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> So insuring those is pointless except as a marketing stunt to confuse people, which is why saying "We're insured" is bad faith. I don't think it's in bad fa

by javert 12y ago

> So insuring those is pointless except as a marketing stunt to confuse people, which is why saying "We're insured" is bad faith. I don't think it's in bad faith. Bitstamp just lost its hot wallet recently, and people were panicking, because they didn't know what the situation was. Now, with Coinbase, if that happens, we don't have to panic. It's hard to tell people something that is true and have it be "in bad faith." > I disagree that technical problems can't make them insolvent. I agree with you here, I just think the chance is so low that it's not worth mentioning. I don't have any insider info, but I seem to recall reading a post a long time ago where they explained having some kind of x-of-y system of paper wallets stored in bank safety deposit boxes all over the country with a lot of redundancy. If you are willing to assume they have even a minimal level of common sense and competency, they have an offline storage system that is very robust. > But beyond tech problems, consider a thought experiment: If you're a gambling person, would you trade 20 years of your life in exchange for becoming a billionaire? I think this is an interesting thought experiment. I don't completely disagree, but I am still willing to trust coinbase with my money.

sillysaurus3 12y ago
Well, Bitstamp was incompetent enough to keep $5M USD (almost 20k BTC) in their hot wallet. That's half their most recent funding round, so the panic is probably warranted. I think we're at an impasse because you believe in Coinbase's competency. That's commendable, but I saw firsthand how incompetent an exchange can be without anybody noticing. If I'd researched Mt. Gox, I would have found a history of tech problems not dissimilar to Coinbase's, so the goal with my original comment was to remind people that this situation is very similar to Mt. Gox. They're based in the US, they have good investors, but still fundamentally similar to Mt. Gox. Don't get me wrong, making an exchange is a hard problem, so it's pretty amazing that Coinbase has gotten this far with "only" four or five high-profile issues. Everyone loves a story of some small group of people surmounting a difficult problem. But when that problem puts people's livelihoods at risk, we need to make sure everybody is fully informed about the risks. I also want to thank you for the interesting conversation. Much appreciated!
- adrianmacneil 12y ago
  I'm not sure I would call Bitstamp incompetent for keeping $5M USD worth of bitcoin in their hot wallet. A hot wallet needs to contain enough to cover the largest reasonably-sized transaction which a user may want to withdraw (and then some), and a global exchange like Bitstamp would have many institutional customers who may withdraw that much on a weekly basis.
- javert 12y ago
  > They're based in the US, they have good investors, but still fundamentally similar to Mt. Gox. I just don't agree with that. Those two things make them fundamentally different than Mt. Gox. The other fundamental difference is that they are not run by Mark Karpeles. I have to believe Karpeles is an exceptionally immoral/careless (or something, I'm not exactly sure) person, not anywhere close to the average. But there is definitely some validity in what you are saying. I mean, nobody should trust to any bitcoin exchange more than they can afford to lose. > I also want to thank you for the interesting conversation. Much appreciated! Same to you!

by javert 12y ago

sillysaurus3 12y ago

Well, Bitstamp was incompetent enough to keep $5M USD (almost 20k BTC) in their hot wallet. That's half their most recent funding round, so the panic is probably warranted. I think we're at an impasse because you believe in Coinbase's competency. That's commendable, but I saw firsthand how incompetent an exchange can be without anybody noticing. If I'd researched Mt. Gox, I would have found a history of tech problems not dissimilar to Coinbase's, so the goal with my original comment was to remind people that this situation is very similar to Mt. Gox. They're based in the US, they have good investors, but still fundamentally similar to Mt. Gox. Don't get me wrong, making an exchange is a hard problem, so it's pretty amazing that Coinbase has gotten this far with "only" four or five high-profile issues. Everyone loves a story of some small group of people surmounting a difficult problem. But when that problem puts people's livelihoods at risk, we need to make sure everybody is fully informed about the risks. I also want to thank you for the interesting conversation. Much appreciated!

adrianmacneil 12y ago
I'm not sure I would call Bitstamp incompetent for keeping $5M USD worth of bitcoin in their hot wallet. A hot wallet needs to contain enough to cover the largest reasonably-sized transaction which a user may want to withdraw (and then some), and a global exchange like Bitstamp would have many institutional customers who may withdraw that much on a weekly basis.
javert 12y ago
> They're based in the US, they have good investors, but still fundamentally similar to Mt. Gox. I just don't agree with that. Those two things make them fundamentally different than Mt. Gox. The other fundamental difference is that they are not run by Mark Karpeles. I have to believe Karpeles is an exceptionally immoral/careless (or something, I'm not exactly sure) person, not anywhere close to the average. But there is definitely some validity in what you are saying. I mean, nobody should trust to any bitcoin exchange more than they can afford to lose. > I also want to thank you for the interesting conversation. Much appreciated! Same to you!