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You can hurt yourself with a powertool, even a kitchen knife or a kettle. Do more damage than you ever could with bitcoin. That doesn't mean the manufacturer sh

by blfr 12y ago

You can hurt yourself with a powertool, even a kitchen knife or a kettle. Do more damage than you ever could with bitcoin. That doesn't mean the manufacturer should buy you healthcare insurance. Storing 4700BTC with an exchange is far, far beyond intended use. My position is that you shouldn't be doing it. I understand the pro-consumer position. Yes, maybe the exchange should push you into cashing out. But this is starting to turn into padding every room. We allow people to speculate on forex. We allow them to play carpenter. I don't see why this shouldn't extend to bitcoin.

sillysaurus3 12y ago
My intent wasn't to argue that Coinbase should be illegal. That would be silly. My goal was to show that regardless of how we feel consumers should act, those links show how they do act. Consumers take risks far beyond what's reasonable. It's up to Coinbase to protect them, and for them to inform consumers if they can't. But Coinbase is doing just the opposite: they're advertising that they're insured while handwaving the fact that they only insure 2% of their coins. And so on.
mikeash 12y ago
I guess the question is, why are they making such a big deal about their insurance, if it's both unnecessary and not useful? It sounds like they're trying to run the exchange as you say (with the vast majority of assets not insured) but trying to convince people that it's a safe place to store any amount ("we are insured").
- blfr 12y ago
  The insurance covers the riskiest part of their operation: hot wallets. And it's meant to convince people that it's a safe place to exchange money. Seems rather straight-forward to me.
  - sillysaurus3 12y ago
    The whole point of a hot wallet is that it doesn't matter if it disappears. The only point of insuring it is to give a false sense of safety.
    - blfr 12y ago
      How can it not matter if 3% of assets under your management disappear?
      - sillysaurus3 12y ago
        If it matters, then you're keeping too much in your hot wallet. The definition of "hot wallet" is "we keep a small enough assets here to cover day-to-day operations, but not so much that we're in trouble if they disappear." There's no other reason to have a hot wallet. Insuring their hot wallet might let Coinbase increase its size, but it offers no extra protection for consumers. None whatsoever.
        Dylan16807 12y ago
        You're crazy. How easily you can lose the funds in a hot wallet is not part of the definition. Also, I feel safer using a business that can't lose 3% of its assets in seconds, no matter if it would be stable either way. I'm surprised that you don't. (And yes, safety is the same thing as protection.)
        mikeash 12y ago
        I agree that this definition of a hot wallet is wacky. The definition of a hot wallet is easy: it's a wallet that's online and can be accessed by automated systems without human intervention. How you use it is entirely up to you, and nothing says you can't put 100% of your assets in a hot wallet, it's just a really bad idea. However, I still think it's really odd to only insure the hot wallet and to call so much attention to the fact that it's insured. Imagine if your bank called attention to the fact that they were insured with large, high-rated insurers for any conceivable loss... and then they mention at the end that the insurance only covers what's in the tellers' drawers, not what's in the vault. Personally I'd run far, far away if I saw something like that.

by blfr 12y ago

sillysaurus3 12y ago

My intent wasn't to argue that Coinbase should be illegal. That would be silly. My goal was to show that regardless of how we feel consumers should act, those links show how they do act. Consumers take risks far beyond what's reasonable. It's up to Coinbase to protect them, and for them to inform consumers if they can't. But Coinbase is doing just the opposite: they're advertising that they're insured while handwaving the fact that they only insure 2% of their coins. And so on.

mikeash 12y ago

I guess the question is, why are they making such a big deal about their insurance, if it's both unnecessary and not useful? It sounds like they're trying to run the exchange as you say (with the vast majority of assets not insured) but trying to convince people that it's a safe place to store any amount ("we are insured").

blfr 12y ago
The insurance covers the riskiest part of their operation: hot wallets. And it's meant to convince people that it's a safe place to exchange money. Seems rather straight-forward to me.
- sillysaurus3 12y ago
  The whole point of a hot wallet is that it doesn't matter if it disappears. The only point of insuring it is to give a false sense of safety.
  - blfr 12y ago
    How can it not matter if 3% of assets under your management disappear?
    - sillysaurus3 12y ago
      If it matters, then you're keeping too much in your hot wallet. The definition of "hot wallet" is "we keep a small enough assets here to cover day-to-day operations, but not so much that we're in trouble if they disappear." There's no other reason to have a hot wallet. Insuring their hot wallet might let Coinbase increase its size, but it offers no extra protection for consumers. None whatsoever.
      - Dylan16807 12y ago
        You're crazy. How easily you can lose the funds in a hot wallet is not part of the definition. Also, I feel safer using a business that can't lose 3% of its assets in seconds, no matter if it would be stable either way. I'm surprised that you don't. (And yes, safety is the same thing as protection.)
        mikeash 12y ago
        I agree that this definition of a hot wallet is wacky. The definition of a hot wallet is easy: it's a wallet that's online and can be accessed by automated systems without human intervention. How you use it is entirely up to you, and nothing says you can't put 100% of your assets in a hot wallet, it's just a really bad idea. However, I still think it's really odd to only insure the hot wallet and to call so much attention to the fact that it's insured. Imagine if your bank called attention to the fact that they were insured with large, high-rated insurers for any conceivable loss... and then they mention at the end that the insurance only covers what's in the tellers' drawers, not what's in the vault. Personally I'd run far, far away if I saw something like that.