Coinbase Custody Is Officially Open for Business | Hacker News Reader

Coinbase Custody Is Officially Open for Business

blog.coinbase.com

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Terms:

Setup fee: $100,000 USD

Annual fee: 1.2% of the balance.

Minimum balance: $10,000,000 USD

Insurance: No info available.

Insurance: https://www.coinbase.com/legal/insurance

That's Coinbase generally, not the custodial service.

It says individual balances are FDIC insured up to $250,000. which is lower than the setup fee and minimum balance for the custodial account, I share the link to show they have some systems in place, speculation and trading will never be risk-free I think

They can't even get their two factor authentication to work. Their customer service a joke, and their processing takes too long.

Why people are hyped over their new products / features knowing how shit their old ones are is beyond me.

Every time a new Coinbase feature or product is posted on HN most of the comments are anti-Coinbase.

Not sure if this is related or not, but Coinbase's cryptocurrencies of choice (Bitcoin, Ethereum and Litecoin) just got a huge price bump in the past 2 hours which makes total sense because if this "Coinbase Custody" system is adopted by businesses and institutions, huge amount of money will be poured into these cryptocurrencies which will dwarf the current price.

Am I missing something or it makes sense?

Who the hell knows with cryptocurrencies. Investor confidence sways easily and government approvals can make or break viability not to mention most of the populace (including the institutions) have no idea how to practically make use of them. It's probably here to stay, but (hopefully) in a different iteration than we're used to today: more eco-friendly and sustainable.

As someone who watches the price of bitcoin in detail every day, the price bump from today is not related to this news.

It's just usual market activity (stop hunting)

Are you saying that if you were a trader or just in the market to buy and sell Bitcoin, and somehow you knew, 100%, 24 hours before anyone else, that Coinbase was announcing this, it would not influence you at all? Because that is what you are saying.

Yes, this is what I am saying. This is minor news. This is old news. It was known that this was coming since at least November:

https://medium.com/@barmstrong/announcing-coinbase-custody-a...

Institutions want investments that confer actual rights, something which these cryptocurrencies do not do.

If you are expecting a large influx of institutional investment money, I expect you will be disappointed.

That’s not true. For example, owning bitcoin gives you property rights.

Are you referring to the right to obtain profit from forks?

No, i’m talking about the fact that bitcoin is literally property according to the government.

Also profit != property.

That's a good criticism of ICOs that fund specific teams, which are somewhat analogous to company shares. Base layer cryptocurrencies on decentralized platforms are more like commodities and foreign currencies, which don't confer rights either but still attract massive investment.

I would say Bitcoin Cash is Coinbases's currency of choice.

They have pushed for on-chain scaling for years and have been very vocal about how horrible Blockstream (small blocks) has been for Bitcoin.

Next step: Coinbase gives discount of custody service fees - or even pays the deposit maker a fee (a.k.a interest) if it is allowed to lend coins forward while coins are within custody (a.k.a fractional reserve banking).

"fractional reserve banking" would be the case if Coinbase lends more than it holds in their accounts. That's impossible with bitcoins.

That's possible. They can lend the same bitcoins to many different people, with the expectation that not all of them will withdraw the borrowed coins at the same time.

How do you lend the same cash to two people? Don’t people take loans to spend the money?

If Coinbase customer A borrows bitcoins and transfers them to Coinbase customer B, those bitcoins never leave Coinbase, assuming that customer B does not transfers them immediately out of Coinbase. Same happens if Coinbase customer A tranfers 1 BTC to Bitstamp customer B and Bitstamp customer C transfers 1 BTC to Coinbase customer D. Fractional reserve banking can happen (and did happen) even without a central bank, with gold backed currencies.

So, if you need a loan for rent for your startup, and your landlord is also a Coinbase customer, then this is possible.

But I don’t understand your argument... you’re talking about a future where Coinbase has the installed base of, like, Venmo?

> "fractional reserve banking" would be the case if Coinbase lends more than it holds in their accounts. That's impossible with bitcoins.

That is definitely not impossible. Let's go through this step by step:

I start by depositing one bitcoin to coinbase and agree that coinbase is allowed to lend that forward, but will give me back one bitcoin whenever I request so. Coinbase promptly lends the bitcoin to you.

You, then, go ahead and buy stuff from me with the bitcoin, and I go back to Coinbase and make a second deposit. At this point Coinbase owes me two bitcoins. Then you need another loan, call again to Coinbase and borrow another bitcoin. Now Coinbase has lent you total of two bitcoins even if there is only one existing in the whole fictional universe.

Now, you can see a couple of interesting further observations from here:

First one is that quite soon people and coinbase figure out that it is very cumbersome to move actual bitcoins around, and it would be much more efficient if instead of me requesting one bitcoin back to now make an purchase from coffee shop, I just ask that Coinbase owe me one bitcoin less and the coffee shop owner one coin more.

The second one is that after this, the coinbase deposits are equivalent to bitcoin as money in economy. For the coffee shop owner it is irrelevant whether I pay with bitcoin or a coinbase dposit, the economical value is identical. What this then means is that the money supply of bitcoin economy is not fixed as bitcoin people expect, but the coinbases of bitcoin economy will create a chaotic supply of bitcoin money. Whic, of course, will cause bitcoin value to fluctuate chaotically to the end of the days. Finally, there exists no institution, mechanism or whatever in bitcoin to stop this development. Nobody is able to prohibit fractional reserve banking and nobody is able to stop money creation in bitcoin economy.

Sorry, but to me, bitcoin is destined to fail as a money.

Coinbase stole $30,000 from me and won't return it. They listed a new coin (bitcoin cash) without prior announcement. I bought $30,000 worth at $5000 each. It went from $500 to $9000 in a matter of minutes. However, while allowing people to buy the coin at very high prices, they also froze everyone's ability to sell the coin. They only allowed people to sell it on their market again, about 24 hours later, after the coin went down to $1,000.

They say that coinbase engineers knew about the coin being listed beforehand (obviously) and bought a bunch before listing it publicly (an unannounced), then the insiders sold it all for a huge profit.

What lesson did I learn? Coinbase is crooked.

Oh well. Lock 'em up

> What lesson did I learn?

"Gambling is dangerous"?

You invested money in a completely unregulated asset class. Buyer beware

Coinbase did not steal anything from you.

Sometimes you get lucky with a risky investment sometimes you lose it all. That’s why they are called risky investments

Stole has a particular legal definition.

Assets being stopped for trading occurs in all markets, including in the highly regarded US stock market.

You wanted to participate in a pump and dump, and now you are angry that you couldn't do the dump. You thought it was easy money, well, now you know one aspect that you didn't consider (that selling might be suspended)

Either the market is open or closed, and when that changes is a very well-known schedule (for the most part). Even the US stock market would run into some very unhappy people if they partially closed a market (e.g. only allowed buying, not selling) or they closed a particular stock at their whim.

I'm not saying this wasn't risky or dumb, I'm just saying the US stock market is a poor counter-example because both of the things that happened in this case are exceedingly unlikely to happen on the US stock market.

Individual stocks can be frozen, and things like the flash crash can trigger circuit breakers with little to no warning.

Plus, a company can (hell, typically does) release news after-hours and leave you in the lurch, or go suddenly bankrupt. Ask me how my couple dozen Lehman Brothers shares are doing...

Yeah but just because the stock market may have been a poor example, it does not invalidate the rest of his argument. The OP tried to pump and dump, now he's complaining because he got burned.

No such thing as easy money.

Trading is ‘closed’ (aka halted) for individual securities relatively frequently in the US. See https://en.m.wikipedia.org/wiki/Trading_halt

> I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.—Warren Buffett

> or they closed a particular stock at their whim

This happens all the time, a ticker will get halted for a time and no one can trade them even though the market is open.

http://www.nasdaqtrader.com/Trader.aspx?id=TradeHalts

live by da pump; die by da pump

>They say

Sounds reliable

You are full of it.

> They only allowed people to sell it on their market again, about 24 hours later, after the coin went down to $1,000.

This is completely false, and a lie since you say you were trading it at the time. BCH was trading between $3200 - $4300 when it reopened later the next day.

Not only do you not understand what the verb steal means, you give false information as to how the BCH market traded. You also don't seem to understand that for every buyer there is also a seller. Further, you provide no evidence of your claims of insider trading. I for example, "knew", that BCH was highly likely coming to the exchange based on public information that was already available. BCH API entries were added to coinbase/gdax DAYS before it was open for trading. That you conflate people that were paying attention for clues to the same as people of being guilty of insider trading is sour grapes.

What lesson did I learn from your post? That some people are liars and look to cast blames on others for their own decisions.

Why in the world would an expert trader like yourself place an order for something that was over $1000 higher on GDAX compared to other exchanges? Why because you thought you could scalp it and sell it for more to someone else. You played a very dangerous speculative game and lost - I hope the tuition payment you spent will be taken to heart.

Their allegations are not entirely off base. The Coinbase BCH launch was a complete disaster. The BCH price pumped for days on other exchanges leading up to the announcement. See here for some more information:

https://motherboard.vice.com/en_us/article/pam4xn/coinbase-i...

In addition, they opened up trading on GDAX, but waited to open up buys and sells on Coinbase until Roger Ver’s segment on CNBC Fast Money (right when the price was at its highest).

That said, I do not think Coinbase should pay someone back for making a poor decision with their money. People like to deflect their own mistakes instead of taking responsibility. Coinbase didn’t make this person buy BCH at $5,000.

That the rollout of BCH was problematic is not something I disagree with. It was a huge embarrassment professionally for coinbase.

I am well aware of BCH increasing in price prior to the launch but #1 EVERYTHING was going up in price at the time - BCH started ramping up the prior week from ~ $1700, and #2 really took off once the API keys were publicly found that weekend. That there was a peak of insanity on the release of BCH, I don't dispute, I merely claim that these other claims of nefarious actions can be easily explained through more mundane behaviors.

You bought shitcoin cash.

This is your fault you idiot.

Its literally fake bitcoin.

Commenting like this will get you banned here. Please don't do it again.

https://news.ycombinator.com/newsguidelines.html

You still have your Bitcoin Cash dont you ? Trading is high-risk, you have to learn to recognize pump-and-dumps yourself, because they're gonna happen whether they're organized by the exchange or not.

It's a shame that Coinbase, of all people, demands payment for Coinbase Custody in a fiat currency of US Dollars.

I think of Coinbase as "cryptocurrency for people who don't believe in cryptocurrency" so it's not surprising from that perspective.

Please.

Coinbase has kept my bitcoin safe since 2011.

They also have free payments to friends with their email + shift card.

Yes their customer service sucks, but they have provided tens of thousands of dollars in value to me.

I want to clarify that there's plenty of value around cryptocurrency that doesn't involve believing in it, but it helps to understand the different worldviews.

I've been holding btc in paper wallets since 2011. They're easy, free and no one has access to my btc but me.

I like my 2fa, hope your house doesnt burn down.

Fireproof boxes.

I hope Coinbase gives you your btc when the run starts next year or two.

This. only suckers keep their coin on exchanges. Mtgox. Bitcoinica. Mintpal. Poloniex. Cryptsy. Bitfinex. Coincheck. All hacked, all lost their users coin.

Any coin on exchanges does not belong to you. Only coin in which you and you alone hold the keys, is yours.

Bitfloor. That was a doozy too.

There's room for both sides to be right. Paper / steel / hardware wallets are a great solution. Coinbase can be ok too

My paper wallet has never asked for KYC/AML info.

How often do you spend from your paper wallet?

There are lots of paper wallet generators but it seemed like an exercise in frustration to actually use the private key on the page to spend the money.

Whenever I need them.

I generate keypairs using the reference client on an offline device that never touches a network.

Private keys can be imported and spent using almost any wallet: Coinomi, Mycelium, the reference client, etc.

Except coinbase wasnt even around in 2011??

> payment for Coinbase Custody in a fiat currency of US Dollars

They're selling shovels for cash. The gold is for the miners.

"Hold my private keys" has the same intellectual heft as "hold my beer and watch this".

This is the most poorly named venture, there's a huge political battle going on about immigrants and custody of their children at the border, custody itself usually goes hand in hand with 'battle'.

Having worked with foster children, trying to adopt, when they went back to a relative, and we lost custody it was painful. Custody to MANY MANY people in America has VERY negative connotations.

The concept of financial custody goes back hundreds of years (although I realize most HN readers have probably never heard of it); it doesn't make sense to abandon that terminology over a short-lived political crisis.

I'm sure there's many things they could call it though, that would have more positive overtones. From a branding/marketing perspective.

Edit: For example, why not call it Coinbase Custodian? Totally different connotation, and better name IMHO.

> why not call it Coinbase Custodian?

"Coinbase Custody" tells me exactly what they're doing. "Coinbase Custodian" makes me think they're launching a janitorial service.

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