Coinbase: The Heart of the Bitcoin Frenzy

With the frenzy out there, Coinbase makes crypto currencies trading&#x2F;investing&#x2F;purchasing as robust and seemingly as safe as possible. This could be a signal, now that we have some reputable market players that crypto currencies are really just starting and there is a very high ceiling. Getting in before coinbase you had to mine your own (that party ended quickly - Butterfly Labs, cex.io for cloud mining etc) or be part of a sketchy exchange (mtgox, btc-e etc where funds were stolen or seized). Some of the rules such as 10k limits on buying&#x2F;selling&#x2F;transfers put a natural throttling on bitcoin that other markets don&#x27;t have, since the buying is immense it should continue to go up for sometime due to this throttling and now reputable sources for buying into the market.<p>Side note: one of the absolute killer features of crypto currency markets is finally we have an always on market. Stock markets and exchanges still operate in the old days of the hours of the day in the country they are based in, crypto currency is an always on market which is nice because it eliminates the after hours&#x2F;before open games that go on with stocks.

I have a ton of respect for Coinbase. It seems like their implied priorities are:<p>1) Security 1a) Compliance ... 57) Customer Service<p>While annoying, this was both sufficient and necessary for the business to date. Security is necessary for obvious reasons. Compliance is necessary because to be able to do business with US banks (card processing, ACH, wires...) they had to be aggressive about complying with US regulation. Which ultimately gives them an advantage on the customer service front relative to their competition for retail investors. And frankly, they aren&#x27;t much worse than most online brokers.<p>These priorities were also sufficient. Amazon was competing against major incumbents and had to win on cost and service. By outcompeting an empty field on compliance, Coinbase has built a significant moat around US retail. They have relationships with Fidelity and USAA that signal legitimacy. They had cold storage while incumbents were&#x2F;are still saying &#x27;blockchain not Bitcoin&#x27;.<p>The critical question is how they manage customer service and communications going forward. Amazon, Facebook, and Google created monopolies based on a great user experience. Uber destroyed a thousand monopolies for the same reason. Coinbase is riding the coattails of Bitcoin&#x27;s awesome UX, the warm fuzzies people get from making 10x on an investment. If and when there is a correction, their core business will hinge on how well they handle a large sell-off.

Coinbase seems to be the quintessential &quot;sell shovels during a gold rush&quot; company. Definitely provides a good case study about how to create a successful business during new industry booms.

It is pretty funny how the original value proposition of &quot;being your own bank&quot; given in the bitcoin whitepaper, which is necessitated by actually possessing the private keys, has gone out the window due to convenience and a lack of understanding of the fundamental blockchain technology by speculators. Coinbase is central in these facts.

Most interesting thing I learned from this article:<p>Brian Armstrong, Coinbase CEO, &quot;said he now holds more of his wealth in a Bitcoin competitor, Ether&quot;

I used to use coinbase but some godawful KYC&#x2F;AML thing kicked in and asked me to send them a &quot;selfie&quot; of myself, which creeped me the hell out. I&#x27;m a US citizen, am not on any sort of list of prohibited people, and had already given them a photo of my driver&#x27;s licence and my SSN -- and have had no issues with opening other bank&#x2F;bitcoin-exchange accounts online previously.<p>I thus switched to Gemini because I do not want to support this invasive nonsense. It&#x27;s literally an automated version of &quot;put shoe on head&quot; (the request that &#x2F;b&#x2F;tards would make of camgirls that they wanted to troll).<p>Between that, and the thing where you literally have to enter your <i>BANK</i>&#x27;S username&#x2F;password to ANOTHER WEBSITE (coinbase, in this case) to prove you have that account (of course it chokes on 2FA); the USian banking system is such a scary bad mess -- and i&#x27;m pretty sure that that&#x27;s a significant driver of bitcoin adoption (and there&#x27;s also the ACH clusterfuck).

&quot;too big to fail&quot; doesn&#x27;t yet apply to any entity directly engaged in this space, as its entire business model. J.P. Morgan got away with a central role in the GFC because it did not suit the regulatory environment to kick one of the legs of a wobbly table.<p>The same does not apply to this, or any other coin- centric company. Yes, in <i>our</i> terms, these are huge dollar sums. But if you work in fintech, this is a small pimple on the side of trades in real goods, and existing financial instruments.<p>Look: the fintech people <i>get</i> this space, and they are not dissing the model entirely. But please, don&#x27;t pretend that the feds could not shut this agency down tomorrow, and it would have almost no effect on the US bottom line reports for financials.

Coinbase has a key difference from traditional brokers such as Charles Schwab, Scottrade, etc.<p>It doesn&#x27;t charge a flat fee for buy&#x2F;sell crypto currency, but a 2-3% fee based on the transaction value.<p>So even though I&#x27;m sure they&#x27;ve been making cash hand over fist this past 12 months, it makes any sort of future prediction extremely difficult. They not only have to predict customer growth (which leads to transaction volume), but also the price of those cryptocurrencies. It&#x27;s akin to calculate position from nothing but a accelerometer, and that double integral would be quite a bit of margin of error.<p>But in the end it may not even matter, as far as revenue growth and even profit wise I&#x27;m sure they are doing absolutely amazingly.<p>Hell, I wouldn&#x27;t even be surprised if Coinbase has higher daily revenue (definitely more profitable) than <i>Uber</i> at this point.

If the bubble bursts, this will be a delightful pull quote in the postmortem:<p>&quot;Correction: December 6, 2017 An earlier version of a photo caption with this article misidentified the place where Coinbase employees were gathered for lunch. It was the gaming room, not the cafeteria.&quot;

&gt; No company had made it simpler to sign up, link a bank account or debit card, and begin buying Bitcoin.<p>Actually, I think it is still too difficult. I mean it is not that difficult, but if you had to send every e-commerce shop a photo of your driver license just to buy something there would be a lot fewer people buying stuff online.

Support is horrible, here is my story - not sure how common that problem is. Would be interested if others have the same valdation issue.<p>I have a case open for multiple weeks to get my address validated. I was able to buy initially, but now it pops up a &quot;quiz&quot; (that&#x27;s how support calls it), where i have to enter my address and then it says that it&#x27;s not a valid permanent address. Which is funny because that is the same address the accepted when I signed up and validated my ID. There support literally tells me, &quot;sorry your problem, but you can try the quiz again- and maybe one day it will work&quot;. To me thats an unbelievable statement.<p>I think they have to stop onnoarding customers and solve some of their basic flows first. What if I wanted to sell? It is just not possible within Coinbase.

I would love to hear more about what must be Coinbase&#x27;s love&#x2F;hate relationship with MongoDB.<p>From my very uninformed perspective, the tool mostly does what it says on the tin these days, but that hasn&#x27;t always been the case. I would be interested in following along with Coinbase during this transition, and hearing more about what MongoDB is used for there today.

Does anyone know the hot&#x2F;cold wallet address for Coinbase, like the below one for Bitfinex?<p><a href="https:&#x2F;&#x2F;bitinfocharts.com&#x2F;bitcoin&#x2F;address&#x2F;3D2oetdNuZUqQHPJmcMDDHYoqkyNVsFk9r" rel="nofollow">https:&#x2F;&#x2F;bitinfocharts.com&#x2F;bitcoin&#x2F;address&#x2F;3D2oetdNuZUqQHPJmc...</a>

(Coinbase: YC S12)

So can you actually withdraw money from coinbase, if you say had 100 coins (I don&#x27;t). Everyone said back then that Mt. Gox was safe because it was the biggest. It being based in Japan was a huge red flag, but nobody cared until all of its money disappeared.<p>Coinbase being based in the US probably won&#x27;t happen because there could be consequences for them if they disappear with the coins, but having been burned by Mt. Gox fiasco is making me sit out of crypto, but with some sour grapes because each day bitcoin just go up and up. Was $13000 yesterday and it&#x27;s almost $16000 today. It took a week to go from $10000 to $15000. Insane.

What I find most interesting about Coinbase is that they quote your selling exchange rate the moment you place a sell order. If I click &quot;sell&quot; right now, they lock in the $13,000 exchange rate or whatever it is. The amount that shows up in my bank days later is exactly what they quoted at the time I placed the sell order. When people start selling off, this policy is either going to drive them to bankruptcy or create a lot of unhappy customers.

Coinbase is getting away with murder charging outrageous fees, cashing in the bitcoin frenzy. Kinda like the shady brokerages in the 80s.

Coinbase is down again. This seems to happen with every BTC price spike now, and since these spikes get more extreme, I guess Coinbase&#x27;s infrastructure always lags behind.

With the wild price swings, Bitcoin has practically no value as anything other than a speculative investment.<p>Are any of these people downloading Coinbase and buying coins really interested in transacting in Bitcoin or are they just buying Beanie Babies?<p>Although, as someone who thought the bubble would burst at $1,000, I&#x27;m quite impressed at how much interest it has garnered. I just don&#x27;t seeing it end well for many people.

Unless you buy with credit cards, good luck making bank transfers work on Coinbase.<p>EDIT: Downvoting with no explanation will not change my experience. I believe that cryptocurrencies are the future but having to wait weeks for a simple bank transfer only to find out that your funds will be returned with no explanation why apart from a cryptic message that has something to do with your bank account name not matching your coinbase name is rather annoying. Match how? What do you compare? An extra dot at the end of your middle name will throw off the system without any reasonable explanation.<p>Honestly, if Coinbase improves their messages in this situation, it may actually reduce the overhead on their customer support but I gather that this might be intentional.

I have heard so many bad things about coinbase...as the mtgox scandal shows, sometimes the most popular exchange is not the best I would rather spread my $ in several smaller ones

I bought £100 of Bitcoin in September via Coinbase, pretty much just to have a play with Bitcoin itself, and try a couple of transactions.<p>To my horror, I discovered that transaction wasn&#x27;t actually in the blockchain, and that Coinbase essentially has an internal system you just have to trust, which seemed to be contrary to the whole idea of a global ledger.<p>I setup my own wallet and transferred it to that (thus achieving my initial goal of seeing my own transaction in the block chain). There&#x27;s no way I&#x27;d put any significant amounts into Bitcoin, let alone Coinbase.

im traveling and when inattempted to join.. due to my IP u couldnt get a US based account which would allow me to buy coins. i asked support and got some automated answer which didnt work. i responded and waited again. lost huge opportunities for weeks.<p>Their ID system keeps throwing me errors when using my US passport. i have no Us drivers license or Active Us Cel phone for auth.

So, any guesses as to top line for coinbase?

&gt; 57) Customer Service<p>58) Recruiting process

Slightly offtopic, but this is so funny: (From today’s “money stuff” <a href="https:&#x2F;&#x2F;www.bloomberg.com&#x2F;view&#x2F;articles&#x2F;2017-12-07&#x2F;shale-shareholders-and-direct-listing" rel="nofollow">https:&#x2F;&#x2F;www.bloomberg.com&#x2F;view&#x2F;articles&#x2F;2017-12-07&#x2F;shale-sha...</a>)<p>Happy Bitcoin 13,000 Day.<p>I mean, that was yesterday. A few hours after I sent out Money Stuff saying Happy Bitcoin 12,000 Day, which was also yesterday. At this rate we&#x27;ll have Bitcoin 25,000 before my &quot;Bitcoin 25,000 Before Dow 25,000&quot; hats get here.<p>Happy Bitcoin 14,000 Day.<p>That was also yesterday.<p>Happy Bitcoin 15,000 Day.<p>That was this morning. See what I mean?<p>Happy Bitcoin 16,000 Day.<p>That will be this afternoon, probably.<p>Happy Bitcoin 17,000 Day.<p>Just in case, why not.<p>Still more bitcoin.<p>Bitcoin futures are set to start trading next week at CBOE Global Markets Inc.&#x27;s futures exchange, with CME Group Inc. following the week after that, but some people object:<p>The Futures Industry Association, whose members include Goldman Sachs Group Inc., JPMorgan Chase &amp; Co. and Citigroup Inc., detailed its concerns in a letter to the Commodity Futures Trading Commission on Wednesday. The association said there should have been more discussion about margin levels, trading limits, stress tests and clearing before the contracts were given a green light.<p>For clearing members of futures exchanges, the worry is that some bitcoin futures trader will blow up, and that bitcoin is so volatile that the trader&#x27;s margin won&#x27;t be sufficient to cover its losses. That will leave the members of the exchanges on the hook for losses. This seems like a ... totally reasonable worry? If you collected 25 percent margin from someone who was short bitcoin on Monday, they would have blown through it by this morning. Also the standard fate of bitcoin exchanges seems to be to get hacked and lose their customers&#x27; money, so if you are a customer of a futures exchange I can see why you&#x27;d be skeptical of your futures exchange turning into a bitcoin exchange.<p>Meanwhile, here is a nice profile of Coinbase, a bitcoin exchange that hasn&#x27;t been hacked, much. (Though: &quot;In May, the company was criticized by a customer who could not reach anyone at the company after his account was hacked.&quot;) It &quot;runs an exchange, called GDAX, tailored to larger investors,&quot; overseen by Adam White. &quot;A year ago, his Wall Street outreach was difficult, but &#x27;it’s all inbound now,&#x27; Mr. White said.&quot; Indeed.<p>Oh and another bitcoin thing was hacked:<p>NiceHash, the marketplace for cloud-based mining of cryptocurrencies, said hackers breached its systems and stole an unknown amount of bitcoin from its virtual wallet.<p>Some $60 million worth of bitcoins may have been affected. Elsewhere here&#x27;s a guy who lost the password to his 40 bitcoins.

I have recommended Coinbase to many people. But, a few days ago, I had a double charge on my bank account from them and have learned since that their customer support is essentially non-existent. It’s been 8 days with no response by e-mail, their posted phone number results in a busy signal, and the alternate numbers I found posted on forums go straight to hold music before hanging up after a couple of minutes. I filed a fraud report with my bank.

I posted this earlier today, and earlier than that as an Ask HN. I promise after this I won&#x27;t post it again, at least for awhile. This seems sufficiently important that it&#x27;s worth a slight annoyance.<p>What should we do about the destabilizing potential of Bitcoin?<p>There are two facts about Bitcoin worth worrying about:<p>1. There is no upper bound on the price<p>2. Everyone who thought the price won&#x27;t continue to exponentially increase was wrong<p>Greed is a powerful motivator.<p>It&#x27;s easy to smile at this[1] but it will only take a couple more 10x increases before people stop laughing.<p>What happens when governments start putting money into Bitcoin because they don&#x27;t want their economy to be left out? It&#x27;ll only make the price go up even further.<p>It might be a good idea to take a step back for a moment and stop thinking &quot;Can I get rich?&quot; and start thinking &quot;Before this reaches a point where we should worry, what should we do?&quot;<p>I&#x27;m aware that this has roughly a 0.1% chance of happening. But if you&#x27;ll suspend your disbelief for a few minutes and accept &quot;What if it might be true?&quot; then you&#x27;ll find it&#x27;s an interesting question worth thinking about.<p>It&#x27;s starting to feel like no one really has a plan for this contingency. It will be a relief if the price crashes back to $1k, but Bitcoin defies belief. How many of you have parents that are seriously talking about getting in? Everyone wants to become rich. And if that infectious mindset spreads to the whole population, we might get an uncontrolled upward spiral.<p>Is there a way to prevent that?<p>Now, to add to the discussion: Several people have voiced that there is no reason to worry, both because it&#x27;s impossible for BTC to hit $1M&#x2F;coin and because this is all conjecture. But there is every indication that the BTC craze could in fact spread to the entire world -- literally nobody will be able to escape thinking about it, because that is what the world values. This has low probability, but just like climate change, it&#x27;s worth planning for it now rather than later. Can we please try to think of something? Look at this[2] and let that graph sink in.<p>Fiction is also worth taking seriously. Satellites were predicted by fiction long before they were deployed. Many of the most influential ideas start as works of art. The dystopian future as envisioned in [1] is a far cry from how things would turn out, but the underlying idea is that we will become subservient to a tiny few. It&#x27;s only a matter of time before that money starts turning into real power.<p>So, if we could set aside our selfishness and try to snap out of the getting-rich craze, and ask &quot;Can we possibly stop this?&quot; it would probably be one of the most impactful ways you could spend a few minutes.<p>Making BTC illegal won&#x27;t work. It&#x27;ll just go to countries where it&#x27;s not, and take the people with them.<p>I don&#x27;t think it would be possible to sneak a backdoor into BTC. People would notice by now. And even if it works, they&#x27;d just fork and preserve the wealth.<p>Even if one were to theoretically become batshit insane and try to hunt down everyone who holds BTC, that won&#x27;t work either, because it&#x27;s easy to conceal. The price of mixing services will just rise to the point of taking transaction fees into account, and that&#x27;s how much people will start to pay.<p>I can&#x27;t think of anything else. Ideas?<p>[1] <a href="https:&#x2F;&#x2F;www.reddit.com&#x2F;r&#x2F;Bitcoin&#x2F;comments&#x2F;1lfobc&#x2F;i_am_a_timetraveler_from_the_future_here_to_beg&#x2F;" rel="nofollow">https:&#x2F;&#x2F;www.reddit.com&#x2F;r&#x2F;Bitcoin&#x2F;comments&#x2F;1lfobc&#x2F;i_am_a_time...</a><p>[2] <a href="https:&#x2F;&#x2F;www.reddit.com&#x2F;r&#x2F;Bitcoin&#x2F;comments&#x2F;7f3z8j&#x2F;btc_price_as_predicted_by_luka_magnotta_aka_time&#x2F;" rel="nofollow">https:&#x2F;&#x2F;www.reddit.com&#x2F;r&#x2F;Bitcoin&#x2F;comments&#x2F;7f3z8j&#x2F;btc_price_a...</a>

That &quot;What is money&quot; slide is pretty much brainwash