Coinbase (YC S12) seeks to bring Bitcoin to the masses

A while ago I wrote that perhaps the greatest contribution the Bitcoin experiment will make to humankind is to teach you and me and our neighbors more about the realities of economics. And now I will add that the Bitcoin experiment will also contribute to greater understanding of attack surfaces and online crime. Many of the ideas about how to mine Bitcoins, store Bitcoins, and trade with Bitcoins as a medium of exchange illustrate both the strengths and weaknesses of any other medium of exchange in a world full of human beings. Seeing the discussion of Bitcoins here on Hacker News reminds me of early discussions in the 1990s of online payment systems such as PayPal, and the arguments beforehand that PayPal wouldn't have to invest a lot of time and effort (as it eventually did) building defenses against theft and fraud. If a weakness in a system is attached to a lot of money, the way to bet is to bet that someone will go looking for that weakness, even if you haven't thought of it.

<p><pre><code> 1. Start centralized bitcoin depository. 2. Fail to provide any loss protection. 3. "get hacked" 4. Profit.</code></pre>

It looks nice, but I don't see anything addressing safety and security. How does this service guarantee that any money you transfer to them will be kept safe? Also, do they guarantee that if a break-in occurs like the Bitcoinica disaster, that users' monies will be returned?

First rule of financial apps: if you're going to deal with money you should own your servers. The cloud is not an option.<p>Second rule: Hire a security expert and a thief. The former to keep you safe and the latter to break in before the real ones so the expert can fix the holes.<p>Btw, I like the service.

<i>"Widespread Adoption"</i> <i>About $2 million a day (USD) is already being transacted in bitcoin. It's quickly becoming an international currency of the world.</i><p>Er... bit of a stretch

It's very cool to see that after posting looking for a co-founder to get into YC, it looks like Brian has gotten into YC as a solo founder and by the looks of it, is doing great.<p>I sent his previous post looking for a co-founder to friends because Brian looked seriously formidable. Best of luck to him.

So, this is essentially yet another cloud-based bitcoin wallet?<p>Also, how will you comfort your customers when you get hacked and their funds are gone? That is not a hypothetical thing to ask, but very real and has happened before in the cloud-wallet bussiness.<p>Anyone who wants to get started with bitcoin, I suggest using the client Electrum. Written in python, light, quick and secure.

Any technical details on how wallets are protected? I think we've seen how previous bitcoin websites have fared on HN, it would be cool to know some of the details on how the BTC are going to be protected so that the problems of the past don't happen again.

Since you auto-focus on the email address input field... it erases the default text that reads "Your Email" so it is initially quite confusing to know what you should enter.<p>I had to click on the page to de-select the input, see that it said "Your Email", and then enter my email.<p>The way it is now, it looks like you might simply want two passwords.

I think that this could be the hero that Bitcoin needs. If they make it super simple / super clean they could revolutionize Bitcoin.<p>To the creators, have you considered adding a USD (or other currency) funding option? Since getting the Bitcoins is probably the biggest obstacle for most everyday consumers.

I like the idea, kind of a PayPal for Bitcoin. My issues would be the usual: I don't trust a new service with my bitcoins, don't know anything about their policy for data loss, etc. The about page and support pages don't really instill any confidence. If I knew I could trust them it would seem like a great service.

<i>"Zero Transaction Fees"</i>???<p>Are you refunding the bitcoin transaction fees that are builtin to the protocol[1]? If you are going to eat that cost you should say so, it seems like a good marketing point.<p>[1] <a href="https://en.bitcoin.it/wiki/Transaction_fees" rel="nofollow">https://en.bitcoin.it/wiki/Transaction_fees</a>

1) How do you make a profit? 2) How do I convert to "real money"? If I can't, why should the average joe be interested in this at all? Power users can use mtgox already. 3) How do you plan to keep it legal? As I understand, there is no legal precedent about new currencies and the law is not favorable.

Lots of startups have tried to popularize Bitcoin. What's different about this one?

What advantages does this service provide over bitcoin itself? My suggestion would be to make this very clear, and definitely make sure it is explained on the About page.

Have they been hacked yet? It's a rite of passage.

If I want to sell something, how can I get my Bitcoins converted to cash, safely and reliably? I don't trust MtGox, and I don't want to long-term forex risk exposure. Is there someone who could settle Bitcoin to USD, daily in San Francisco?

The best way to find out if bitcoin is a viable platform is for someone to forge ahead with mainstream oriented services like this. We'll all learn a ton from what happens.<p>Payments is a great starting point for a mainstream bitcoin serice. The user isn't going out too far on a limb to use the service because it's just a payment. This could increase the chance of adoption, and lessen the impact of something going wrong in the early days.<p>I'm really impressed with folks trying to make a service like this work. I find any opinionated naysaying to be really boring. Can't wait to see how it turns out. Hope there is enough traction to put it all to a real test.

Will there be an API? It looks neat!<p>It's one of those ambitious projects, that, even if failure is in the future, it's still a worthwhile project.

I've toyed with the idea of a Bitcoin bank for a while now. Since I don't seem to be making much progress here's the final piece that I think this is missing and would really let this take off. Offer a way for your customers to spend their Bitcoins using plastic through a payment processor. The cheap startup version way of offering this would be to partner with a bank to offer your customers prepaid debit cards. On your website they would have two accounts, one with the funds avaible on the card and the other with your Bitcoin wallet. When they want to transfer funds make a market trade on behalf of them and put the money on their cards. Obviously in the long run the ideal setup would be to become a licensed money transmitter which can be ridiculously expensive in some states, and yes you need the license in each state you do business in. This is what Paypal has. As a licensed financial institution you now have the ability to offer your own debit/credit cards and you could theoretically make market trades from your customers bitcoin wallets as soon as you receive transaction requests.<p>Obviously this doesn't flow with the spirit of Bitcoin and why it was designed but I think it's what will be necessary for it to start gaining wide spread use.

What's the pitch to the masses? "We make Bitcoin easy to use... and all you lose is anonymity and decentralization?"

I'm not sure why, but I find the term "for the masses" horribly insulting and elitist. It instantly turns me off on whatever it is you're talking about and tells me absolutely nothing about the product other than you think your target market is a mass of people that aren't as smart as you.

How is a user protected from a transaction history subpoena?

I think Brian dated my sister back at Rice.. haha. So strange to stumble upon him here. Anyway, impressive startup resume. I'm familiar with a lot of his projects, but never connected the dots.<p>Too bad my comment contributes nothing to the post and it's gonna go to the bottom. Oh well..

This looks great - I can't wait until you can start ordering from eBay and Amazon with bitcoin.

So the profit mechanism is through taking a percentage of bank transfers. So not going after banks.<p>Also did you mean shopping card or shopping cart? I can't resolve either from context and shopping card is not commonly used.

Storing individual wallets in the cloud is better than have a single institution-wide account that holds everyone's money like MtGox did/does. With the latter, you need to roll your own secure transaction system to keep track of balances. The former uses bitcoins existing transaction record keeping, allowing the devs to focus on the already hard problem of secure authentication.<p>Still, centralizing a decentralized system is like trying to tame a wild animal. I can be done, but expect to get bit.

Any bitcoin related website that has you "choose a password" and not a Passphrase, and perhaps mandatory 2 stage authentication, is just asking for it.

Does Bitcoin solve <a href="https://en.wikipedia.org/wiki/Triffin_dilemma" rel="nofollow">https://en.wikipedia.org/wiki/Triffin_dilemma</a>

Is it that Bootstrap makes every website look amazing or is it that people who build amazing looking websites tend to use Bootstrap?

The 2-minute video on their home page takes the right approach. It does <i>not</i> try to explain the lofty ideals of Bitcoin. It never mentions scary concepts like free banking, lack of government regulation, and crypto. It uses the word "anonymous" only once. That's the way to convince the public: a cheery talk about tangible benefits!

Is coinbase using aws or heroku and down right now? Seeing an application error on coinbase.com...

Currently getting a 500 error when trying to create a password with special characters.<p>With all the password hash leaks going on these days, am I the only one paranoid enough to create a long, random password?

Congrats Brian! I remember when you told me about your idea at startup school. Heard you had left Airbnb and I suspected it was for this.

... and their site looks just like Github.

Is bitcoin still deflationary?

I decided to see what they had to say to a question I had. This is the responses they gave! :3 How do you see yourself combating the rapid fluctuation of price vs value when dealing with merchants?<p>Brian Armstrong: good question<p>Brian Armstrong: two thoughts on that<p>Brian Armstrong: one would be an automatic withdrawal rule they could setup<p>Brian Armstrong: so it just gets converted automatically when it arrives and deposits once a day or something<p>Brian Armstrong: the other is that i think the exchange rate volatility is largely a short term problem, volatility decreases as volume of transactions increases<p>Brian Armstrong: so if you believe btc volume of transactions will be much higher in 5 years, then exchange rate volatility will be much lower<p>→Makes sense, Saw the site mentioned on hacker news, so that means you'll probally mentioned on slashdot at some point<p>→^.^<p>Brian Armstrong: at least that is my guess :)<p>Brian Armstrong: hope so<p>Brian Armstrong: maybe I should submit it?<p>Brian Armstrong: haven't slashdotted in a few years<p>→heh, you could try, though slashdot seems to be consolidated to a few power submitters lately, might try reddit?<p>→<a href="http://www.reddit.com/r/bitcoin" rel="nofollow">http://www.reddit.com/r/bitcoin</a> would be a start?<p>→<a href="http://news.ycombinator.com/item?id=4177605" rel="nofollow">http://news.ycombinator.com/item?id=4177605</a> that's the article mentioning you btw<p>Brian Armstrong: already submitted :)<p>Brian Armstrong: <a href="http://www.reddit.com/r/Bitcoin/comments/vswkw/silicon_valley_investors_back_coinbasecom_seeking/" rel="nofollow">http://www.reddit.com/r/Bitcoin/comments/vswkw/silicon_valle...</a><p>→Where bitcoin could REALLY take off is CPU usage cycles<p>→Since bitcoin is fractional<p>Brian Armstrong: oh yeah, tiny amounts<p>→Instead of charging pennies per cycle, you could specify exact amounts per clock<p>→so instead of 1 penny per second<p>→.00001 per clock or whatever is the better value<p>→It'd be alot more precise<p>→It must be interesting to start a company like this. Are you / your company registered in the united states? And if so, How do you feel about their reaction to bitcoin?<p>Brian Armstrong: yep that'd be interesting for sure<p>Brian Armstrong: we're incorporated in delaware (U.S.)<p>Brian Armstrong: based in california<p>Brian Armstrong: we have the backing of really good investors who want to see innovation happen<p>Brian Armstrong: as long as we pursue licensing as a money transmitter (same as facebook credits, paypal, etc) i think we'll be ok<p>Brian Armstrong: it will def be controversial though<p>→I wonder how mt.gox handles it<p>Brian Armstrong: they are incorporated outside the U.S. (Japan I believe)<p>→<i>nods</i><p>→Well, If it's ok with you, i'll post this to the hacker news article and see what kind of discussions it generates? Only with your permission of course! =^.^=<p>Brian Armstrong: sure, that'd be fine with us!

Twitter Bootstrap is homogenizing the entire web! This place used to be cool, man. What happened?!

are you a single founder?

Congrats!

How is this different than MtGox? I don't trust MtGox, but at least they've made mistakes and have spoken publicly about how they've fixed those mistakes.<p>On the other hand, are these guys storing my wallet safely? How about my balance (please god, don't store it as a float)? How about my password? If they're not launching with two-factor auth I won't even give it a chance (and likely ever, honestly).<p>I've gotten progressively more and more pessimistic about these sorts of sites even though I like the idea of BitCoin as a currency. If security isn't heavily discussed and visible (2FA, do it!) at the launch, it will be hard for me to take this seriously.

Is this a YCombinator start-up? I see PG's name there.