure that your colo gives you IP addresses that aren't on any blacklists, but other than that it's fine.
- oleganza 12y ago
  Email is decentralized, that means I can quit Gmail any time I want and use another service. Or even start my own. Git is decentralized, that means I can quit Github any time I want and use another service to host my repositories. Bitcoin is the same: I'm not locked into Coinbase, I can switch them for another service, personal wallet on a phone, a hardware wallet, or a combination of them. Move my coins to a company in another jurisdiction etc. Just the very fact of how easy it is to switch, creates a pressure on your provider and makes them work harder. US banking is not decentralized. I cannot simply take dollars out to some other service or wallet. Moving them takes a lot of time, there is no privacy, there is suspicious reports and interrogation everywhere, civil forfeiture laws and for another jurisdiction, I have to sell dollars for another currency which incurs fees, risks etc. In short: Bitcoin is like Git, fiat money and banking is like CVS.
tuananh 12y ago
if you communicate with people using gmail, it would be pointless though.

by Mahn 12y ago

vectorpush 12y ago

Well said, though, I think there is reason to be concerned about the continued centralization of bitcoin payment processors. In a world where bitpay and coinbase are processing the vast majority of bitcoin payments, it's easy to imagine how a coordinated denial of service attack could temporarily cripple the bitcoin economy from the consumer's perspective.

Mahn 12y ago
Sure, but then again, it's hard to picture the "consumerization" of bitcoin happening without services like BitPay or Coinbase in the first place. Plus, if there's a future where bitcoin actually has a respectable market share in consumer payments, surely there would be more competing companies in the space trying to get a slice of the pie.
ThomPete 12y ago
The big difference is that you don't need to be certified and so it doesn't exclude anyone from getting into this game. Compare that with banking which is basically impossible to even get started with properly. The interesting thing here is that it's build on an open protocol rather than on legislation and so this I believe will at least give the opportunity to create all sorts of interesting solutions that are currently impossible to do within the current banking system because technology moves faster than legislation. So even if we are talking centralization or clustering as I like to call it, we are not talking exclusion.
- vectorpush 12y ago
  Sure, the barrier to entry is lower, but that may not always be the case, especially once the big players start to push towards regulating competition out of the market. Even existing regulations are already a show-stopper for any company without the considerable capital necessary to tackle the morass of money transmission laws and licencing concerns that vary from state to state. There is also a big first mover advantage in payment processing because there isn't very much room to innovate beyond lower fees (hard to beat bitpay's 0%) and a reputable brand. I think there is a real risk that we'll see bitcoin processing completely swallowed up by these big players.
  - ThomPete 12y ago
    How can they push toward regulation? Honest question? I could set up wherever i want i the world right?
    - vectorpush 12y ago
      Yes, you can setup wherever you want, but if you want to process payments for U.S. businesses then you need to act in accordance with U.S. money transmission laws, otherwise, nobody will do business with you. Currently, bitcoin payment processors do not fall under the purview of MSB or MTB classification, but that could easily change, especially because cryptocurrencies are still a relatively new concept.
      - ThomPete 12y ago
        But then it's the US businesses that will not be in compliance right? Not me?
        sushid 12y ago
        Right, but if US (et al.) merchants are not using your service because using your service means they're not in compliance, you won't be much of a competitor in that field.
oco101 12y ago
Well that is only one problem, the other is that 58% of the hasrate is controlled by only 5 pools .

matthewowen 12y ago

I actually think that this comment highlights that centralization can come in quite sneakily. Email's a great example. You could set up your own email server, but doing so in such a way that you don't harm your ability to get emails into people's inboxes is problematic in all sorts of ways: you've got a good chance of being classified as spam. So even though the system is decentralized, the fact that most users are centralized within a few big players means that those parties can unilaterally impose rules that cut off users who don't participate in the centralized ecosystem. In short: if Coinbase becomes sufficiently large, they could have the de facto power to disadvantage people who choose to use bitcoin outside of major centralized services. This isn't to say that a system can't tend more or less to centralization: sure, it can, and Bitcoin could have a strong tendency to make unilaterally enforced centralization hard. But even good technical solutions are vulnerable to social forces, and social forces can be very powerful.

Meekro 12y ago
I think you're overstating how much private mail servers are penalized. I've run several on colocated machines, and delivering emails to the major providers has never been a problem. You have to make sure that your colo gives you IP addresses that aren't on any blacklists, but other than that it's fine.
oleganza 12y ago
Email is decentralized, that means I can quit Gmail any time I want and use another service. Or even start my own. Git is decentralized, that means I can quit Github any time I want and use another service to host my repositories. Bitcoin is the same: I'm not locked into Coinbase, I can switch them for another service, personal wallet on a phone, a hardware wallet, or a combination of them. Move my coins to a company in another jurisdiction etc. Just the very fact of how easy it is to switch, creates a pressure on your provider and makes them work harder. US banking is not decentralized. I cannot simply take dollars out to some other service or wallet. Moving them takes a lot of time, there is no privacy, there is suspicious reports and interrogation everywhere, civil forfeiture laws and for another jurisdiction, I have to sell dollars for another currency which incurs fees, risks etc. In short: Bitcoin is like Git, fiat money and banking is like CVS.

tuananh 12y ago

if you communicate with people using gmail, it would be pointless though.