Coinbase Raises $75M from DFJ Growth, USAA, NYSE, and More(blog.coinbase.com)
blog.coinbase.com
Coinbase Raises $75M from DFJ Growth, USAA, NYSE, and More
http://blog.coinbase.com/post/108642362357/coinbase-raises-75m-from-dfj-growth-usaa-nyse
199 comments
Funny how apparently the biggest Bitcoin company is a bank for centralized storage and management of Bitcoins, which was the exact opposite goal (according to the idealists) of bitcoins. Next up they'll probably offer interest and loans/mortgages.
Coinbase is just another company in the Bitcoin ecosystem, them being successful does not mean Bitcoin cannot have other faces or uses. Nobody condemns email for being too centralized because Gmail is popular, people who care for decentralization can and do set up their own email server.
I actually think that this comment highlights that centralization can come in quite sneakily.
Email's a great example. You could set up your own email server, but doing so in such a way that you don't harm your ability to get emails into people's inboxes is problematic in all sorts of ways: you've got a good chance of being classified as spam. So even though the system is decentralized, the fact that most users are centralized within a few big players means that those parties can unilaterally impose rules that cut off users who don't participate in the centralized ecosystem.
In short: if Coinbase becomes sufficiently large, they could have the de facto power to disadvantage people who choose to use bitcoin outside of major centralized services.
This isn't to say that a system can't tend more or less to centralization: sure, it can, and Bitcoin could have a strong tendency to make unilaterally enforced centralization hard. But even good technical solutions are vulnerable to social forces, and social forces can be very powerful.
Email's a great example. You could set up your own email server, but doing so in such a way that you don't harm your ability to get emails into people's inboxes is problematic in all sorts of ways: you've got a good chance of being classified as spam. So even though the system is decentralized, the fact that most users are centralized within a few big players means that those parties can unilaterally impose rules that cut off users who don't participate in the centralized ecosystem.
In short: if Coinbase becomes sufficiently large, they could have the de facto power to disadvantage people who choose to use bitcoin outside of major centralized services.
This isn't to say that a system can't tend more or less to centralization: sure, it can, and Bitcoin could have a strong tendency to make unilaterally enforced centralization hard. But even good technical solutions are vulnerable to social forces, and social forces can be very powerful.
Email is decentralized, that means I can quit Gmail any time I want and use another service. Or even start my own.
Git is decentralized, that means I can quit Github any time I want and use another service to host my repositories.
Bitcoin is the same: I'm not locked into Coinbase, I can switch them for another service, personal wallet on a phone, a hardware wallet, or a combination of them. Move my coins to a company in another jurisdiction etc.
Just the very fact of how easy it is to switch, creates a pressure on your provider and makes them work harder.
US banking is not decentralized. I cannot simply take dollars out to some other service or wallet. Moving them takes a lot of time, there is no privacy, there is suspicious reports and interrogation everywhere, civil forfeiture laws and for another jurisdiction, I have to sell dollars for another currency which incurs fees, risks etc.
In short: Bitcoin is like Git, fiat money and banking is like CVS.
Git is decentralized, that means I can quit Github any time I want and use another service to host my repositories.
Bitcoin is the same: I'm not locked into Coinbase, I can switch them for another service, personal wallet on a phone, a hardware wallet, or a combination of them. Move my coins to a company in another jurisdiction etc.
Just the very fact of how easy it is to switch, creates a pressure on your provider and makes them work harder.
US banking is not decentralized. I cannot simply take dollars out to some other service or wallet. Moving them takes a lot of time, there is no privacy, there is suspicious reports and interrogation everywhere, civil forfeiture laws and for another jurisdiction, I have to sell dollars for another currency which incurs fees, risks etc.
In short: Bitcoin is like Git, fiat money and banking is like CVS.
I'm not disputing that you can do those things. But I'm saying that when a particular provider is sufficiently powerful, they have the capability to make those options less appealing, either malevolently or inadvertently.
You could move your open source project away from GitHub, but if GitHub is sufficiently popular that most people don't understand how the patch system works in git, and hence don't know how to contribute without using the affordances that GitHub offers, then you will incur a cost by doing so.
The point I'm making is that if the majority of people using a decentralized system via a centralized wrapper, and if interaction with those people is a priority, then it is possible for the provider of that centralized wrapper to make it harder for you to interact with their customers without yourself using the centralized wrapper. The more they do so, the less value there is to you (the decentralized user) in the millions/billions of people using decentralized service X through centralized wrapper Y, because they're effectively unreachable unless you also use said centralized wrapper.
This can happen by continuing to use the decentralized infrastructure, but penalizing participants who aren't accessing the infrastructure through a popular system. Alternatively, it can happen by having the decentralized infrastructure co-opted, so even though the service to some extent interacts with it, most user interaction actually exists entirely within the centralized system.
I mean, it doesn't seem crazy for me to imagine a world in which (eg) as a Coinbase user there's some monetary advantage to receiving payments from Coinbase members vs the wider Bitcoin world. At which point maybe merchants want you to pay via "Coinbase Send" (or w/e this hypothetical service is called) rather than pure Bitcoin transactions. At which point, sure, Bitcoin is the underlying unit of value, but no-one is actually using Bitcoin transactions (Coinbase is just moving around their internal accounting DB records), and hence the fact that things are counted in Bitcoin is basically a historical artifact.
I have no idea what will happen. My argument is just that I don't think that it is impossible for decentralized systems to be functionally neutered when people mostly interact with them through centralized wrappers.
You could move your open source project away from GitHub, but if GitHub is sufficiently popular that most people don't understand how the patch system works in git, and hence don't know how to contribute without using the affordances that GitHub offers, then you will incur a cost by doing so.
The point I'm making is that if the majority of people using a decentralized system via a centralized wrapper, and if interaction with those people is a priority, then it is possible for the provider of that centralized wrapper to make it harder for you to interact with their customers without yourself using the centralized wrapper. The more they do so, the less value there is to you (the decentralized user) in the millions/billions of people using decentralized service X through centralized wrapper Y, because they're effectively unreachable unless you also use said centralized wrapper.
This can happen by continuing to use the decentralized infrastructure, but penalizing participants who aren't accessing the infrastructure through a popular system. Alternatively, it can happen by having the decentralized infrastructure co-opted, so even though the service to some extent interacts with it, most user interaction actually exists entirely within the centralized system.
I mean, it doesn't seem crazy for me to imagine a world in which (eg) as a Coinbase user there's some monetary advantage to receiving payments from Coinbase members vs the wider Bitcoin world. At which point maybe merchants want you to pay via "Coinbase Send" (or w/e this hypothetical service is called) rather than pure Bitcoin transactions. At which point, sure, Bitcoin is the underlying unit of value, but no-one is actually using Bitcoin transactions (Coinbase is just moving around their internal accounting DB records), and hence the fact that things are counted in Bitcoin is basically a historical artifact.
I have no idea what will happen. My argument is just that I don't think that it is impossible for decentralized systems to be functionally neutered when people mostly interact with them through centralized wrappers.
lol you lost me at gmail but just for the fun of it.. so that your definition of decentralization ... Could you move your money out of MtGox ??
Could you move more than the FDIC insured amount from Goldman Sachs? Or Lloyds in the UK?
Luckily, with Bitcoin, it's trade what you can lose. Keep the rest by yourself. Yes, there were some losses, but it's a trading platform. Somewhat expected.
If you don't believe me research what happened with the Swiss Franc recently. It has closed a lot of FX trading platforms from sheer losses [1].
This isn't limited to bitcoin — that's a naive and ignorant point of view.
[1] http://www.bidnessetc.com/32853-swiss-franc-shock-highlight-...
Luckily, with Bitcoin, it's trade what you can lose. Keep the rest by yourself. Yes, there were some losses, but it's a trading platform. Somewhat expected.
If you don't believe me research what happened with the Swiss Franc recently. It has closed a lot of FX trading platforms from sheer losses [1].
This isn't limited to bitcoin — that's a naive and ignorant point of view.
[1] http://www.bidnessetc.com/32853-swiss-franc-shock-highlight-...
One day blockchain.info stopped working for me (I think they mistakenly banned lots of IPs). And yes, I simply withdrew my money out of it. I just loaded my private key in a mobile wallet and swept the coins.
Apparently Coinbase now offers a multi-signature feature, so people could do the same.
Apparently Coinbase now offers a multi-signature feature, so people could do the same.
[deleted]
I'm a little concerned that over time, it is going to become more difficult and less private to move money out of Coinbase. Even now they ask you "where do you send your money? is it another website?" when you try to withdraw. This is unacceptable.
Of course for some of us it's unacceptable. And we can simply not use it. Personally, I have never even used exchanges like MtGox, only Localbitcoins.
I'm talking about a whole community, not individuals. If some individuals are burned using centralized service, all others can learn from it and move elsewhere or choose more wisely. Not so with banking system which burns everyone and no one can opt out or compete with it.
if you store bitcoin in their vault, you have complete control over them
I think you're overstating how much private mail servers are penalized. I've run several on colocated machines, and delivering emails to the major providers has never been a problem. You have to make sure that your colo gives you IP addresses that aren't on any blacklists, but other than that it's fine.
Well said, though, I think there is reason to be concerned about the continued centralization of bitcoin payment processors. In a world where bitpay and coinbase are processing the vast majority of bitcoin payments, it's easy to imagine how a coordinated denial of service attack could temporarily cripple the bitcoin economy from the consumer's perspective.
The big difference is that you don't need to be certified and so it doesn't exclude anyone from getting into this game. Compare that with banking which is basically impossible to even get started with properly.
The interesting thing here is that it's build on an open protocol rather than on legislation and so this I believe will at least give the opportunity to create all sorts of interesting solutions that are currently impossible to do within the current banking system because technology moves faster than legislation.
So even if we are talking centralization or clustering as I like to call it, we are not talking exclusion.
The interesting thing here is that it's build on an open protocol rather than on legislation and so this I believe will at least give the opportunity to create all sorts of interesting solutions that are currently impossible to do within the current banking system because technology moves faster than legislation.
So even if we are talking centralization or clustering as I like to call it, we are not talking exclusion.
Sure, the barrier to entry is lower, but that may not always be the case, especially once the big players start to push towards regulating competition out of the market.
Even existing regulations are already a show-stopper for any company without the considerable capital necessary to tackle the morass of money transmission laws and licencing concerns that vary from state to state. There is also a big first mover advantage in payment processing because there isn't very much room to innovate beyond lower fees (hard to beat bitpay's 0%) and a reputable brand.
I think there is a real risk that we'll see bitcoin processing completely swallowed up by these big players.
I think there is a real risk that we'll see bitcoin processing completely swallowed up by these big players.
How can they push toward regulation? Honest question? I could set up wherever i want i the world right?
Yes, you can setup wherever you want, but if you want to process payments for U.S. businesses then you need to act in accordance with U.S. money transmission laws, otherwise, nobody will do business with you. Currently, bitcoin payment processors do not fall under the purview of MSB or MTB classification, but that could easily change, especially because cryptocurrencies are still a relatively new concept.
But then it's the US businesses that will not be in compliance right? Not me?
Right, but if US (et al.) merchants are not using your service because using your service means they're not in compliance, you won't be much of a competitor in that field.
Which if the rest of the world is, is going to decrease the risk of any legislation happening to begin with no?
You are a bit late...
http://en.wikipedia.org/wiki/Legality_of_Bitcoin_by_country
http://en.wikipedia.org/wiki/Legality_of_Bitcoin_by_country
Unless you are being overly pedantic I don't understand what your point is. And if it is just pedantic then oh well.
Sure, but then again, it's hard to picture the "consumerization" of bitcoin happening without services like BitPay or Coinbase in the first place. Plus, if there's a future where bitcoin actually has a respectable market share in consumer payments, surely there would be more competing companies in the space trying to get a slice of the pie.
Well that is only one problem, the other is that 58% of the hasrate is controlled by only 5 pools .
if you communicate with people using gmail, it would be pointless though.
Really? I always assumed that bitcoin would follow pretty much the same path as currency on its way to mainstream adoption (mainstream adoption being more or less a prerequisite of any currency). Banks, loans and mortgages don't exist because of some massive conspiracy, they exist because they are necessary. And they are just as necessary in bitcoins as in any other form of exchange.
yeah i mean the point of Bitcoin is that it's decentralized…on a technical level that's not going to change. also another huge point is that it's natively digital which enables tons of shit. whatever, coinbase is awesome
In what way are Bitcoins "natively digital" that dollars aren't? The vast majority of USD exists only in digital form that is convertible upon request to paper and metal trinkets.
The reason some banks take so long to do transfers is not because USD is somehow analog, it's for institutional reasons that are entirely rectifiable - which is why it's not true of all banks or often, true outside the US.
The reason some banks take so long to do transfers is not because USD is somehow analog, it's for institutional reasons that are entirely rectifiable - which is why it's not true of all banks or often, true outside the US.
That's the exact opposite goal of, I would guess, an extremely small number of people, and even a small number of people who would be described as big fans of Bitcoin. I don't even think it's worth mentioning. I'm extremely optimistic about Bitcoin, and I see no reason why offering traditional financial services (including exchange with government currencies) on top of Bitcoin is undesirable.
Different definition of centralization. Coinbase may hold and control a lot of bitcoins, but they don't control the network and can't make fiat declarations if they want to ban/block someone from using bitcoin.
Unless they become a large enough payment provider.
If a sufficient number of businesses integrate coinbase into their sales, it's not just a matter of the paying customer going elsewhere to process the payment: the entity selling the goods also has to move away from coinbase.
Sure, you can still send coins over the network - but given a large enough foothold that doesn't mean you'll be able to pay for the goods you want, at the merchant you want.
If a sufficient number of businesses integrate coinbase into their sales, it's not just a matter of the paying customer going elsewhere to process the payment: the entity selling the goods also has to move away from coinbase.
Sure, you can still send coins over the network - but given a large enough foothold that doesn't mean you'll be able to pay for the goods you want, at the merchant you want.
5 pools control the network ...witch is scary
It's not scary, and by looking at your comment history it's pretty obvious you have an agenda against Bitcoin, and you are trying to promote your PoS (a flawed concept) altcoins, probably just because you can't stand that someone else invested in Bitcoin before you. Apparently 1,000% gains per year is not enough for some people.
Interesting let stick with the 5 pool controlling the network part, and cut the crap with my comment history it is irrelevant. Start by addressing why is not scary. Just saying it is not scary it is a pretty stupid explanation...
Wasn't Bitcoin always meant to be cash for computers? Bulk of cash belongs in the banks.
Mere possibility of running a node on your own and sending money directly alters the dynamic. You can use a third party service if you like. You have to use a third party to transfer dollars over the Internet.
Mere possibility of running a node on your own and sending money directly alters the dynamic. You can use a third party service if you like. You have to use a third party to transfer dollars over the Internet.
"Wasn't Bitcoin always meant to be cash for computers?
Bulk of cash belongs in the banks."
I'd say most money lives in banks. Most cash is out in the world.
A downside of having someone else hold onto your BTC on a website is that you can't spend it in the ways that are supposed to make BTC powerful.
On the other hand, you do still reap the benefits of the rock-solid wealth-storage device that is BTC. And where could be a safer place for your BTC than a website on the Internet? Those things never get hacked.
I'd say most money lives in banks. Most cash is out in the world.
A downside of having someone else hold onto your BTC on a website is that you can't spend it in the ways that are supposed to make BTC powerful.
On the other hand, you do still reap the benefits of the rock-solid wealth-storage device that is BTC. And where could be a safer place for your BTC than a website on the Internet? Those things never get hacked.
So you never heard of multi-signature? You can have that even on Coinbase.
No, it's like saying that it's bad or strange that for example godaddy.com is a large DNS provider. They are just a popular provider of a decentralized service
I believe cash is also decentralized until you have to much to store and it becomes complicated and risky to keep it under your bed.
Keeping your bitcoins inside your computer comes to a cost of security and maintenance with the risk of losing them or getting robbed... Giving them to a bank you trust is the solution if you can't do that on your own.
Well, people are familiar with banks, and they know how to use them. I think that's the only way to get widespread adoption at this stage. Sure, everybody on this site would prefer to see a more decentralized solution, but to get the attention of more people that's the only way. Copy the big guys.
Well, what do you mean by "Bitcoin company"? Are there no retailers larger than Coinbase now accepting Bitcoin? Such companies may not base their entire business around it, but the goal of Bitcoin is meant to be a widely-used medium of exchange. It's not necessarily bring about large companies on its own. And what would a "US Dollar company" be, if not a bank, anyway?
Haha yeah it is ironic. For people who want a bit of nuance (it's certainly true what he said, just not the whole truth) here's some additional thoughts.
One is that the paradox of bitcoin adoption is that it can't take off without a normal banking system. And if you had a decent banking system, you wouldn't need bitcoin in the first place.
That is, fraud is a big issue in online retail. You buy product X online and then you 'charge back' your transaction and end up with a free product. Merchants then have to solve this by starting legal cases and provide evidence that a product was supplied blablabla. Sometimes this costs more than it's worth. Bitcoin faces a lot of these problems, too. How do you acquire bitcoin? You can't through Paypal because of this fraud, everyone charges it back and Paypal mostly ignores evidence that bitcoin was indeed supplied. As a seller you can't really make a case and win.
So you end up with these big companies that act a bit like banks. They require you to verify your identity, your residence, bank account etc. All to prevent fraud. And of course all of that has costs, so they charge you 1%. And then you pay them not through a credit card, that's 2.5% in fees which doesn't work if you pay $100 to get $100 of bitcoin. So you pay through ACH, which takes a few days but is cheap.
So you end up with a service that sells you bitcoin for 1% that takes a few days. Why? Because there's no way to safely send money cheaply and instantly without fraud, which is what bitcoin allows you to do and solves.
So the paradox is, if everyone had bitcoin, it wouldn't be a problem. But they don't, so we need banks. But if banks worked well, we wouldn't need bitcoin.
Over time this becomes less of an issue of course. This is what made Coinbase big, not its storage, but its exchange function for US customers. As a wallet, it's not the biggest, Blockchain.info which does not see your private keys (it's a software layer) has almost a million more wallets. So it's big for its exchange function which has little to do with centralized or decentralized storage of money.
The second part is centralized storage. This is a function of culture and software sophistication. In the early days most bitcoin software wasn't user friendly and not very well written. Today we're seeing changes. In fact, Coinbase has a multi-sig product, which is a software solution allowing you full autonomy over your money, and Coinbase none. That's not centralized storage, users retain full control over their private keys and Coinbase offers the software to facilitate it, much like how an Excel sheet facilitates your personal data analysis but doesn't award Microsoft ownership of your data. Over time we'll see products like this emerge more and more and people will have a choice to move away from centralized storage, and culture may shift towards that, too.
In short though, bitcoin wasn't about 'never use a centralized company'. It's about a protocol layer that's not proprietary, with a currency that can't be forged or printed to fuel political agendas (like militaristic foreign policy). The fact that centralized and decentralized solutions become available on top of that layer is both fine. Much like how a decentralized internet would be awesome despite the fact it would still see centralized repositories of data like Facebook, it's not about which services become most popular as long as the underlying network remains free and open.
One is that the paradox of bitcoin adoption is that it can't take off without a normal banking system. And if you had a decent banking system, you wouldn't need bitcoin in the first place.
That is, fraud is a big issue in online retail. You buy product X online and then you 'charge back' your transaction and end up with a free product. Merchants then have to solve this by starting legal cases and provide evidence that a product was supplied blablabla. Sometimes this costs more than it's worth. Bitcoin faces a lot of these problems, too. How do you acquire bitcoin? You can't through Paypal because of this fraud, everyone charges it back and Paypal mostly ignores evidence that bitcoin was indeed supplied. As a seller you can't really make a case and win.
So you end up with these big companies that act a bit like banks. They require you to verify your identity, your residence, bank account etc. All to prevent fraud. And of course all of that has costs, so they charge you 1%. And then you pay them not through a credit card, that's 2.5% in fees which doesn't work if you pay $100 to get $100 of bitcoin. So you pay through ACH, which takes a few days but is cheap.
So you end up with a service that sells you bitcoin for 1% that takes a few days. Why? Because there's no way to safely send money cheaply and instantly without fraud, which is what bitcoin allows you to do and solves.
So the paradox is, if everyone had bitcoin, it wouldn't be a problem. But they don't, so we need banks. But if banks worked well, we wouldn't need bitcoin.
Over time this becomes less of an issue of course. This is what made Coinbase big, not its storage, but its exchange function for US customers. As a wallet, it's not the biggest, Blockchain.info which does not see your private keys (it's a software layer) has almost a million more wallets. So it's big for its exchange function which has little to do with centralized or decentralized storage of money.
The second part is centralized storage. This is a function of culture and software sophistication. In the early days most bitcoin software wasn't user friendly and not very well written. Today we're seeing changes. In fact, Coinbase has a multi-sig product, which is a software solution allowing you full autonomy over your money, and Coinbase none. That's not centralized storage, users retain full control over their private keys and Coinbase offers the software to facilitate it, much like how an Excel sheet facilitates your personal data analysis but doesn't award Microsoft ownership of your data. Over time we'll see products like this emerge more and more and people will have a choice to move away from centralized storage, and culture may shift towards that, too.
In short though, bitcoin wasn't about 'never use a centralized company'. It's about a protocol layer that's not proprietary, with a currency that can't be forged or printed to fuel political agendas (like militaristic foreign policy). The fact that centralized and decentralized solutions become available on top of that layer is both fine. Much like how a decentralized internet would be awesome despite the fact it would still see centralized repositories of data like Facebook, it's not about which services become most popular as long as the underlying network remains free and open.
This is one of the reasons I co-founded https://www.incoin.io, so you can choose to get paid partly in bitcoin (or not, if you don't want to) without a 1% fee.
Your identity is already verified for tax purposes. It's a straight up facilitator.
As a shameless plug, the other reason is savings. We've implemented splitting your paycheck up into multiple accounts to incentivise savings, and it's working really well.
Your identity is already verified for tax purposes. It's a straight up facilitator.
As a shameless plug, the other reason is savings. We've implemented splitting your paycheck up into multiple accounts to incentivise savings, and it's working really well.
You are ignoring the cost of the bitcoin network. Someone has to pay for all of those hashes. Currently it is being paid for by block rewards mainly to the miners, and the transaction fees are very low. Taking into account the bitcoins created to pay the miners, the cost per transaction is much higher with bitcoin than with traditional banking.
Nah, they're not linked. That is, if the entire planet had 0 transactions for the next 24 hours, you'd still award bitcoin miners the same block rewards every 10 minutes for the next 24 hours. In other words, block rewards are not a per-transaction cost, they're a systemic cost.
And that cost is dropping. Money supply is just inherent to bitcoin's design to kick it off, but it's dropping to near zero within a few decades, unlike systemic costs of printing fiat which remain endlessly.
The long-term reward are transaction fees, and those are certainly quite cheap. You can move millions of dollars with pennies of fees, or you can make one transaction with thousands of outputs, also for mere pennies. Those fees can stay low as when you get 1.000x more transactions, you can pay for the same security with extremely small fees per transaction. (i.e. securing the system is expensive, again it's a systemic cost, but securing each individual transaction isn't, that's just a cheap process of verifying a signature and storing 1/10th the amount of data of a tweet. So if you get enough transactions going, securing the system can be funded by very many very cheap transaction fees. And if you don't get many transactions going, then bitcoin isn't popular and well used anyway and who cares then if it doesn't work? It's like saying Myspace has technical flaws, nobody cares if it already failed to become popular that it would also have failed for technical reasons.
Bitcoin is imo unlikely to ever let you buy a cup of coffee using a single blockchain transaction (I mean, you can now, I'm talking sustaining this over the long term). Instead, it'll be used as the value network on which financial systems are built that will allow you to do this. Whether that's sidechains or offchains, they'll all use bitcoin's blockchain as a settling mechanism, without forcing low-value transactions on a permanent global ledger.
And that cost is dropping. Money supply is just inherent to bitcoin's design to kick it off, but it's dropping to near zero within a few decades, unlike systemic costs of printing fiat which remain endlessly.
The long-term reward are transaction fees, and those are certainly quite cheap. You can move millions of dollars with pennies of fees, or you can make one transaction with thousands of outputs, also for mere pennies. Those fees can stay low as when you get 1.000x more transactions, you can pay for the same security with extremely small fees per transaction. (i.e. securing the system is expensive, again it's a systemic cost, but securing each individual transaction isn't, that's just a cheap process of verifying a signature and storing 1/10th the amount of data of a tweet. So if you get enough transactions going, securing the system can be funded by very many very cheap transaction fees. And if you don't get many transactions going, then bitcoin isn't popular and well used anyway and who cares then if it doesn't work? It's like saying Myspace has technical flaws, nobody cares if it already failed to become popular that it would also have failed for technical reasons.
Bitcoin is imo unlikely to ever let you buy a cup of coffee using a single blockchain transaction (I mean, you can now, I'm talking sustaining this over the long term). Instead, it'll be used as the value network on which financial systems are built that will allow you to do this. Whether that's sidechains or offchains, they'll all use bitcoin's blockchain as a settling mechanism, without forcing low-value transactions on a permanent global ledger.
And you are ignoring a much bigger issue. For instance, the Fed has expanded the USD monetary base by about 4 trillion in the past six years. So why not take that figure, divide it by the total number of transactions in the past six years and call it "the dollar's cost per transaction"?
Every inflationary currency system suffers from the same problem. At least bitcoin has a hard cap on the total number of units that will ever be available.
Every inflationary currency system suffers from the same problem. At least bitcoin has a hard cap on the total number of units that will ever be available.
Because that wasn't required to facilitate each transaction
It was required to facilitate future transactions.
[That was the argument made anyway]
[That was the argument made anyway]
> At least bitcoin has a hard cap on the total number of units that will ever be available.
You say that as though it is a good thing. Do you really think the US would be better off with QE? It seems to me it'd look more like the Eurozone.
Increase in money supply != inflation, FWIW.
You say that as though it is a good thing. Do you really think the US would be better off with QE? It seems to me it'd look more like the Eurozone.
Increase in money supply != inflation, FWIW.
Do you know of any hard analysis on these numbers?
There's not a ton of research but it's not really a difficult topic to get some superficial answers on cause it's all on the blockchain which is public of course.
For one we have the transaction numbers (again just count transactions on the blockchain) for the past 24 hours. It's been averaging about 100k the past few weeks. (averaging about 70k for 2014 for context).
We also know that every 10 minutes a block is mined and 25 bitcoins are rewarded with a value of $200 per coin. So in 24 hours that's $720k.
In short this puts the average supply of bitcoin at $7 per transaction.
In short, you can't call it a 'cost per transaction' because it's not a marginal cost. i.e. if zero transactions were made, there'd still be a supply of 25 bitcoins every 10 minutes up to $700k per day. Same with if 1 trillion transactions were made. In other words, this is simply a supply function, not a per-transaction cost function.
To put this into perspective, here's an example. e.g. if you build a bridge for $1m and you have 1 million users, the average cost per user is $1. But if only 1 person uses the bridge, it's not like the cost of a bridge is $1 million per user. That would be ridiculous. If we went about reasoning like that nobody would build a bridge at that cost, especially not in places where you get many users because you'd get insanely expensive bridges (1 million users costs 1 million * 1 million!)
Now it's true that someone has to pay for all this hashing which secures the blockchain. But that cost is not to secure each individual transaction. It's a cost to secure the system, a systemic cost. A bit like the cost to build a bridge, a global cost, not a marginal one (i.e. it doesn't cost extra to let 10 persons instead of 1 person to walk over the bridge)
The bridge is a poor example because you can't get unlimited people on the bridge. (there is some marginal cost, i.e. there is a cost difference to building a bridge to move 100 people per hour versus 100 thousand people per hour). In bitcoin this difference is trivial. It's like asking what the cost of a tweet is on twitter's bandwidth or storage, it's very tiny like a tiny fraction of a penny. This cost is paid for in transaction fees.
So to return to the systemic cost, you need to come up with enough money to incentivize miners to act honestly. And we can do that by rewarding them with bitcoin. Today that comes from block rewards, but it doesn't have to be like that. In 10 years, if bitcoin is popular, we can see millions of transactions per block, and if each transaction costs a penny then you can easily cover today's block rewards.
For some example numbers: current security costs about $5k per block, and we've just heard bitcoin's Chief Scientist report on tests that he did with large blocks. His tests showed he can power 200 megabyte blocks on his 2012 home PC. That's enough data for more than 400k transactions, meaning that with 0 block rewards you could get transactions as cheap as 1.2 cents, nothing close to the $7 figure I stated before.
And this ability grows at Moore's, Kryder's and Nielsen's law (cpu, storage, bandwidth) meaning that the ability to power larger blocks grows by 80x every decade or so. If you then fill those larger blocks with 80x transactions, then each transaction can get 80x cheaper. Within a decade we could get to fractions of a penny per transaction.
Then combine that with the fact that 1 transaction can carry a ton of data. i.e. you can send bitcoin to thousands of people with 1 transaction if you wanted. Or you could use bitcoin as a settling system for offchain or sidechain systems, meaning you can settle thousands of trades with only a few transactions making the cost of transactions even cheaper.
So these 'cost' figures look a lot scarier than they are. I wrote a similar bit as above about what that all means here: https://news.ycombinator.com/item?id=8922262
In short bitcoin really is very cheap and its cost will not be its downfall. It might fail for other reasons, but I don't perceive costs to be one of its obstacles, rather it's one of its competitive advantages.
For one we have the transaction numbers (again just count transactions on the blockchain) for the past 24 hours. It's been averaging about 100k the past few weeks. (averaging about 70k for 2014 for context).
We also know that every 10 minutes a block is mined and 25 bitcoins are rewarded with a value of $200 per coin. So in 24 hours that's $720k.
In short this puts the average supply of bitcoin at $7 per transaction.
In short, you can't call it a 'cost per transaction' because it's not a marginal cost. i.e. if zero transactions were made, there'd still be a supply of 25 bitcoins every 10 minutes up to $700k per day. Same with if 1 trillion transactions were made. In other words, this is simply a supply function, not a per-transaction cost function.
To put this into perspective, here's an example. e.g. if you build a bridge for $1m and you have 1 million users, the average cost per user is $1. But if only 1 person uses the bridge, it's not like the cost of a bridge is $1 million per user. That would be ridiculous. If we went about reasoning like that nobody would build a bridge at that cost, especially not in places where you get many users because you'd get insanely expensive bridges (1 million users costs 1 million * 1 million!)
Now it's true that someone has to pay for all this hashing which secures the blockchain. But that cost is not to secure each individual transaction. It's a cost to secure the system, a systemic cost. A bit like the cost to build a bridge, a global cost, not a marginal one (i.e. it doesn't cost extra to let 10 persons instead of 1 person to walk over the bridge)
The bridge is a poor example because you can't get unlimited people on the bridge. (there is some marginal cost, i.e. there is a cost difference to building a bridge to move 100 people per hour versus 100 thousand people per hour). In bitcoin this difference is trivial. It's like asking what the cost of a tweet is on twitter's bandwidth or storage, it's very tiny like a tiny fraction of a penny. This cost is paid for in transaction fees.
So to return to the systemic cost, you need to come up with enough money to incentivize miners to act honestly. And we can do that by rewarding them with bitcoin. Today that comes from block rewards, but it doesn't have to be like that. In 10 years, if bitcoin is popular, we can see millions of transactions per block, and if each transaction costs a penny then you can easily cover today's block rewards.
For some example numbers: current security costs about $5k per block, and we've just heard bitcoin's Chief Scientist report on tests that he did with large blocks. His tests showed he can power 200 megabyte blocks on his 2012 home PC. That's enough data for more than 400k transactions, meaning that with 0 block rewards you could get transactions as cheap as 1.2 cents, nothing close to the $7 figure I stated before.
And this ability grows at Moore's, Kryder's and Nielsen's law (cpu, storage, bandwidth) meaning that the ability to power larger blocks grows by 80x every decade or so. If you then fill those larger blocks with 80x transactions, then each transaction can get 80x cheaper. Within a decade we could get to fractions of a penny per transaction.
Then combine that with the fact that 1 transaction can carry a ton of data. i.e. you can send bitcoin to thousands of people with 1 transaction if you wanted. Or you could use bitcoin as a settling system for offchain or sidechain systems, meaning you can settle thousands of trades with only a few transactions making the cost of transactions even cheaper.
So these 'cost' figures look a lot scarier than they are. I wrote a similar bit as above about what that all means here: https://news.ycombinator.com/item?id=8922262
In short bitcoin really is very cheap and its cost will not be its downfall. It might fail for other reasons, but I don't perceive costs to be one of its obstacles, rather it's one of its competitive advantages.
Coinbase is about buying bitcoins and taking them as payment. Its primary purpose is not to hold other people's bitcoins. It is an exchange and payment processor. So it's funny that your description is the exact opposite of what Coinbase actually does.
Coinbase is as much about Bitcoin storage as it those other things, lets not pretend otherwise. They didn't just roll out the offline vault with double email confirmations and a two day delay because storage isn't their thing. They are not an exchange, you don't trade on Coinbase. They're a broker, you get coins from them with a markup and delay.
The broker exchange distinction is fair, but everyone who has bitcoins needs to heighten their security to keep them. That doesn't mean that is a service that coinbase is intent on offering though. People may choose to do that, which seems risky to me, but that is a means to an end.
They aren't a storage company, they are a company who facilitates transactions and like any other bitcoin business needs to securely store their btc.
The original comment was about them being similar to a bank which just isn't true at this point, it isn't what their business is about.
They aren't a storage company, they are a company who facilitates transactions and like any other bitcoin business needs to securely store their btc.
The original comment was about them being similar to a bank which just isn't true at this point, it isn't what their business is about.
> They aren't a storage company, they are a company who facilitates transactions and like any other bitcoin business needs to securely store their btc.
> The original comment was about them being similar to a bank which just isn't true at this point, it isn't what their business is about.
I don't get how you see a bank? As a storage company or money that just sits there doing nothing? Or as a company that facilitates transactions not unlike Coinbase?
They're very much like a bank in that regard. And yes they do also put a big focus on storage, it's not their only thing but they have one of the most popular wallets (2 million), claim to hold the most amount of bitcoin for users, more than any other company in the world, have a multi-sig product, have a vault product, have an insurance on their wallets, have mobile wallets, an SMS wallet, a web wallet.
This idea they're not about storing bitcoin (as well as other things) is ridiculous.
Are they a bank? In some ways, sure. Is that bad? No. A bank just offers financial services, and that's awesome.
And if you offer those financial services in a currency that can't be forged by criminals or printed and debased to fund an illegitimate military adventure, on a network that can't be blocked, is open to all, transparent and requires no permission, and offer products like a multi-sig wallet that put 100% of control with the user and 0% control with Coinbase as a choice to the user, that's awesome.
That may be a bank in that they offer financial services, but it's a lot better to me.
I don't get how you see a bank? As a storage company or money that just sits there doing nothing? Or as a company that facilitates transactions not unlike Coinbase?
They're very much like a bank in that regard. And yes they do also put a big focus on storage, it's not their only thing but they have one of the most popular wallets (2 million), claim to hold the most amount of bitcoin for users, more than any other company in the world, have a multi-sig product, have a vault product, have an insurance on their wallets, have mobile wallets, an SMS wallet, a web wallet.
This idea they're not about storing bitcoin (as well as other things) is ridiculous.
Are they a bank? In some ways, sure. Is that bad? No. A bank just offers financial services, and that's awesome.
And if you offer those financial services in a currency that can't be forged by criminals or printed and debased to fund an illegitimate military adventure, on a network that can't be blocked, is open to all, transparent and requires no permission, and offer products like a multi-sig wallet that put 100% of control with the user and 0% control with Coinbase as a choice to the user, that's awesome.
That may be a bank in that they offer financial services, but it's a lot better to me.
> They aren't a storage company, they are a company who facilitates transactions and like any other bitcoin business needs to securely store their btc.
That's quite simply wrong; they are the most popular online wallet there is. You simply cannot make this claim, it's patently untrue.
That's quite simply wrong; they are the most popular online wallet there is. You simply cannot make this claim, it's patently untrue.
Then what is Coinbase Vault?
https://www.coinbase.com/vault
https://www.coinbase.com/vault
"The Coinbase Vault Has Zero Fees".
So how do they make money from it? By stealing your assets, like most Bitcoin wallet companies?
So how do they make money from it? By stealing your assets, like most Bitcoin wallet companies?
> Its primary purpose is not to hold other people's bitcoins
Wrong. There's a reason they call one of their services a "wallet" - because they hold other people's bitcoins. And guess what, they now have a USD wallet too, for storing other people's USD (http://avc.com/2015/01/feature-friday-us-dollar-wallet/)
And as gnaritas said, they are not an exchange, they have a broker service.
Wrong. There's a reason they call one of their services a "wallet" - because they hold other people's bitcoins. And guess what, they now have a USD wallet too, for storing other people's USD (http://avc.com/2015/01/feature-friday-us-dollar-wallet/)
And as gnaritas said, they are not an exchange, they have a broker service.
Those things are a means to an end, the company doesn't exist to hold people's money. Banks do, since they loan out money at a fractional reserve. Coinbase makes money by btc going through them. Of course they have to hold bitcoin and of course it is more advantageous to hold some USD so people can trade instantly.
The original post was about them being like a bank, which is not true in the context of their business model.
The original post was about them being like a bank, which is not true in the context of their business model.
> Those things are a means to an end, the company doesn't exist to hold people's money
Yet. Like the OP said, "Next up they'll probably offer interest and loans/mortgages". Who knows what else they'll divert their attentions to (hint: it's probably where the money is).
Coinbase seems to be going for the Payment Processor route, now with the USD wallet who knows if they'll offer you a CC just like Xapo. Guess who else offers you CCs?
Yet. Like the OP said, "Next up they'll probably offer interest and loans/mortgages". Who knows what else they'll divert their attentions to (hint: it's probably where the money is).
Coinbase seems to be going for the Payment Processor route, now with the USD wallet who knows if they'll offer you a CC just like Xapo. Guess who else offers you CCs?
Wallet isn't something Coinbase came up with, it's a Bitcoin term. A wallet, or more specifically a wallet address, is an account number that's used to send and receive Bitcoins.
A wallet, in bitcoin terminology, is a keychain. It's a collection of private keys, each corresponding to a bitcoin address.
no one claimed that Coinbase came up with btc wallets.
but usd wallets are definitely something novel (bitstamp also allows you to hold usd, but not for the use cases that coinbase is enabling)
but usd wallets are definitely something novel (bitstamp also allows you to hold usd, but not for the use cases that coinbase is enabling)
Possible it's just the easiest model for establishment investors to understand.
Doesn't necessarily imply anything about future bitcoin business models, or even current ones that still fly beneath the mainstream investor radars.
Doesn't necessarily imply anything about future bitcoin business models, or even current ones that still fly beneath the mainstream investor radars.
Even if you just rebuilt banks as they exist today on top of Bitcoin, you'd still get some pretty huge advantages, potentially massively increased security, speed, reduced costs, among others. Another big one is that these banks can service the entire global market, massively increasing competition among and hence quality of banking services.
This is totally true I'm not sure where the down votes come from. HN seems to really hate bitcoin.
Where do these massive increase in security, speed, and cost reductions come from in a banking system built on bitcoin?
The irreversible transactions, 10-minute minimum verification, and wildly volatile spread obviously.
Banks become forced to compete with an (almost) free and instantaneous method of transferring value (sending bitcoin peer-to-peer without the use of a third party).
It currently costs $40+ for a comparable fiat service (wire transfers).
It currently costs $40+ for a comparable fiat service (wire transfers).
this is only really true in the united states. the rest of the world has free or almost free instant account to account transfers
"Rest of the world" is a bit of an overstatement, and even then it's only within certain zones. Inter-zone transfer on the global level is still slow and costly, where ever you are.
True, but there's a decent case to be made that (1) transaction fees will have to increase (in general) as the block reward decreases, and (2) transaction fees will have to increase (for these centralized services) if they want to eat the cost of fraud [1].
[1] https://freedom-to-tinker.com/blog/randomwalker/the-low-tran...
[1] https://freedom-to-tinker.com/blog/randomwalker/the-low-tran...
Without the use of a third party? Bitcoin transactions need to be confirmed in the blockchain which requires third-party miners to exist. Mining costs are relatively high considering the value provided. The blockchain is not at all (and was never intended to be) an efficient way to transfer digital funds. It was created to be decentralized and it serves that purpose, but using it to back a centralized system would be self-defeating, hence this comment thread.
Transferring value in the form of maintaining electronic accounts isn't comparable to wire transfers of fiat where the funds are made available in local currency. Banks don't just track numbers in accounts: providing liquidity and ensuring those numbers actually mean something is not trivial. If bitcoins were globally accepted it would be a more competitive service, but even then there would be the issues of fraud protection and compliance with money laundering legislation that bitcoin doesn't handle well.
Transferring value in the form of maintaining electronic accounts isn't comparable to wire transfers of fiat where the funds are made available in local currency. Banks don't just track numbers in accounts: providing liquidity and ensuring those numbers actually mean something is not trivial. If bitcoins were globally accepted it would be a more competitive service, but even then there would be the issues of fraud protection and compliance with money laundering legislation that bitcoin doesn't handle well.
Only if you live in the USA.
It's free for most people in Europe. And fast.
It's free for most people in Europe. And fast.
I live in Canada and the cheapest, fastest way to transfer fiat is to email a picture of a filled-out cheque. It's pathetic.
Almost every bank in Canada has access to interac transfers which are like $3 and complete in 30 minutes to an hour.
Yes, but hilariously that's both slower and more expensive than the picture of a cheque method.
Bitcoin is capped at something like 7 transactions per second. VISA handles tens of thousands. I think "faster" is disputable.
Speed is not a function of capacity in this particular context. A car with 1 seat driving 500 m/h is faster, don't you think, than a car with 4 seats that drives 50 m/h.
I mean we can argue semantics, but if you want to send $100 from the US to the Philippines, bitcoin is generally a lot faster than your bank, even when you have to buy bitcoin and sell it in the Philippines because of international transactions taking much longer than local ones.
As for capacity, bitcoin's 'Chief Scientist' just wrote a blog post on scalability: http://gavintech.blogspot.de/2015/01/twenty-megabytes-testin...
To make a long story short, thousands of transactions per second (Visa averages about 2k) is certainly possible. I'd be more worried about bitcoin adoption (from an interest/tech/growth point of view) as a limit than technical scalability issues as a limit, especially with things like sidechains. (Look at Blockstream's Sidechains for example as a solution, just got a $21m investment.)
It's generally held that it can scale, whether it can grow and become popular and well used remains to be seen (I think it's likely but it's far from certain).
I mean we can argue semantics, but if you want to send $100 from the US to the Philippines, bitcoin is generally a lot faster than your bank, even when you have to buy bitcoin and sell it in the Philippines because of international transactions taking much longer than local ones.
As for capacity, bitcoin's 'Chief Scientist' just wrote a blog post on scalability: http://gavintech.blogspot.de/2015/01/twenty-megabytes-testin...
To make a long story short, thousands of transactions per second (Visa averages about 2k) is certainly possible. I'd be more worried about bitcoin adoption (from an interest/tech/growth point of view) as a limit than technical scalability issues as a limit, especially with things like sidechains. (Look at Blockstream's Sidechains for example as a solution, just got a $21m investment.)
It's generally held that it can scale, whether it can grow and become popular and well used remains to be seen (I think it's likely but it's far from certain).
Banks don't transfer money to each other through Visa, they use SWIFT. Transactions usually take 4 business days.
The block size limit is in the process of being changed, but there isn't a rush since blocks are not being filled. If they do get filled, transaction costs will go up and tiny (0.01 USD) micro-transactions won't be viable until the block limit is increased. So the only thing that might happen is transactions of a few cents are temporarily not viable (the transaction cost is larger than the amount sent).
The block size limit is in the process of being changed, but there isn't a rush since blocks are not being filled. If they do get filled, transaction costs will go up and tiny (0.01 USD) micro-transactions won't be viable until the block limit is increased. So the only thing that might happen is transactions of a few cents are temporarily not viable (the transaction cost is larger than the amount sent).
If your wires take you 4 days you need to switch banks. I make regular international transfers and unless I miss business hours they are always in the receiving account the next morning.
This issue is being addressed via invertible bloom lookup tables.
https://gist.github.com/gavinandresen/e20c3b5a1d4b97f79ac2
https://gist.github.com/gavinandresen/e20c3b5a1d4b97f79ac2
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Confirms for me that Bitcoin is on track to disrupt credit card payments, possibly ACH/Wire, and not to be a replacement currency. Credit cards handle about 3.6 trillion/year in transactions. With 3% per transaction fees, chargebacks and equipment costs -- there are plenty of reasons for merchants to increasingly accept BTC provided companies like Coinbase are prepared to take the BTC market risk by sweeping BTC into local currency.
Plenty of reasons for merchants to accept BTC, still not a lot of reasons for consumers..
Exactly. I still use plastic even when btc is an option. Credit cards are simply better for the consumer (instantaneous transaction, chargeback/dispute and points)
>Credit cards are simply better for the consumer
This suggests you haven't tried paying with bitcoin. Sure, you lose all those things you get with creditcards, but for me some advantages that bitcoin offers over credit cards (and yes I'm a consumer too) are more important, such us:
- I'm not afraid that any of the providers where I have bought things gets hacked, because my identity and payment details is not kept by them.
- Paying with bitcoin is so much easier, I don't need to copy stupid numbers from a card with my keyboard ever again.
- I don't need to check my bank account from time to time to see if I had charges that don't correspond to things I didn't buy.
- I'm not afraid of bank commissions that especially take place when I pay for things abroad.
These are the little things that will make a universal-worldwide-digital-coin succeed. Could be that this coin is bitcoin, or other one.
This suggests you haven't tried paying with bitcoin. Sure, you lose all those things you get with creditcards, but for me some advantages that bitcoin offers over credit cards (and yes I'm a consumer too) are more important, such us:
- I'm not afraid that any of the providers where I have bought things gets hacked, because my identity and payment details is not kept by them.
- Paying with bitcoin is so much easier, I don't need to copy stupid numbers from a card with my keyboard ever again.
- I don't need to check my bank account from time to time to see if I had charges that don't correspond to things I didn't buy.
- I'm not afraid of bank commissions that especially take place when I pay for things abroad.
These are the little things that will make a universal-worldwide-digital-coin succeed. Could be that this coin is bitcoin, or other one.
I'm not afraid that any of the providers where I have bought things gets hacked, because my identity and payment details is not kept by them.
Aren't you just trading the risk of the merchant being hacked and stealing payment details (which with credit cards, can be fixed by simply issuing a new card) for the risk of someone getting access to where you store your bitcoins (where you effectively have zero recourse)?
That seems like an unbalanced tradeoff from my perspective.
Aren't you just trading the risk of the merchant being hacked and stealing payment details (which with credit cards, can be fixed by simply issuing a new card) for the risk of someone getting access to where you store your bitcoins (where you effectively have zero recourse)?
That seems like an unbalanced tradeoff from my perspective.
Which is easier: securing only 1 hardware wallet, or securing the HUNDREDS or THOUSANDS of merchant systems that your credit card information flows through?
If you fail with your wallet there is no recourse and you're out of luck. If any of the "HUNDREDS or THOUSANDS" of merchant systems fail you are not held responsible and in the worst case get any missing funds back after a small waiting period. Usually the worst thing that happens is you'll have to update a couple recurring payments, but they'll sometimes even help you with that (Amex!).
I'll take the CC please!
I'll take the CC please!
You are wrong, in many cases the customer has no recourse for credit card fraud: https://news.ycombinator.com/item?id=8918865 People think credit card anti-fraud measures are perfect. They are not.
I don't think anything is perfect, but with BTC there is a 0% chance of recourse. I'll take the option with a ton of consumer protection law and someone to sue over the Wild West any day of the week.
These consumer protection laws protect you regardless of the manner of payment: bitcoins/dollars/whatever.
You CAN and SHOULD use the legal tools at your disposition (lawsuit, small claim court, FTC/BBB complaints...) if you get scammed after paying in bitcoins. You definitively have a chance of recourse. These tools work, that's why we have them.
For example the U.S. Securities Exchange Commission successfully prosecuted Trendon Shavers (he was running his scam denominated in bitcoins).
You CAN and SHOULD use the legal tools at your disposition (lawsuit, small claim court, FTC/BBB complaints...) if you get scammed after paying in bitcoins. You definitively have a chance of recourse. These tools work, that's why we have them.
For example the U.S. Securities Exchange Commission successfully prosecuted Trendon Shavers (he was running his scam denominated in bitcoins).
The consequences of failing to secure my hardware wallet are that I lose all my money.
The consequences of failing to secure a merchant system are that I have to get a new credit card and maybe click the "dispute" button on my bank website a couple times.
The consequences of failing to secure a merchant system are that I have to get a new credit card and maybe click the "dispute" button on my bank website a couple times.
For almost everyone on the planet the second is easier. People are bad at security.
It is very rare for people in countries where cards have PINs to both lose a card and give away the PIN to the thief. Banks have educated customers well enough to not write the PIN on the card.
Likewise, a PIN-protected Bitcoin hardware wallet is reasonably pretty secure. You would need a thief with professional equipment to decap the secure chip to access data in the EEPROM that would otherwise be PIN-protected. I would trust this any time over the merchants systems which routinely get hacked over and over.
Likewise, a PIN-protected Bitcoin hardware wallet is reasonably pretty secure. You would need a thief with professional equipment to decap the secure chip to access data in the EEPROM that would otherwise be PIN-protected. I would trust this any time over the merchants systems which routinely get hacked over and over.
If it's pin protected then either it has to be used with another system that can lock out pins or I can build a robot to try all pins using simple plans from the internet. Problem solved. So how does this device help again?
Also it's quite common for people to give their pin to thieves it happens at ATM stick ups all the time. The difference there is in cases where they are forced to withdraw money they aren't liable(it's considered the bank being robbed not them) and in cases where the thief takes the info and runs they can call the bank cancel the card and not be out anything.
Also it's quite common for people to give their pin to thieves it happens at ATM stick ups all the time. The difference there is in cases where they are forced to withdraw money they aren't liable(it's considered the bank being robbed not them) and in cases where the thief takes the info and runs they can call the bank cancel the card and not be out anything.
Clearly you have no idea how secure or tamper resistant chip technology works. To prevent such brute force approaches, they are designed to limit the maximum number of attempts, before they permanently disable themselves, which prevents you from trying all combinations.
As to liability, I have pointed out in this HN thread multiple instances where customers are in fact held liable (60-day rule, stolen PIN).
As to liability, I have pointed out in this HN thread multiple instances where customers are in fact held liable (60-day rule, stolen PIN).
What happens if I forget my pin then?
Your 1 example requires the person to not check their statement for 2 months. That means there is a 2 month safety window. Do you have numbers on how many people actually have that problem vs the numbers for the ones it works fine for? I would put money on the former being less than a hundredth of a percent
Your second one has been debunked where you originally posted it
Your 1 example requires the person to not check their statement for 2 months. That means there is a 2 month safety window. Do you have numbers on how many people actually have that problem vs the numbers for the ones it works fine for? I would put money on the former being less than a hundredth of a percent
Your second one has been debunked where you originally posted it
> Your second one has been debunked where you originally posted it
Uh no. I gave sources to prove it: https://news.ycombinator.com/item?id=8920067
> What happens if I forget my pin then?
It could be handled the same way as when you forget your credit card PIN. Contact the company who sold you the hardware wallet and who verified your identity when you purchased it, and they could reset it: each wallet could have a rescue passcode that only the company knows. You see, Bitcoin is flexible enough that it lets us develop whatever infrastructure we want on top of it. Even though this service does not exist yet, if it is something people want it will likely be created.
So if your friend Bob wants no one to know his rescue passcode or his identity for ideological reasons then he would himself be responsible for safeguarding the rescue passcode. But if you, sanswork, don't trust yourself to memorize the passcode, buy a hardware wallet from such a company. Either way, you or Bob have a choice of having a wallet work the way you want it to work.
> Your 1 example requires the person to not check their statement for 2 months.
Not necessarily. There are other tactics that scammers use to defeat chargeback protections. For instance they will delay the shipment after you purchase. They will claim multi-weeks long delays due to depleted warehouse stocks. They will ship to a "wrong" address. They will ship the "wrong" item and take time to re-ship the correct one. During all this time they will be all nice and apologetic to make it look like these are simple honest mistakes. After the 60-day limit passes, they cut contact with you, you realize it's a scam, you try to charge back, and you realize you can't! You were not aware of the 60-day limit. The scammers have your money. You are screwed.
Uh no. I gave sources to prove it: https://news.ycombinator.com/item?id=8920067
> What happens if I forget my pin then?
It could be handled the same way as when you forget your credit card PIN. Contact the company who sold you the hardware wallet and who verified your identity when you purchased it, and they could reset it: each wallet could have a rescue passcode that only the company knows. You see, Bitcoin is flexible enough that it lets us develop whatever infrastructure we want on top of it. Even though this service does not exist yet, if it is something people want it will likely be created.
So if your friend Bob wants no one to know his rescue passcode or his identity for ideological reasons then he would himself be responsible for safeguarding the rescue passcode. But if you, sanswork, don't trust yourself to memorize the passcode, buy a hardware wallet from such a company. Either way, you or Bob have a choice of having a wallet work the way you want it to work.
> Your 1 example requires the person to not check their statement for 2 months.
Not necessarily. There are other tactics that scammers use to defeat chargeback protections. For instance they will delay the shipment after you purchase. They will claim multi-weeks long delays due to depleted warehouse stocks. They will ship to a "wrong" address. They will ship the "wrong" item and take time to re-ship the correct one. During all this time they will be all nice and apologetic to make it look like these are simple honest mistakes. After the 60-day limit passes, they cut contact with you, you realize it's a scam, you try to charge back, and you realize you can't! You were not aware of the 60-day limit. The scammers have your money. You are screwed.
[deleted]
> Paying with bitcoin is so much easier, I don't need to copy stupid numbers from a card with my keyboard ever again.
Things may have changed, and this is by no means a critique of Bitcoin as a protocol, but I've had the opposite experience so far.
For online purchases at best, in order to make a purchase, I've needed to copy the address to send payments to, log into my wallet, paste the address, go back and copy a code from the website and paste that in the memo, and enter the correct payment amount. At worst, it's required multiple emails because things were broken.
For online credit card purchases, it's been as easy as clicking a single button (Saved CC info), and having everything simply work. Entering the CC info is a little more work, but I wouldn't say its significantly easier than the Bitcoin experience.
In person purchases are slightly easier, but it still requires some form of taking a picture of a QR code and waiting a minute or two for the payment to go through. With a credit card its as easy as making a swipe and sometimes signing.
I have hope that one day paying with bitcoin will be easier, but so far I haven't experienced this.
Things may have changed, and this is by no means a critique of Bitcoin as a protocol, but I've had the opposite experience so far.
For online purchases at best, in order to make a purchase, I've needed to copy the address to send payments to, log into my wallet, paste the address, go back and copy a code from the website and paste that in the memo, and enter the correct payment amount. At worst, it's required multiple emails because things were broken.
For online credit card purchases, it's been as easy as clicking a single button (Saved CC info), and having everything simply work. Entering the CC info is a little more work, but I wouldn't say its significantly easier than the Bitcoin experience.
In person purchases are slightly easier, but it still requires some form of taking a picture of a QR code and waiting a minute or two for the payment to go through. With a credit card its as easy as making a swipe and sometimes signing.
I have hope that one day paying with bitcoin will be easier, but so far I haven't experienced this.
Seems like Apple Pay addresses most of your concerns. But, when you say you are not afraid of getting hacked. What about bitcoins stolen from mt gox/bitstamp ?
That is mtgox/bitstamp getting hacked. I only use exchanges for buying/selling bitcoins, not for storing them.
The NFC-enabled bitcoin wallets are coming. It won't get easier than that.
I believe they're already here. And it will get easier than that. It's called Apple Pay.
Have you ever had your credit card stolen? Have you ever had it frozen and not been able to spend your own money? These things happen constantly but never happen when paying with bitcoin. The more you have to deal with banks the more of a breathe of fresh air it is to pay in btc.
Credit card fraud is incredibly rampant and the security measures in place by banks and sites is so over the top it becomes difficult to even use them. Use ghostery? Your transaction won't go through with an unknown error. Use a VPN? Your transaction won't go through with an unknown error. Paying from a different computer? A different IP? Using a different address? All these things are a recipe for being on hold with your bank for 45 minutes when you all you wanted to do was order $50 of stuff from NewEgg.
Credit card fraud is incredibly rampant and the security measures in place by banks and sites is so over the top it becomes difficult to even use them. Use ghostery? Your transaction won't go through with an unknown error. Use a VPN? Your transaction won't go through with an unknown error. Paying from a different computer? A different IP? Using a different address? All these things are a recipe for being on hold with your bank for 45 minutes when you all you wanted to do was order $50 of stuff from NewEgg.
I use my credit card a lot for all sorts of things. In the past 3 years I can only remember my card being rejected once. An when this happened I immediately got an automated call that allowed me to confirm my transaction (so I was still able to use that card to pay).
My card was also stolen once (someone copied the magnetic stripe). Once this someone did a transaction on the other side of the country I immediatelly got a call from Amex which proceed to refund that transaction and to send me a new card. IIRC a replacement card arrived in the mail on the next day. In the mean time I just used my debit card to pay for things.
My card was also stolen once (someone copied the magnetic stripe). Once this someone did a transaction on the other side of the country I immediatelly got a call from Amex which proceed to refund that transaction and to send me a new card. IIRC a replacement card arrived in the mail on the next day. In the mean time I just used my debit card to pay for things.
You obviously have no idea what you're talking about. The consumer isn't responsible for Credit Card fraud - if it's stolen my bank reimburses me for transactions I did not commit.
If bitcoins are stolen you get what?
Specifically the lack of fraud protection is obviously advantageous for merchants (who often are the ones, not the banks, paying out in the case of fraud) but for the consumer its distinctly worse.
Specifically the lack of fraud protection is obviously advantageous for merchants (who often are the ones, not the banks, paying out in the case of fraud) but for the consumer its distinctly worse.
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Credit card fraud results in billions of dollars in losses every year, this is a problem bitcoin will very likely solve at a fraction of the cost.
This makes sense since the Bitcoin system has been basically immune from fraud and scams up until this point.
I didn't say anything about liability, I was talking about credit cards being canceled and suspended.
> The consumer isn't responsible for Credit Card fraud
Wrong. In many cases he is responsible.
Scenario #1: 60 days (typically) after the transaction, the customer has no recourse to report fraud. You were browsing your credit card statements and notice a $50 charge 2 months ago that you never authorized? Tough luck.
Scenario #2: When the card was physically present during the transaction, and when a pin code was used, the customer is always (edit: I meant "typically") held responsible unless he can prove he and his authorized users were definitively not present.
Wrong. In many cases he is responsible.
Scenario #1: 60 days (typically) after the transaction, the customer has no recourse to report fraud. You were browsing your credit card statements and notice a $50 charge 2 months ago that you never authorized? Tough luck.
Scenario #2: When the card was physically present during the transaction, and when a pin code was used, the customer is always (edit: I meant "typically") held responsible unless he can prove he and his authorized users were definitively not present.
>Scenario #2: When the card was physically present during the transaction, and when a pin code was used, the customer is always held responsible unless he can prove he and his authorized users were definitively not present.
I think you ought to fact check on Scenario #2 (at least in the US), The merchant is responsible for confirming the identity of the customer matches the one stated on the card - the customer does not need to prove anything.
Link (re pin number use): http://www.occ.gov/static/news-issuances/memos-advisory-lett...
As for Scenario #1 - the 60 day limit is quite reasonable. What kind of investigation of unauthorized usage could a bank possibly conduct 60 days after an unauthorized $50 payment?
I think you ought to fact check on Scenario #2 (at least in the US), The merchant is responsible for confirming the identity of the customer matches the one stated on the card - the customer does not need to prove anything.
Link (re pin number use): http://www.occ.gov/static/news-issuances/memos-advisory-lett...
As for Scenario #1 - the 60 day limit is quite reasonable. What kind of investigation of unauthorized usage could a bank possibly conduct 60 days after an unauthorized $50 payment?
Regarding the advisory letter, it just requires the bank to "investigate". The bank can still conclude the transaction was authorized and deny your claim to cancel the transaction. So it will be your responsibility as a customer to prove that you were not present during the transaction.
Regarding scenario #1, it is irrelevant if the amount is $50 or $1000. My point is, you have no recourse. Credit cards won't protect you from fraud in this case.
Regarding scenario #1, it is irrelevant if the amount is $50 or $1000. My point is, you have no recourse. Credit cards won't protect you from fraud in this case.
Again. You are incorrect and you don't what you're talking about, banks need to send a written explanation of a denial and in most cases they aren't partial (because usually they aren't the ones paying the refund) - since legally the merchant is responsible for confirming customer identity (it's not the customer that would have to prove they weren't there).
Anyways, debating the effectiveness of consumer fraud-protection is quite beside the point, since Bitcoin offers absolutely no fraud protection and very circumstantial utility (i.e. the ability to make anonymous or pseudo-anonymous payments).
Anyways, debating the effectiveness of consumer fraud-protection is quite beside the point, since Bitcoin offers absolutely no fraud protection and very circumstantial utility (i.e. the ability to make anonymous or pseudo-anonymous payments).
I know very well what I am talking about. Read for example a credit card agreement from a random bank, say Scotiabank, in the section about fraud:
"If your Password or PIN is used in such a transaction, you will be liable for the full debt, including interest arising from such use" Source: http://www.scotiabank.com/ca/common/pdf/borrowing/revolving_...
In other words, if a thief somehow steals my PIN, I will be liable as a customer. If you still don't believe me, read any of the stories reported by journalists explaining how banks reject fraud claims when the PIN was used: http://mymoneycounselor.com/card-fraud-blame-shift Merchants may be responsible for verifying the customer's identity, but often they don't. This is why credit card fraud is prevalent.
> debating the effectiveness of consumer fraud-protection is quite beside the point
On the contrary, this is important in this debate. You can't use "zero-liability" as a reason why credit cards are superiors to Bitcoin when I prove to you customers are actually held liable in many cases.
Bitcoin can be superior to credit cards, because when the wallet is properly secured (for example a passcode-protected hardware wallet), theft and fraud becomes increasingly unlikely, whereas credit card fraud continues to become a bigger and bigger problem, and banks increasingly shift the liability toward customers as I documented above.
"If your Password or PIN is used in such a transaction, you will be liable for the full debt, including interest arising from such use" Source: http://www.scotiabank.com/ca/common/pdf/borrowing/revolving_...
In other words, if a thief somehow steals my PIN, I will be liable as a customer. If you still don't believe me, read any of the stories reported by journalists explaining how banks reject fraud claims when the PIN was used: http://mymoneycounselor.com/card-fraud-blame-shift Merchants may be responsible for verifying the customer's identity, but often they don't. This is why credit card fraud is prevalent.
> debating the effectiveness of consumer fraud-protection is quite beside the point
On the contrary, this is important in this debate. You can't use "zero-liability" as a reason why credit cards are superiors to Bitcoin when I prove to you customers are actually held liable in many cases.
Bitcoin can be superior to credit cards, because when the wallet is properly secured (for example a passcode-protected hardware wallet), theft and fraud becomes increasingly unlikely, whereas credit card fraud continues to become a bigger and bigger problem, and banks increasingly shift the liability toward customers as I documented above.
Bitcoins can't be stolen. Period. A different thing is that you may suck at protecting your operating system.
As a percentage of total money supply, mtgox was the biggest theft (or loss, there is no differene to victims) of currency in modern history.
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What an amusingly incorrect display of pedantry. Check your convenient local dictionary and you'll find something like this:
1. to take (the property of another or others) without permission or right, especially secretly or by force:
(http://dictionary.reference.com/browse/steal)
Note that the definition does not take into consideration whether you think the victim should have done more to protect themselves, just as the fact that every year thousands of criminals are successfully prosecuted for stealing even in cases where homeowners did not have dogs, 24x7 security guards, etc.
1. to take (the property of another or others) without permission or right, especially secretly or by force:
(http://dictionary.reference.com/browse/steal)
Note that the definition does not take into consideration whether you think the victim should have done more to protect themselves, just as the fact that every year thousands of criminals are successfully prosecuted for stealing even in cases where homeowners did not have dogs, 24x7 security guards, etc.
Good point.
Also the analogy that other person raised ("Your stuff can't be stolen. Period. A different thing is that you may suck at protecting your house") is a good one too.
However, we're talking about different things here.
When do bitcoins really get "stolen"? When terrible things happen, like if people install malware or trojans by accident, or don't apply security updates to their systems.
This, to me, is the equivalent of leaving the door of your house wide open. Not simply not putting an alarm system, you know.
That is, if you want to use bitcoin, have some common sense and minimal computer knowledge, first (minimal includes knowing how to keep your operating system updated, not be a certified sysadmin).
Also the analogy that other person raised ("Your stuff can't be stolen. Period. A different thing is that you may suck at protecting your house") is a good one too.
However, we're talking about different things here.
When do bitcoins really get "stolen"? When terrible things happen, like if people install malware or trojans by accident, or don't apply security updates to their systems.
This, to me, is the equivalent of leaving the door of your house wide open. Not simply not putting an alarm system, you know.
That is, if you want to use bitcoin, have some common sense and minimal computer knowledge, first (minimal includes knowing how to keep your operating system updated, not be a certified sysadmin).
> When do bitcoins really get "stolen"? When terrible things happen, like if people install malware or trojans by accident, or don't apply security updates to their systems.
> This, to me, is the equivalent of leaving the door of your house wide open. Not simply not putting an alarm system, you know.
In that case, you should think more carefully about the problem because you're conflating two unlike things. Even ignoring the fact how many bitcoins have been stolen were compromised by previously-popular third parties, your current position is the equivalent of hearing about someone's house being broken into and saying “Oh, your stuff wasn't really stolen – everyone knows that you shouldn't buy a Kwikset lock/ever invite guests over/forget to arm your alarm”.
Designing a system which assumes humans will perfectly follow the best operating procedures is the security equivalent of hawking a perpetual motion device. In the real world, people delay updates or get let down by an unreliable updater, get hit by zero-days or suckered by scammers, etc. Anyone serious about building a financial system needs to plan for that and build in layers of safety precautions.
I get that you really want Bitcoin to succeed but the way to do that is by taking problems seriously and working to fix them rather than pretending them away.
In that case, you should think more carefully about the problem because you're conflating two unlike things. Even ignoring the fact how many bitcoins have been stolen were compromised by previously-popular third parties, your current position is the equivalent of hearing about someone's house being broken into and saying “Oh, your stuff wasn't really stolen – everyone knows that you shouldn't buy a Kwikset lock/ever invite guests over/forget to arm your alarm”.
Designing a system which assumes humans will perfectly follow the best operating procedures is the security equivalent of hawking a perpetual motion device. In the real world, people delay updates or get let down by an unreliable updater, get hit by zero-days or suckered by scammers, etc. Anyone serious about building a financial system needs to plan for that and build in layers of safety precautions.
I get that you really want Bitcoin to succeed but the way to do that is by taking problems seriously and working to fix them rather than pretending them away.
This is a painfully absurd statement. You aren't doing bitcoin any favors by disingenuously suggesting that it cannot be stolen; everyone knows it can be, and faulting the victim for not properly securing their operating system (a feat that even billion dollar corporations often fail to achieve) is exactly the wrong type of message to be broadcasting to the masses.
Your stuff can't be stolen. Period. A different thing is that you may suck at protecting your house.
So, if someone robs you at knifepoint on the street and takes your wallet, your wallet has not really been stolen, because you failed to wear adequate protective gear?
Have you ever had your bitcoins stolen?
I'd rather have my credit card stolen, which I'm not liable for if I report it promptly, instead of just being out of the funds permanently.
I'd rather have my credit card stolen, which I'm not liable for if I report it promptly, instead of just being out of the funds permanently.
Obviously if I'm keeping my bitcoins in a private wallet on my computer and the computer is stolen, then I they are probably gone, like cash. But, I would assume that it is possible to have some insurance? If I had my house insured and cash was stolen, I could be reimbursed by the insurance, correct? I would assume the same thing could be done with bitcoin? And what about a situation like with Coinbase, if they are "hacked" or whatever, isn't it at least theoretically possible that the bitcoins could be insured? I think just as bitcoin fanatics are overzealous about the enhanced security of bitcoin, the other side can get a little short-sighted by not imagining any scenario where your bitcoin deposits are insured in some way.
The difference is that I don't go around sharing my bitcoin private keys with Target like I'm forced to do with my credit card details. FWIW I've never had any BTC stolen but I've had multiple credit cards canceled by my bank 'for my protection'.
Actually, as the USA will finally move to EMV over the next year or so, no, you don't share your private key with target.
> Have you ever had your credit card stolen?
I have. It was pretty inconvenient, but after a call to the bank, the stolen card was cancelled and the unauthorized transactions were reversed. If your bitcoins are stolen, the money is gone forever without any possibility of recovering the funds.
> Have you ever had it frozen and not been able to spend your own money?
No, that's never happened to me. I have once had a very large transaction automatically declined in the past, which was also inconvenient at the time, but the bank called me about it within 60 seconds of the transaction and I was able to resolve the issue right there. Reflecting on it later, I decided I liked the fact that my bank sought additional verification before authorizing a very large and unusual transaction.
> Credit card fraud is incredibly rampant and the security measures in place by banks and sites is so over the top it becomes difficult to even use them.
This is not an issue for me or anyone I know. I've never had a bank card payment rejected because of ghostery or an IP address or my VPN. Besides, even if I did, there is no reason why a business could not use identical signals for rejecting a bitcoin payment, especially since the consequences of bitcoin fraud or much more severe for the consumer.
For the vast majority of consumers, bitcoin as currency, offers almost nothing in the way of advantages over bank cards; that's just the reality. This isn't to say that bitcoin is useless or that banks always have their customer's best interest at heart, but there's really no denying the fact that banks are safer and more convenient than bitcoin for most people.
I have. It was pretty inconvenient, but after a call to the bank, the stolen card was cancelled and the unauthorized transactions were reversed. If your bitcoins are stolen, the money is gone forever without any possibility of recovering the funds.
> Have you ever had it frozen and not been able to spend your own money?
No, that's never happened to me. I have once had a very large transaction automatically declined in the past, which was also inconvenient at the time, but the bank called me about it within 60 seconds of the transaction and I was able to resolve the issue right there. Reflecting on it later, I decided I liked the fact that my bank sought additional verification before authorizing a very large and unusual transaction.
> Credit card fraud is incredibly rampant and the security measures in place by banks and sites is so over the top it becomes difficult to even use them.
This is not an issue for me or anyone I know. I've never had a bank card payment rejected because of ghostery or an IP address or my VPN. Besides, even if I did, there is no reason why a business could not use identical signals for rejecting a bitcoin payment, especially since the consequences of bitcoin fraud or much more severe for the consumer.
For the vast majority of consumers, bitcoin as currency, offers almost nothing in the way of advantages over bank cards; that's just the reality. This isn't to say that bitcoin is useless or that banks always have their customer's best interest at heart, but there's really no denying the fact that banks are safer and more convenient than bitcoin for most people.
>Have you ever had your credit card stolen?
At least 3 times. It didn't cost me a cent. Chase sent a new one over 2 day air.
Have you ever reversed a bitcoin charge because of a fraudulent seller?
At least 3 times. It didn't cost me a cent. Chase sent a new one over 2 day air.
Have you ever reversed a bitcoin charge because of a fraudulent seller?
3% for very low volume maybe. Get a little bit of volume and you'll get less than 0.7%.
That depends on what you're selling. If your store sells "high risk" items (I know electronics are a high risk item, and adult content as well), the fee can exceed 3%, as I understand it.
So the progress will be for consumers to willingly purchase without any protection? It's high risk for a reason, BTC doesn't solve any of that.
No, the solution is either for consumers to purchase from trusted stores only, or for a company to take over the role of arbitrageur between buyer and seller -- for a fee, of course.
Basically splitting the functionality of PayPal into two: 1) payment processing and 2) dispute resolution.
Basically splitting the functionality of PayPal into two: 1) payment processing and 2) dispute resolution.
How is that possible given that my credit card gives 1% cash back?
A lot of people don't pay off their cards on time?
The average american has 15k in credit card debt[1]
1) http://money.cnn.com/magazines/moneymag/money101/lesson9/
1) http://money.cnn.com/magazines/moneymag/money101/lesson9/
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Why do people keeping talking about BTC replacing credit card payments? BTC does not offer credit. It might replace debit cards (BIG might), but credit cards exist for a reason.
I think most people use credit cards for convenience/points not because they're so broke they need to borrow money to buy a Big Mac.
Less than 50% of Americans always pay their full balance, around 33% usually or always carry a balance.
http://www.gallup.com/poll/168668/americans-rely-less-credit...
http://www.gallup.com/poll/168668/americans-rely-less-credit...
Most people use credit cards for cash flow management. They carry a balance, but make payments.
I wrote an article on this, scroll on down to "The Solution" http://cointelegraph.com/news/113255/keeping-score-at-the-20...
Bitcoin just pushes the costs onto the consumer.
In order to replicate the credit card payment process you have:
prebuy bitcoins. Not only is this a bitch to deal with, but it costs money. Transaction fees, hidden or not. Sure you can buy on an exchange but that has a small fee plus the risk they'll steal or lose your coins. Buying from an ATM or broker has a fee. Even if it isn't explicit they'll get you on exchange rate spread.
Some sort of escrow service. If Amazon doesn't ship me my TV, I can cancel the charge on Visa. Either you forgo this or you pay for it. This will have a fee.
There is volatility risk.
Then the merchant still has some fees. They have to pay Coinbase their fee.
When accounting for all the risk I doubt it's cheaper.
That isn't even considering that confirmation time is like what? 10-30 minutes?
Bitcoin will be the silk road currency but not much else.
In order to replicate the credit card payment process you have:
prebuy bitcoins. Not only is this a bitch to deal with, but it costs money. Transaction fees, hidden or not. Sure you can buy on an exchange but that has a small fee plus the risk they'll steal or lose your coins. Buying from an ATM or broker has a fee. Even if it isn't explicit they'll get you on exchange rate spread.
Some sort of escrow service. If Amazon doesn't ship me my TV, I can cancel the charge on Visa. Either you forgo this or you pay for it. This will have a fee.
There is volatility risk.
Then the merchant still has some fees. They have to pay Coinbase their fee.
When accounting for all the risk I doubt it's cheaper.
That isn't even considering that confirmation time is like what? 10-30 minutes?
Bitcoin will be the silk road currency but not much else.
You can buy bitcoins at Circle for free. And sell, too, at the same price. No spread obviously (as that would mean you can arbitrage, as their buy and sell price are exactly the same).
Volatility risk is inherent to every single currency. The swiss franc just had a 30% change in value. Bitcoin's volatility is going down every year, look at the charts, and it makes sense, too. Deeper markets are harder to move. There's nothing particularly unique about bitcoin that makes it volatile except its youth and nascent ecosystem. Over time its predictable supply curve makes it less volatile than most of the world's currencies for most of the world's population that don't live in stable OECD economies with decent currencies. There are numerous countries with 10-20% inflation and wild swings.
Is bitcoin any better? Well again, its volatility is going down every year. But already you can go to Bitreserve and lock in the price to a dollar or euro or gold or yen or whatever value. So if you're in Kenya, instead of 10% inflation, you just keep your money according to the dollar rate if you want, enabled by bitcoin.
Merchant fee? Bitpay offers 0% processing for all. Their most recent merchant taking bitcoin through Bitpay (at 0% fees) was Microsoft.
Transactions are instant, confirmation time can be mitigated as it's a function of risk. Cup of coffee needs no confirmation time. Amazon needs no confirmation time. (if the customer double spends it, you simply cancel 15 minutes later and the item supposed to ship the next day won't arrive.) Xbox Live needs no confirmation time. (account gets shut down after 10 minutes of trying to set up a multiplayer game of Halo, xbox gets fingerprinted and it and the ip gets blacklisted for fraud. Remember only the owner of bitcoin can double spend through careful effort, meaning you can be near certain fraud was intentional.) In short, virtually all of online retail has no real confirmation issues long term. And software solutions are in progress, there was one posted just last week, can't find it atm.
Escrow: it's just an insurance service, no reason there won't be a company offering it. In fact escrow with timelocks and multi-sig already exist. It's a bit of a long discussion but look into Mike Hearn's presentations and articles on this, the short story is that with bitcoin you can get much better and fairer and more specific expert escrow services to fit your particular niche. Paypal and Amazon's systems aren't adequate and allow too much fraud and require too many costs.
Whether the customer or the merchant pays isn't relevant, the customer ALWAYS pays, it's not like the merchant will pay extra fees from his money-tree in his backyard. The customer pays. So if you have an expensive escrow system that screws over merchants and lets criminals chargeback lots of transactions stealing products essentially without paying and the merchant has to pay for expensive processes to get their product/money back, or let it slide, then the company will raise prices to make up for the losses or go out of business. Customers pay.
Same with creditcard theft. Oh you don't have to pay if your CC gets stolen and someone spends $1k of your money? You still pay. Mastercard isn't giving you $1k. They're either taking it from the merchant (see above), or they're paying you money out of revenues. Surprise, in both cases, you're the source of revenue. Banking isn't cheap, there are enough articles on this online just check 'm out. A checking account averages about $200 a year? Credit is hugely overpriced? Paying 15-20% a year on credit when if I put money in a savings account I can barely get 0.5%? That's obviously because there's no peer-to-peer lending, if there was you'd both pay/get 10% and be better off by 10%. But people accept crazy rates on creditcards, why? Because the regular use is free or insured or promoted. All of those things you think are 'free' or 'cheap' are only such because you're getting screwed in other areas of your financial services.
In short, creditcards are a 1950s invention that are hugely unsecure: people walk around with plastic cards with their freaking entire password (doubles as an account number) printed on it. And everytime you want to pay, you show your password. It's insane. And then if something goes wrong, you charge it back. All of this costs money, there's a ton of theft and fraud with this system and the customer ends up paying for it. You're deluding yourself if you think that's cheap, it's like getting a free razor and being oblivious to the fact you're paying a shit ton on the blades.
Volatility risk is inherent to every single currency. The swiss franc just had a 30% change in value. Bitcoin's volatility is going down every year, look at the charts, and it makes sense, too. Deeper markets are harder to move. There's nothing particularly unique about bitcoin that makes it volatile except its youth and nascent ecosystem. Over time its predictable supply curve makes it less volatile than most of the world's currencies for most of the world's population that don't live in stable OECD economies with decent currencies. There are numerous countries with 10-20% inflation and wild swings.
Is bitcoin any better? Well again, its volatility is going down every year. But already you can go to Bitreserve and lock in the price to a dollar or euro or gold or yen or whatever value. So if you're in Kenya, instead of 10% inflation, you just keep your money according to the dollar rate if you want, enabled by bitcoin.
Merchant fee? Bitpay offers 0% processing for all. Their most recent merchant taking bitcoin through Bitpay (at 0% fees) was Microsoft.
Transactions are instant, confirmation time can be mitigated as it's a function of risk. Cup of coffee needs no confirmation time. Amazon needs no confirmation time. (if the customer double spends it, you simply cancel 15 minutes later and the item supposed to ship the next day won't arrive.) Xbox Live needs no confirmation time. (account gets shut down after 10 minutes of trying to set up a multiplayer game of Halo, xbox gets fingerprinted and it and the ip gets blacklisted for fraud. Remember only the owner of bitcoin can double spend through careful effort, meaning you can be near certain fraud was intentional.) In short, virtually all of online retail has no real confirmation issues long term. And software solutions are in progress, there was one posted just last week, can't find it atm.
Escrow: it's just an insurance service, no reason there won't be a company offering it. In fact escrow with timelocks and multi-sig already exist. It's a bit of a long discussion but look into Mike Hearn's presentations and articles on this, the short story is that with bitcoin you can get much better and fairer and more specific expert escrow services to fit your particular niche. Paypal and Amazon's systems aren't adequate and allow too much fraud and require too many costs.
Whether the customer or the merchant pays isn't relevant, the customer ALWAYS pays, it's not like the merchant will pay extra fees from his money-tree in his backyard. The customer pays. So if you have an expensive escrow system that screws over merchants and lets criminals chargeback lots of transactions stealing products essentially without paying and the merchant has to pay for expensive processes to get their product/money back, or let it slide, then the company will raise prices to make up for the losses or go out of business. Customers pay.
Same with creditcard theft. Oh you don't have to pay if your CC gets stolen and someone spends $1k of your money? You still pay. Mastercard isn't giving you $1k. They're either taking it from the merchant (see above), or they're paying you money out of revenues. Surprise, in both cases, you're the source of revenue. Banking isn't cheap, there are enough articles on this online just check 'm out. A checking account averages about $200 a year? Credit is hugely overpriced? Paying 15-20% a year on credit when if I put money in a savings account I can barely get 0.5%? That's obviously because there's no peer-to-peer lending, if there was you'd both pay/get 10% and be better off by 10%. But people accept crazy rates on creditcards, why? Because the regular use is free or insured or promoted. All of those things you think are 'free' or 'cheap' are only such because you're getting screwed in other areas of your financial services.
In short, creditcards are a 1950s invention that are hugely unsecure: people walk around with plastic cards with their freaking entire password (doubles as an account number) printed on it. And everytime you want to pay, you show your password. It's insane. And then if something goes wrong, you charge it back. All of this costs money, there's a ton of theft and fraud with this system and the customer ends up paying for it. You're deluding yourself if you think that's cheap, it's like getting a free razor and being oblivious to the fact you're paying a shit ton on the blades.
Let's do this point by point, cause I'm bored at the moment.
> Volatility risk is inherent to every single currency.
Except for the currency that's native to your country. I do not have "volatility" risk holding USD, purchasing things with USD. I do have volatility with BTC, even sans the export to fiat, as BTC is only valued based on it's worth relative to other currencies.
> There's nothing particularly unique about bitcoin that makes it volatile except its youth and nascent ecosystem.
So, you're saying a decentralized, pseudonymous digital currency whose scarcity is not derived from policy mandates and whose trade value is not backed by anything beyond what someone is willing to buy it for in another currency, that can only be acquired by purchasing said currency from a third-party, has no properties that are particularly unique to it that would influence volatility?
> Over time its predictable supply curve makes it less volatile than most of the world's currencies for most of the world's population that don't live in stable OECD economies with decent currencies.
See above.
> Merchant fee? Bitpay offers 0% processing for all. Their most recent merchant taking bitcoin through Bitpay (at 0% fees) was Microsoft.
BitPay offers a 0% processing charge and makes money on the spread. Also, that's basically a "for now" situation. Third, even if you remove that fee, there are miner fees involved with any transaction you'd like to actually have verified in a decent chunk of time (they are tiny, but there.)
So "0% merchant fees" is a completely disingenuous statement.
> Transactions are instant…virtually all of online retail has no real confirmation issues long term.
So, transactions are instant but aren't instant, but that's OK because for most things they don't need to be instant, but it's important that transactions be instant (which they aren't).
Gotcha.
> Escrow: it's just an insurance service, no reason there won't be a company offering it. Paypal and Amazon's systems aren't adequate and allow too much fraud and require too many costs.
So, instead of placing escrow responsibility on the shoulders of the merchant and banks, we should place it on the shoulder of the consumer, and make them pay for it, because that's a great idea.
> Whether the customer or the merchant pays isn't relevant, the customer ALWAYS pays, it's not like the merchant will pay extra fees from his money-tree in his backyard.
The assumption here, and it's so hilariously common I have zero words for it, is that merchants, if you pay with BTC, will discount their products to reflect the 1-3% fee they're saving.
Just like how, when you pay with cash today, people commonly discount things by 1-3%.
> Same with creditcard theft. Oh you don't have to pay if your CC gets stolen and someone spends $1k of your money? You still pay. Mastercard isn't giving you $1k.
Correct, almost, but not at all!
Mastercard isn't actually paying, in many, many cases. More often than not, they simple reverse the transactions and make the merchant deal with absorbing the cost. Otherwise, you're right. MasterCard pays out their revenues, which are funded by interest on debts and merchant fees.
So, I pay a fee to MasterCard for letting me borrow money I don't have, and merchants pay a fee to MasterCard so they can take get money people don't have, and to you, this is a bad arrangement?
> Credit is hugely overpriced? Paying 15-20% a year on credit when if I put money in a savings account I can barely get 0.5%? That's obviously because there's no peer-to-peer lending, if there was you'd both pay/get 10% and be better off by 10%.
In what universe did you find this magic 10% statistic, and how can we borrow money from it?
People pay high interest rates on credit because it's risky to give them credit. If it's not risky, you pay next to nothing.
Peer to peer lending will not magically solve the rate issue. There are peer to peer lenders out there now, and their rates are actually worse than banks in many cases. But they're also willing to loan to a riskier customer base. Huzzah!
> In short, creditcards are a 1950s invention that are hugely unsecure: people walk around with plastic cards with their freaking entire password (doubles as an account number) printed on it. And everytime you want to pay, you show your password. It's insane.
You're absolutely. That's why the CC industry is working very hard to derive new transaction methods which are more secure. Chip and Pin, Apple Pay, etc.
But yes, by all means, let's abandon all the wonderful, painless, things about our current banking structure so that we might bask in the warm glow of an unregulated, barely-beta quality piece of software.
Because there's absolutely no way our banking system can get better, except for all the ways its gotten better for the last 100 years.
> Volatility risk is inherent to every single currency.
Except for the currency that's native to your country. I do not have "volatility" risk holding USD, purchasing things with USD. I do have volatility with BTC, even sans the export to fiat, as BTC is only valued based on it's worth relative to other currencies.
> There's nothing particularly unique about bitcoin that makes it volatile except its youth and nascent ecosystem.
So, you're saying a decentralized, pseudonymous digital currency whose scarcity is not derived from policy mandates and whose trade value is not backed by anything beyond what someone is willing to buy it for in another currency, that can only be acquired by purchasing said currency from a third-party, has no properties that are particularly unique to it that would influence volatility?
> Over time its predictable supply curve makes it less volatile than most of the world's currencies for most of the world's population that don't live in stable OECD economies with decent currencies.
See above.
> Merchant fee? Bitpay offers 0% processing for all. Their most recent merchant taking bitcoin through Bitpay (at 0% fees) was Microsoft.
BitPay offers a 0% processing charge and makes money on the spread. Also, that's basically a "for now" situation. Third, even if you remove that fee, there are miner fees involved with any transaction you'd like to actually have verified in a decent chunk of time (they are tiny, but there.)
So "0% merchant fees" is a completely disingenuous statement.
> Transactions are instant…virtually all of online retail has no real confirmation issues long term.
So, transactions are instant but aren't instant, but that's OK because for most things they don't need to be instant, but it's important that transactions be instant (which they aren't).
Gotcha.
> Escrow: it's just an insurance service, no reason there won't be a company offering it. Paypal and Amazon's systems aren't adequate and allow too much fraud and require too many costs.
So, instead of placing escrow responsibility on the shoulders of the merchant and banks, we should place it on the shoulder of the consumer, and make them pay for it, because that's a great idea.
> Whether the customer or the merchant pays isn't relevant, the customer ALWAYS pays, it's not like the merchant will pay extra fees from his money-tree in his backyard.
The assumption here, and it's so hilariously common I have zero words for it, is that merchants, if you pay with BTC, will discount their products to reflect the 1-3% fee they're saving.
Just like how, when you pay with cash today, people commonly discount things by 1-3%.
> Same with creditcard theft. Oh you don't have to pay if your CC gets stolen and someone spends $1k of your money? You still pay. Mastercard isn't giving you $1k.
Correct, almost, but not at all!
Mastercard isn't actually paying, in many, many cases. More often than not, they simple reverse the transactions and make the merchant deal with absorbing the cost. Otherwise, you're right. MasterCard pays out their revenues, which are funded by interest on debts and merchant fees.
So, I pay a fee to MasterCard for letting me borrow money I don't have, and merchants pay a fee to MasterCard so they can take get money people don't have, and to you, this is a bad arrangement?
> Credit is hugely overpriced? Paying 15-20% a year on credit when if I put money in a savings account I can barely get 0.5%? That's obviously because there's no peer-to-peer lending, if there was you'd both pay/get 10% and be better off by 10%.
In what universe did you find this magic 10% statistic, and how can we borrow money from it?
People pay high interest rates on credit because it's risky to give them credit. If it's not risky, you pay next to nothing.
Peer to peer lending will not magically solve the rate issue. There are peer to peer lenders out there now, and their rates are actually worse than banks in many cases. But they're also willing to loan to a riskier customer base. Huzzah!
> In short, creditcards are a 1950s invention that are hugely unsecure: people walk around with plastic cards with their freaking entire password (doubles as an account number) printed on it. And everytime you want to pay, you show your password. It's insane.
You're absolutely. That's why the CC industry is working very hard to derive new transaction methods which are more secure. Chip and Pin, Apple Pay, etc.
But yes, by all means, let's abandon all the wonderful, painless, things about our current banking structure so that we might bask in the warm glow of an unregulated, barely-beta quality piece of software.
Because there's absolutely no way our banking system can get better, except for all the ways its gotten better for the last 100 years.
Just like how, when you pay with cash today, people commonly discount things by 1-3%.
They actually can't, since it's forbidden by the payment networks. In fact, there was a classe action lawsuit initiated by thousands of merchants in part due to those restrictions: http://en.m.wikipedia.org/wiki/Payment_Card_Interchange_Fee_...
They actually can't, since it's forbidden by the payment networks. In fact, there was a classe action lawsuit initiated by thousands of merchants in part due to those restrictions: http://en.m.wikipedia.org/wiki/Payment_Card_Interchange_Fee_...
Interesting to see an investment by USAA. They've really stepped up their tech game lately, partnering with some very cool companies (e.g. TrueCar), so I wonder if some type of Coinbase integration is in the works.
I totally agree, especially considering USAA's reputation as a conservative player in the Banking world
That's a pretty impressive lineup of investors. With that kind of funding, I imagine that Coinbase isn't just setting themselves up as a Bitcoin company, but they should be able to create infrastructure that processes/handles any sort of cryptocurrency. So even if BTC loses favor, they'll be one of the few companies that have the infrastructure to support whatever the up-and-coming cryptocurrency is. Regardless of which specific cryptocurrency is in vogue at the time, I do believe that cryptocurrencies are here to stay, and Coinbase is aiming themselves up to be the market leader. This is an investment that even I'd be willing to buy into as well, if there were ever an opportunity.
More likely: a push to become the next PayPal, but using the Bitcoin network rather than the standard ACH banking network. Here's one step towards that: http://avc.com/2015/01/feature-friday-us-dollar-wallet/
Is this a sign of how little PayPal has innovated lately?
Things are so unpredictable. That's regarding the whole Bitcoin (r)evolution. I believe what's currently happening and has happened is great. All these random events that pushed its price down are giving enough time for any interested entities to acquire them at reasonable price - if they understand it and think it may be a good value storage. And it may turn out to be a really good value storage indeed.
Regarding Coinbase I would assume they are convincing their investors that the company has a huge value and expertise even assuming total Bitcoin collapse / switch to another digital currency.
Regarding Coinbase I would assume they are convincing their investors that the company has a huge value and expertise even assuming total Bitcoin collapse / switch to another digital currency.
There are 8 names on the press release, and probably a few more smaller investors. This doesn't represent a huge amount of money for any given fund - at most probably US$20m or so for the lead. The payoff should BTC prove useful will be in the realms of Facebook/Google/Apple valuations. Even if you think there's only a fraction of a percent probabilty that they'll be successful it'd still be worthwhile putting a few million in (assuming you can afford to lose it).
Personally, I think BTC is going to be OK because there's already a decent ecosystem growing around it. Enough people are keen on it succeeding that it'll do something useful. The real question is whether it'll be a multi-trillion dollar industry that replaces money or a multi-billion dollar industry that's used for secure value transactions or proof of work or something, not than whether or not it'll fail entirely and disappear.
Personally, I think BTC is going to be OK because there's already a decent ecosystem growing around it. Enough people are keen on it succeeding that it'll do something useful. The real question is whether it'll be a multi-trillion dollar industry that replaces money or a multi-billion dollar industry that's used for secure value transactions or proof of work or something, not than whether or not it'll fail entirely and disappear.
> Enough people are keen on it succeeding that it'll do something useful.
Exactly. I am personally convinced it will succeed, but I don't know in which way. It could be anything that benefits of proof of work.
Are there actually libraries, or clients which create a P2P network, that is generic? I mean the client synchronization is the same as in BTC, but the data exchanged is generic.
Exactly. I am personally convinced it will succeed, but I don't know in which way. It could be anything that benefits of proof of work.
Are there actually libraries, or clients which create a P2P network, that is generic? I mean the client synchronization is the same as in BTC, but the data exchanged is generic.
Namecoin (http://namecoin.info) might be of interest to you.
That's what I was looking for.
Congrats Brian, Fred, and team! Quite an interesting funding round, and, quite a blooming market. Keep up the good work! I have to say, this sector is one of the most interesting to watch.
Maybe with this capital infusion, Coinbase will get an actual business address. Right now, their mailing address is a PO box in San Francisco's homeless district, their SSL cert is a cheap "domain control only" SSL cert, and their SEC filing gives the address of an apartment on Bluxome St.
That's a violation of California B&P code section 17538. (http://www.leginfo.ca.gov/cgi-bin/displaycode?section=bpc&gr...)
(d) A vendor conducting business through the Internet or any other electronic means of communication shall do all of the following when the transaction involves a buyer located in this state:
(1) Before accepting any payment or processing any debit or credit charge or funds transfer, the vendor shall disclose to the buyer in writing or by electronic means of communication, such as e-mail or an on-screen notice, the vendor's return and refund policy, the legal name under which the business is conducted and, except as provided in paragraph (3), the complete street address from which the business is actually conducted.
That's a violation of California B&P code section 17538. (http://www.leginfo.ca.gov/cgi-bin/displaycode?section=bpc&gr...)
(d) A vendor conducting business through the Internet or any other electronic means of communication shall do all of the following when the transaction involves a buyer located in this state:
(1) Before accepting any payment or processing any debit or credit charge or funds transfer, the vendor shall disclose to the buyer in writing or by electronic means of communication, such as e-mail or an on-screen notice, the vendor's return and refund policy, the legal name under which the business is conducted and, except as provided in paragraph (3), the complete street address from which the business is actually conducted.
...
(3) The complete street address need not be disclosed as required
by paragraph (1) if the vendor utilizes a private mailbox receiving
service and all of the following conditions are met: (A) the vendor
satisfies the conditions described in paragraph (2) of subdivision
(b) of Section 17538.5, (B) the vendor discloses the actual street
address of the private mailbox receiving service in the manner
prescribed by this subdivision for the disclosure of the vendor's
actual street address, and (C) the vendor and the private mailbox
receiving service comply with all of the requirements of subdivisions
(c) to (f), inclusive, of Section 17538.5.
I would be really interested to have more info about Coinbase vision and plans to make bitcoin more mainstream, etc.
Some of those institutions are obviously signs of opening BTC to stock exchange or more hedge founds, and traditional investments assets.
Would have been nice to hear more of where they see/want to put bitcoin in the future.
Some of those institutions are obviously signs of opening BTC to stock exchange or more hedge founds, and traditional investments assets.
Would have been nice to hear more of where they see/want to put bitcoin in the future.
Ben Horowitz predicted on 11/19/14 that Bitcoin is going to be one (of two) of the next massive disruptors in technology. He compares Bitcoin with the revolutionary impact of the internet.
It is gaining momentum.
http://ecorner.stanford.edu/authorMaterialInfo.html?mid=3369
It is gaining momentum.
http://ecorner.stanford.edu/authorMaterialInfo.html?mid=3369
Wow... Vikram Pandit is in this round. I can't think of a worst person to bring into a financial services startup. I come from the industry, and this to me, is Coinbase's Condoleezza.
I don't know how much everybody knows about him (I'm pretty sure his Wikipedia profile won't tell the entire story), but this finance executive has a bad reputation. Pre-financial crisis, he was COO Morgan Stanley, and later went off to create a hedge fund 100% based on hyped market bluffs. He sold the fund to Citigroup ($800m) in 2008* as a condition for him joining as interim CEO of Citigroup... and just a few months later, Citigroup wrote-off the entire fund. As per his role at Citigroup, I'll let you do the research and news digging.
I sometimes don't understand the tech's sector hypocrisy: tech wants to become a solution to the problem, and they go on to finance and advice themselves with the problem. I really don't get it.
* edit from 2007 to '08
I don't know how much everybody knows about him (I'm pretty sure his Wikipedia profile won't tell the entire story), but this finance executive has a bad reputation. Pre-financial crisis, he was COO Morgan Stanley, and later went off to create a hedge fund 100% based on hyped market bluffs. He sold the fund to Citigroup ($800m) in 2008* as a condition for him joining as interim CEO of Citigroup... and just a few months later, Citigroup wrote-off the entire fund. As per his role at Citigroup, I'll let you do the research and news digging.
I sometimes don't understand the tech's sector hypocrisy: tech wants to become a solution to the problem, and they go on to finance and advice themselves with the problem. I really don't get it.
* edit from 2007 to '08
His ethical behaviour aside, which is hard to judge if you don't know him personally, given his track record it is likely that he can open many doors to politicians and/or other relevant people in the financial industry.
This is something a company like Coinbase desperately needs, if it wants to have a say in future Bitcoin regulation that will inevitably be introduced at some point in the future.
I can personally see the value of having someone like that on board.
This is something a company like Coinbase desperately needs, if it wants to have a say in future Bitcoin regulation that will inevitably be introduced at some point in the future.
I can personally see the value of having someone like that on board.
This might be covered by Putt's "Law of Failure": "Innovative organizations abhor little failures but reward big ones" and its corollary "Failure to fail fully is a fool's folly." His point was that innovative orgs will look at someone who "went big" and failed as someone who now knows a problem inside and out, and has walked through the fire so is now better equipped to deal with than anyone else (and so might succeed this time.)
My comment is not about failure, it's about what is wrong with wall st's crony capitalism. this has nothing to do with failure, but about the lack of values, and the damage this has done to the world economy at so many levels.
Certainly not arguing with any of your points; I'm saying the things that happened could rightly be construed by investors as types of failure (e.g., "Citigroup wrote-off the entire fund") which is one of the reasons the law might apply. I'm talking about perception from a particular perspective, not the ethics.
I understand what you mean, and agree to a very large extent with the that line of thought. My concerns with Pandit are not so much on failure, but fraud and mismanagement.
> I sometimes don't understand the tech's sector hypocrisy: tech wants to become a solution to the problem
Only if it can be assured to make them money in the process. Besides, you can't paint with such broad strokes, the "tech sector" can't be guilty of hypocrisy, only individuals can, and from where I sit, it's all pretty clearly about money.
Only if it can be assured to make them money in the process. Besides, you can't paint with such broad strokes, the "tech sector" can't be guilty of hypocrisy, only individuals can, and from where I sit, it's all pretty clearly about money.
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Imagine this: Thousands of us have a large portion of our networth in Bitcoins even after selling 80% of them off to non-early adopters.
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It certainly seems like Bitcoin is dead.
Huge congrats Brian!
There's one (or 10) born every minute. If I were a scammer I'd want these folks email addresses.