Coinbase raises $100M Series D led by IVP

https://blog.coinbase.com/coinbase-raises-100m-series-d-led-by-ivp-f5f25cb51019

by dsugarman • 9 years ago

259 213 9 years ago

blog.coinbase.com

Torai2• 9 years ago

Why does Coinbase need another $100M when it's making tons of money with its fees?

Raise when you don't need it. VCs are desperate to part with cash ("use it or lose it"), and Coinbase probably has the best chance (after perhaps Stripe and Braintree) of becoming the de facto home for the crypto payment/trading industry.

BlackjackCF• 9 years ago

Makes sense, but I don't love how they handled the whole Bitcoin split.

tehlike• 9 years ago

This. When their hands are so strong, they probably got a pretty favorable terms.

dpflan• 9 years ago

Having cash sounds great, but does this kind of cash create a crutch? $100M seems like a large number for CB, but I don't know enough about its business to understand how far that money goes. Is CB growing very quickly and in what ways? Is CB making money on their own?

In order to become the de facto home for crypto payment/trading, what does that mean? Does it mean they need to help make the adoption / use of cryptocurrencies easier and more widespread? I am curious as to how this money gets spent.

arikr• 9 years ago

Not sure why so many people downvoted you, this is likely their thought process.

zjaffee2• 9 years ago

Even so, a 1.6 billion dollar valuation of coinbase is certainly very high. Assuming that over the course of the long term they are comparable to something like intercontinental exchange (the owner of NYSE/EURONEXT, and controller of the clearing house for 50% of the worlds oil futures/derivative products).

The total market cap of coins traded on their platform would need to be magnitudes larger to justify this valuation unless they can somehow either continue to justify their high fees amidst competition, or they would need to totally monopolize all future cryptocurrency banking, something that could certainly involve large amounts of competition in the future as well.

joering23• 9 years ago

Why on earth would it become a "home for crypto". The only reason I use them is because Kraken & Co requires full SSN to buy or sell; Coinbase doesn't. There is no network effect here. I don't buy/sell/keep with Coinbase because my friends or family does. The moment I found some other system that doesn't require my full SSN to be revealed, Im moving on as well.

SippinLean• 9 years ago

Hopefully to hire support staff

SilasX• 9 years ago

I'm of the opposite mindset: why do so many people trust them, with so much money, when they've been so flaky about outages? One 30 minute outage per year would be bad, but they had 3-4 in a two week span, all coinciding with high volume.

Plus, numerous complaints about missing bitcoins. And the potential headache about not honoring BCH balances (which they may be legally sound on).

uncletammy• 9 years ago

Some think that Coinbase's failure to give their customers the Bitcoin Cash they were entitled to after the fork demonstrated their insolvency.

lesiva3• 9 years ago

So I'm late to the digital currency game. What are the regular use cases for digital currency? Who accepts it? Is it mostly for person-to-person trading?

heifer2822• 9 years ago

The utility is that it's a trust-less transfer of value between two parties. Essentially, it's like being able to send cash, anonymously if you chose, to someone else, without an intermediary, in a way that everyone can see and nobody can challenge the legitimacy of.

It seems to me a lot of it is tied up in speculative investment. But there are some vendors who accept it and some countries (eg: Japan) where it's more popular and widely accepted.

iDemonix2• 9 years ago

Depends on the currency. Bitcoin is largely just currency, but things like Ethereum introduce concepts such as smart contracts. Here's an article explaining Ethereum, but obviously there are tons of cryptocurrencies now that all work in their own way.

https://thenextweb.com/contributors/2017/08/10/ultimate-2000...

lesiva3• 9 years ago

Oh, this is super interesting! Thanks!

paulcole2• 9 years ago

lots of people have used it to buy drugs

ktta4• 9 years ago

While downvoting this is warranted, this is certainly true. To catch up on the biggest news that has come out of Bitcoin, I'd suggest reading on 'Silk Road' and Ross Ulbricht. Wired has a very good 2-set long form on this[1].

If you don't want such a verbose story, Ars Techica follwed it well too[2]

[1] https://www.wired.com/2015/04/silk-road-1/ https://www.wired.com/2015/05/silk-road-2

[2] https://arstechnica.com/series/the-silk-road-trial/

fusiongyro• 9 years ago

There are some vendors who take it; the New Mexico Tea Company for instance—and I buy tea from them because it's good tea, not because they take Bitcoin (I usually use a credit card to check out anyway).

https://www.nmteaco.com

I have also used it to transfer money to friends, because being able to do that in-browser without involving Paypal seemed pretty great. I would like to get my family using it for this reason too, but most of them are not tech savvy enough to handle it (and some probably would have trouble with Coinbase's verification).

DiNovi• 9 years ago

it's all being sorted out rn, thus the gold rush

0x4f3759df2• 9 years ago

Use cases (Escaping currency controls,Cannot be seized by government, Asset Speculation, Purchasing legal and illegal things, Money laundering, Donating to people like wikileaks)

Bitpay allows you to use bitcoin with a VISA card https://bitpay.com/

Some merchants accept it, Overstock being a famous one.

zjaffee2• 9 years ago

Many of these things are no different than holding large amounts of normal cash(of any currency really) or something such as gold, with the exception of their being a ledger of all trades that have occurred. Also bitcoins can certainly be seized by the government should they size control over any accounts you hold coins in, take your computers, ect (it's just harder to do so).

Also I think your missing the biggest use case, abet one that isn't frequently discussed, and it is that crypto currencies are by far the best digital payment solution when it comes to the time it takes for transactions to clear. There is no dispute process, and there is no waiting on the fed for their ACA system to clear your transactions. However, I think a lot of people prefer credit cards for cash back and to have the option to charge back, but certainly cryptos are better for sellers (and potentially will give discounts to those who use them in the future).

aphextron• 9 years ago

As a nitpick the proper term is "cryptocurrency", not "digital currency". A cryptocurrency does not necessarily have to be stored or generated digitally.

lesiva3• 9 years ago

Makes sense. Coinbase's website is plastered with the term "digital currency" so that seemed the safest to use since I'm not too familiar with that market :)

avian2• 9 years ago

A cryptocurrency does not necessarily have to be stored or generated digitally.

How would a non-digital cryptocurrency work? While signal scramblers, an analog equivalent to digital cryptography, did exist, I have a hard time imagining an analog blockchain.

the_common_man• 9 years ago

So I'm late to the digital currency game

Many of us haven't even started !

happypants23• 9 years ago

Another use case is fungibility, privacy and anonymity. These are features which are for the most part missing in our current financial system.

Monero (https://getmonero.org/) is a good example of a cryptocurrency which focuses on getting these things right.

xiphias• 9 years ago

You're quite early even by talking about it

discombobulate6• 9 years ago

It's 'crypto currency'. It's not centralised M-Pesa (African digital currency created by Vodafone), or PayPal.

If you don't understand what it is, you may buy the wrong crypto asset. I think it's fair to say it's a good idea to know what you're investing in!

phaed2• 9 years ago

That money would have had better upside if invested in bitcoin directly.

Torai2• 9 years ago

I guess they prefer selling shovels in a gold rush.

ojr• 9 years ago

invest in the high profit margin exchange or invest in one of the high volatility assets the exchange is selling? I would invest in both as a hedge.

jshevek3• 9 years ago

Are you saying that the investors would get a better return on their investment if they had instead simply purchased bitcoins?

That claim seems to require the ability to know the future. Bitcoin may eventually be superseded by a superior alt coin, and disappear into history.

sudoscript• 9 years ago

That claim seems to require the ability to know the future.

One could say startup investing does too.

phaed2• 9 years ago

Explain "superseded" to me. In the world of crypto there is no such thing.

IgorPartola2• 9 years ago

I believe during a gold rush the people who consistently come out ahead are those selling shovels.

burger_moon• 9 years ago

the analogy doesn't really hold to coinbase though. Shovels are a utility for mining gold. That would correlate to GPUs and other computer hardware. In that regard perhaps the VCs should be investing in AMD or Nvidia.

nerfhammer• 9 years ago

Yeesh, now I'm getting worried that if everyone just puts all of their money into speculation instead of investment its going to be really bad for the economy in the long run...

kolbe• 9 years ago

How in the bloody hell does Coinbase not fund its own operations with profit??? I figured they made over a $100m every quarter.

richardknop2• 9 years ago

Do we have any source on what is their revenue? I sincerely doubt they are making 100 million in profit every quarter. I would be surprised if they were actually profitable.

vocatus_gate• 9 years ago

With the fees they charge, and the volume on the exchange, I don't see how they couldn't be making a profit? Of course I'm not a business guy, might be something I'm not thinking of.

fullshark• 9 years ago

I would guess (hope) they have a ton of fiat in reserve that they don't want to touch.

FozzworthSE• 9 years ago

lots of people have used it to buy drugs

mbloom1915• 9 years ago

lots of people have used cash to buy drugs...

stanmancan3• 9 years ago

I'm pretty naive on the subject of Bitcoin so I might be missing something here, but can someone explain to me how it's used right now? Aside from treating BTC like a stock that is. The value of it fluctuates so much that actually buying/accepting it seems incredibly risky. The price can go down just as fast as it goes up.

As a someone looking make purchases with BTC; if the value of a BTC is going up, why would I use it to buy anything? It's gone up $700 in the last week; up $200 in the last 24 hours alone. I'd feel incredible silly spending bitcoin in a growth phase.

As someone looking to accept BTC for purchases, how do I do so with confidence that when I accepted $3400 today that by the time I cash out it's not worth $2700?

My confusion really comes from the buying/selling of legal goods; I can see the risk being worth it if you're operating outside the law. But really; if I'm selling something then there's a pretty good chance I'm buying my supplies with a fiat currency. I have hard and set costs I need to cover. If I accept BTC, there's a chance that when it's all said and done the BTC isn't worth what I paid and now I'm losing money.

Are businesses just expected to accept that risk? If so, how many businesses are actually willing to accept that risk? Or do we have to wait for the price to settle down before seeing more widespread adoption?

avenoir• 9 years ago

When a business accepts bitcoins for payment, there generally is the need to convert them to the currencies used for paying suppliers, employees and shareholders. Some merchants set prices based on the current market rate at the time the price quote is presented to the customer Bitcoin Prices lists the exchange rate for many currencies on multiple exchanges. When prices are determined using an automated process, the current market rate can be based on either a current price or on a weighted average basis. When bitcoin funds for purchases are received, some merchants instantly exchange those proceeds into the preferred currency used. Hedging for each transaction can nearly entirely eliminate exchange rate risk that the business is exposed to when accepting bitcoins for payment. [1]

So it sounds like merchants accept Bitcoin and immediately convert to preferred currency based on the going BTC rate at the time of transaction.

[1] https://en.bitcoin.it/wiki/How_to_accept_Bitcoin,_for_small_...

iDemonix2• 9 years ago

I know it doesn't specifically answer your question, but my understanding is that a majority of 'we accept bitcoin' businesses use a service to translate it in to their native currency at the time of sale (or very shortly after), and often will list their prices in the native currency (rather than BTC + constant adjustment).

seiferteric• 9 years ago

Are there any instruments like options or futures for btc? Seems like these could be used to solve this issue.

45h34jh53k4j8• 9 years ago

Yes, some of the chinese exchanges offer futures contracts.

The larger western exchanges offer leverage (and its other peoples funds earning interest, currently ~0.015%/day).

There is also mining contracts which are a form of derivative.

Also -- none of these deriv's provide any solution to volatility (possibly make it worse?)

acchow• 9 years ago

Exactly this - futures denoted in BTC will turn it into a real currency.

It requires buy in from many parties - suppliers of materials to manufacturers, manufacturers of products, merchants reselling products, etc.

The entire chain can be stabilized with futures so then bitcoin doesn't need to be converted immediately to another currency.

kristopolous• 9 years ago

futures + debt based investing are the two canaries of market crashes. It was true in 2008, 2000, 1987, 1929, 1873, ... heck all the way back to tulip mania or arguably the financial panic of 33AD.

The question of "who's buying, how many of them are there, how long do they intend to hold for, and how are they buying?" you can't answer for sure, but when the capital to buy starts getting more scarce and people start leveraging other assets to continue buying...you'll get to a point where market velocity surpasses speculative velocity and the leveraging ability of the buyer.

In the physical world, this is a vendor of widgets on the street and a buying frenzy. Buyers spend money on the widgets and turn around and open up their own widget shop as sellers to feed the craze. Eventually enough buyers are converted into sellers, not enough buyers remain and the price crashes.

Futures contracts are a form of credit in this model. Bitcoin's crashed 4 times in 6 years - don't think it won't happen again.

rcpt• 9 years ago

It's useful for donating to WikiLeaks when the banks are blocking those.

https://wikileaks.org/Banking-Blockade.html

duren• 9 years ago

It's the same as exchange rates, constantly being recalculated. Though crypotcurrencies are orders of magnitude more volatile. A seller will set their price in USD (or other established fiat), and convert the price to bitcoin at the time of transaction.

As far as cryptocurrencies are concerned, I personally view BTC as a good store of value; it's slow and expensive to transfer compared to other coins.

ryanlol2• 9 years ago

The value of it fluctuates so much that actually buying/accepting it seems incredibly risky. The price can go down just as fast as it goes up.

Why? If someone sends me 1BTC I'll just instantly sell 1BTC, it is tremendously unlikely that I'm gonna get screwed even if there's a 1-2 second delay.

if the value of a BTC is going up, why would I use it to buy anything?

Because you want things and not numbers on the internet.

As someone looking to accept BTC for purchases, how do I do so with confidence that when I accepted $3400 today that by the time I cash out it's not worth $2700?

By being smart and not waiting to cash out. Your maximum loss will be the value of whatever buffer coins you hold, and I guess you could hedge around that too.

45h34jh53k4j8• 9 years ago

There is no 1-2 second delay tho; bitcoin transactions take 1 hour to confirm. At best, you might have 7 blocks between receiving, sending and being credited on the exchange.

Of course, this is possibly things like Litecoin are more stable as you can 'get in and out' in 15 minutes.

skizm2• 9 years ago

Bitcoin purists will say that, eventually, there is no "cash out" phase. 1 BTC = 1 BTC and who cares about what the dollar equivalent happens to be. Once everything is in BTC you will never exchange it for dollars.

Do you spend dollars today wondering if tomorrow the Euro will be worth more or less? No, so why would you care what the dollar equivalent to a BTC is when everything you buy is priced in BTC?

This is long term obviously. The reason the price is "high" now is because there is a finite amount. ~21 million BTC is the max that can ever exist at once. So, theoretically if you replaced the world's currencies with BTC, having a single BTC would make you incredibly wealthy.

beaner• 9 years ago

Not sure why you'd be downvoted. This is what some purists think and it's a popular meme. [1]

[1] http://imgur.com/gE8hDnY

baddox• 9 years ago

But be careful about only mentioning the views of "Bitcoin purists." That sounds like a pretty extreme view, and will be dismissed as a straw man by the Bitcoin fans or optimists, who likely vastly outnumber the "purists."

droopybuns• 9 years ago

Is it a big deal that a BTC can never be lost and later found?

On a long enough timeline, won't lost credentials result in BTC that are functionally permanently out of circulation?

mrisoli• 9 years ago

Can you elaborate on how that is going to happen? Not trying to flame, I can see a world where people use BTC for everything, but I am confused at how that will happen with current valuation.

BTC is worth thousands of dollars, so if everyone starts using BTC will people pay irrational fractions of BTC for bread and milk at the supermarket? will there be some adjustment? How will other entities handle conversion and exchange? Will the general population have some compulsatory event to liquidate their own bank accounts into BTC funds?

Could this change asset valuation worldwide(Real estate, investment funds, etc)? If no government entity mediates currency value and printing can they tax your earnings if companies pay through some decentralized medium? What happens when nobody is paying taxes?

How about other cryptocurrencies, is there some kind of zero-sum game race to the top going on? Can they co-exist in the long term purist scenario?

Some of these questions are probably extremely stupid as I have little financial and economics knowledge and I am almost illiterate when it comes to Bitcoin, and I don't know how it works for the average joe if this purist scenario becomes true.

nradov• 9 years ago

Of course that will never happen in our lifetimes because in the real world people and companies have to pay taxes. The larger sovereign states — which exercise effective monopolies on violence over geographic areas — won't agree to accept payments in cryptocurrencies which they can't control. Even if you conduct transactions in BTC or something similar you'll eventually have to exchange it for the local fiat currency to pay taxes.

panarky• 9 years ago

I'm sure there are some "bitcoin purists" who think someday bitcoin will be used to buy everything, but that's certainly a minority viewpoint.

There's a more pragmatic way to think about it.

Bitcoin can coexist just fine with national currencies, and with other cryptocurrencies, and with precious metals. Bitcoin doesn't need to "win" by replacing any of these.

Bitcoin is valuable because it's a secure way to store and transfer value between people.

If bitcoin is never used to buy your morning coffee, that's OK. If only 1% of the population finds bitcoin useful, that's OK, too.

Dollars, euros and yen are better than bitcoin in many use cases, and bitcoin can do things that dollars, euros and yen cannot do in other use cases.

The simple fact is that many people find bitcoin useful, and that's what makes it valuable.

cesarb• 9 years ago

Do you spend dollars today wondering if tomorrow the Euro will be worth more or less? No, so why would you care what the dollar equivalent to a BTC is when everything you buy is priced in BTC?

Moving the analogy a bit: everything we buy is priced in Reais. However, we still care if tomorrow the Dollar is worth more or less, since it does impact the price of several kinds of goods. For instance, the Dollar increasing in value will lead to computers getting more expensive.

In the same way, even if everything were to be priced in Bitcoins, the exchange rate between Bitcoin and USD would still be significant, unless and until the USD ceased to exist.

Diederich• 9 years ago

~21 million BTC is the max that can ever exist at once

Just to clarify: it's not that there can only be 21 million BTC 'at once'...unless there's a big change in its design that the majority support.

There will only be 21 million BTC ever. If the keys for 1 million of them are lost, then those will never be replaced.

nugget• 9 years ago

If/when the limit of 21 million is reached, the miners would/will increase the limit. Over time the incentives of BTC holders and BTC miners diverge. One of the many reasons a viable PoS is important, as it merges these two groups into one.

cma• 9 years ago

So, theoretically if you replaced the world's currencies with BTC, having a single BTC would make you incredibly wealthy.

The rules can and have changed with just majority (of compute power) consensus through forks. They could be changed to make it inflationary.

1_2__4• 9 years ago

I think traditional currency can remain solvent longer than cryptocurrency can remain irrational.

Cthulhu_• 9 years ago

Do you spend dollars today wondering if tomorrow the Euro will be worth more or less? No

Actually, yes; there's plenty of countries where they use the USD or Euro instead of their local currency because the local currency suffers from high inflation or instability. There's other countries where the currency is tightly linked to the dollar. Both because the dollar is a stable currency, one that isn't influenced by supply / demand like BTC is - BTC is a finite resource, dollars are theoretically infinite.

45h34jh53k4j8• 9 years ago

Its also used to purchase other cryptocurrencies. Trades ride the volatility of USD/BTC, as well as the XXX/BTC. In extreme cases you have USD/BTC, BTC/XXX, XXX/YYY!

While there is a large number of LTC, BTC and ETH exchanged for fiat (USD, EUR, RMB, KRW); Most of the trades are between BTC and alts - https://coinmarketcap.com/exchanges/volume/24-hour/

icebraining2• 9 years ago

Why do you spend any currency when you can buy Bitcoins instead, let it grow and then sell them back into the original currency?

Any reason you can give applies to spending Bitcoin.

ehxcaet• 9 years ago

Not sure that really applies. You NEED to buy things. Rent/mortgage. Food. Transportation expenses. The guy's right - at this point, why would you ever spend BTC on those transactions when you can spend $ instead?

The reason why you spend any currency instead of buying BTC is because you need to. Not because you're willingly buying something unnecessary to forsake potential earnings in the future.

celticninja3• 9 years ago

It is possible for a business to accept bitcoin and immediately have it converted to dollars so they are not exposed to the currency risk but get the benefits of irreversible payments, so little chance for fraud.

zwily• 9 years ago

That's what 99% of the businesses that accept Bitcoin (that aren't themselves crypto-coin based businesses) do. Overstock is a counter-example. They keep 50% of the BTC they collect now as investment.

aresant4• 9 years ago

Fascinating how many questions / comments in this thread question if crypto currency macro even has a use case in this world.

And for good reason.

Is it a currency? Yes and no.

Is it a store of value? Yes and no but sure is volatile.

Is primary use case illegal transactions? Definitely, sometimes.

Is it a anarchist mechanism to shelter wealth and detach from any nation state? Yes absolutely, probably most of the China money that drove the last price bump was getting cash out of China.

Is it a pyramid scheme? Absolutely in many cases, ICOs are making this way easier.

The answer I've arrived at, and why I am compelled by crypto is that in each use case above it has the potential to be the BIGGEST, at a scale never recognized before.

Crypto could be the biggest currency. All it takes is adoption and figuring out scaling. Way easier to transact in a flat-world with a portable currency.

Crypto could be the biggest store of value. The beautiful math behind bitcoin (and others) is self-limiting creating real scarcity. With mass adoption will come stability.

Crypto could drive the majority of illegal transactions. If they figure out privacy more completely it's the perfect mechanism.

Crypto could become the "people's" wealth vault, and undercut nations ability to tax & control markets by truly privatizing wealth. All it takes is MOST of us to decide.

And finally, because it's entertaining to think about, Crypto could drive the biggest pyramid scheme the world has ever seen. There is absolutely no SOFTWARE of structural limitation to running a $1 trillion dollar end game pyramid on Crypto. In fact you figure out the privacy side, add in mass adoption and you could just leverage the current ICO structure for it.

I love crypto because it's boundless.

You have to have some imagination and blind faith to believe any of the use cases above will become true.

But the fun part is there is no limiter on any of those things becoming true.

tenaciousDaniel• 9 years ago

Exactly. Though I think that so many people having invested so much money at such an early stage in this technology's development is the reason why the scrutiny is off the charts. Everyone, from naysayers to evangelists, need to cool off a bit and realize that this stuff is brand new. I'm 110% confident that cryptocurrency in general will yield some very interesting things in the next few decades. But I'm 0% confident that anyone today has a grasp on what those things will be specifically. We should all just be having fun with it and seeing what we can make.

slg• 9 years ago

You say that like most of these things are good? I wouldn't consider boundless tax evasion or a boundless pyramid scheme "the fun part".

utexaspunk2• 9 years ago

And finally, because it's entertaining to think about, Crypto could drive the biggest pyramid scheme the world has ever seen. There is absolutely no SOFTWARE of structural limitation to running a $1 trillion dollar end game pyramid on Crypto. In fact you figure out the privacy side, add in mass adoption and you could just leverage the current ICO structure for it.

Couldn't Crypto itself be the big pyramid scheme? It might never get adopted enough to become the defacto currency (can you imagine the gov't accepting BTC for tax payments?). In the meantime the SEC, or Congress, or maybe some big, multilateral "anti-money laundering" international agreement might do something that threatens it enough to start a run on the "bank", driving the exchange rate to nothing. Those who bought a ton a long time ago and who since cashed out would then be the winners. No?

mtgx• 9 years ago

Even though Bitcoin was initially called a cryptocurrency, I think it's now becoming more clear that cryptocurrencies are more like "cryptoassets" [1] or crypto commodities.

Some of the people who started calling it digital gold a while back got it right. Using Bitcoin is more like using gold (not necessarily physical gold) to pay for stuff. Gold's value also fluctuates significantly over one year's time.

[1] https://medium.com/@cburniske/why-i-like-the-term-cryptoasse...

discombobulate6• 9 years ago

That's questionable. I believe there may be an issue with the economic model if there aren't sufficient transactions (once the issuance starts to slow). Not enough crypto for the miners. They then don't support the network. The network is then less secure. The price then reflects the lack of security.

There's thinking that the winning crypto(s) currency will be both gold + currency.

ringaroundthetx4• 9 years ago

For an entire half-decade there have been payment processors that made it seamless for businesses to accept bitcoin and cash some or all of it out immediately if they wanted to.

If it takes a $100 million fund raise article for you to ask why everyone else isn't crazy, c'est la vie. People look for validation all manner of ways.

Coinbase also has merchant services that allow for immediate cash outs. This is probably one of cryptocurrency's smallest markets.

stanmancan3• 9 years ago

I'm not sure I follow what you're saying in the first two sentences? Neat to know that you can cash out immediately though; that makes more sense.

Are the vendors that accept BTC pricing their goods based on the current exchange rate for 1 BTC? ie. I price product A at $1500USD, I then say I accept BTC, so when someone puts it in the shopping cart it converts $1500USD to BTC and charges them that amount?

Sorry, just not familiar and trying to figure out how it works. I haven't came across anyone that accepts BTC (although I haven't looked either).

utexaspunk2• 9 years ago

Can I get a bank account which works like a normal bank- accepts EFTs in dollars, has a debit card which pays in dollars, but where my balance is stored in BTC and everything is exchanged to/from BTC at the current rate on the fly? With enough of a balance, it seems like I'd be able to weather any fluctuations in the exchange rate and my funds would for the most part appreciate at a much greater rate than the measly interest on a savings account. Does that exist? Would that be a terrible idea?

mrb3• 9 years ago

The Coinbase Shift card does this. It's not a bank account, but just a debit card that exchanges USD<->BTC in real time to settle transactions.

elatier• 9 years ago

Have a look at Revolut - they're adding Bitcoin, Ethereum and Litecoin as holding currencies in the coming weeks.

mrb3• 9 years ago

"As a someone looking make purchases with BTC; if the value of a BTC is going up, why would I use it to buy anything? It's gone up $700 in the last week; up $200 in the last 24 hours alone. I'd feel incredible silly spending bitcoin in a growth phase."

If it goes up so much, isn't it incredibly silly for you to not buy any? See, the reason why you haven't bought BTC yet is the same reason why BTC is still used to buy things. BTC might go down tomorrow, so why not spend it today and get more bang for your buck now.

Case in point: I've personally spent ~100 BTC over the years (buying domain names, Steam games, paying my CPA, buying on Newegg, eating at Charlie Shrem's bar in NYC, etc.)

chocolatebunny• 9 years ago

Your CPA accepts bitcoins?

rb808• 9 years ago

Initially people did use to to buy stuff, but it there isn't really an advantage over credit cards. Now people just want to buy it because it keeps going up in price. Classic Pyramid get rich scheme.

VLM• 9 years ago

Buy and sell limits prevent using coinbase to trade BTC like a stock unless you're talking extremely low limits or extremely long term (like a retirement fund, which I wouldn't recommend)

So the liquidity is weird, I can turn less than $15K into USD in a few moments, but $15001 will take me two weeks and is scary given volatility. I would argue this intentional as in this is why coinbase isn't very useful for drug money laundering.

I once bought a commemorative Swiss Army knife with Debian Linux branding and spent like $200 on nickel and time fees to buy a $100 knife. The numbers are only slightly exaggerated. Transferring money is incredibly expensive.

Fej• 9 years ago

Bitcoin transactions in which the payee retains the currency instead of immediately exchanging it for USD, EUR, GBP, or another usual currency are largely done for illicit purchases, especially those involving narcotics.

This is done because Bitcoin is extremely easy to launder through "tumblers". Unlike, say, paper currency, an individual 'unit' of Bitcoin (insofar as that exists) is not tracked with a serial number.

Additionally, in the US, the IRS is underfunded and prolific sellers are smart. Unlike banks, Bitcoin does not inherently have names attached to accounts/wallets, and so it is much easier to evade taxes than with typical currencies.

sowbug• 9 years ago

TL;DR: holding Bitcoin means you're probably a criminal.

MichaelBurge• 9 years ago

Something like Bitpay guarantees the exchange rate for 15 minutes between invoicing the customer and conversion to USD.

More generally, you'd outsource those risks to dedicated finance companies and handle USD: Exchange rate risk, fee calculation risk, confirmation/double-spending risk, etc. Just like in how there is an entire shell game of risks being offloaded between companies when you accept credit cards, and no merchant directly accepts credit from an unknown customer.

whiskyant• 9 years ago

As someone looking to accept BTC for purchases, how do I do so with confidence that when I accepted $3400 today that by the time I cash out it's not worth $2700?

You can accept BTC and convert it to cash instantly upon acceptance if you want.

pbreit• 9 years ago

Don't get hung up the price fluctuations if all you want to do is use it for transacting. You will only be exposed to BTC price fluctuations for a few seconds or minutes. There's a bilateral parasitic relationship between those who want to use it for transactions and those who want to speculate on its value.

imaginenore• 9 years ago

1) you don't really know that its value will go up, the past doesn't guarantee the future

2) money itself is useless, people like spending it

3) why would you buy computer/phone today if you can buy it next year for half the price?

josh2600• 9 years ago

Seems like a no-brainer for IVP. It seems like coinbase is exceptionally well positioned to harvest a big chuck of the institutional money that's about to hit crypto.

45h34jh53k4j8• 9 years ago

Coinbase is positioning themselves to be the first legit cryptobank. Fidelity now feeds their customer portfolio data (on BTC, LTC and ETH holdings) from their user cold storage holdings at coinbase.

Its extremely risky to hold client keys that hold money. Making a CryptoBank is like making a regular bank on hard mode.

JumpCrisscross• 9 years ago

I don't think they're going for bank, but the more-lucrative exchange model. "Bank" means ongoing fees but lots of risk. "Exchange" means low-risk transaction fees.

fpgaminer5• 9 years ago

Making a CryptoBank is like making a regular bank on hard mode.

Back in "the old days" bank security was based around metal vaults and guns. That I would also consider doing banking on hard mode.

Coinbase just needs good specialist engineers and a good insurance policy. Not much different from a traditional bank.

At least Coinbase has an advantage over traditional banks. Good engineers would probably rather work at Coinbase where they get to play with cool Bitcoin tech, rather than a stuffy old banking system which still limits passwords to 8 characters...

45h34jh53k4j8• 9 years ago

Insurance on cryptocurrency holdings? might be hard to find a provider that would accept that level of risk and volatility. Would the premiums increase with the value of the BTC?

What if there just isn't enough bitcoin in circulation to cover the loss (there is a 21 million cap on BTC).

Bank robberies don't usually leave the bank with nothing :-) Exchange gets rolled, it might not even afford the claim.

Agree about advantage as being a great place to work vs traditional banks. They will attract better talent for sure.

ruok0101• 9 years ago

Maybe now they can spare a human to respond to my 4 attempts to get my account unlocked?

anilshanbhag• 9 years ago

Coinbase makes a killing with their fees. The spread between the buy and sell prices on coinbase are 1-1.2%. On top, their bank transfer charges are proportional to amount transferred instead of standard flat fee. I wonder why they need another $100M !

For people who want to buy, I would recommend Kraken - they have much higher volume and sane pricing. There are others too like Bitfinex, Poloneix, etc.

fpgaminer5• 9 years ago

It's important to note that Coinbase also operates an exchange, GDAX, that anyone can get access to. The fees for limit orders on GDAX are currently 0%, and there are no transaction fees for withdrawal (at least on USD->Bank account or BTC withdrawals). I'm not sure if GDAX has any deposit fees.

Buying/selling directly on Coinbase is merely for convenience, and obviously you're going to pay for that convenience. I'm glad that Coinbase offers that option, because there are a lot of people for whom the fees are worth the ease of use.

But if you're one of those people for whom the fees aren't worth it, and you want to get your hands dirty, by all means use GDAX and pay no fees at all.

dahdum2• 9 years ago

No deposit or withdrawal fees for GDAX, and it's instant to move funds to/from Coinbase wallets.

solotronics• 9 years ago

the fees for market making orders is 0% other orders is about 0.25% (better if you are trading more). market making is when you place an order that is not instantaneously filled.

andruby2• 9 years ago

I was wondering the same thing. At the volume GDAX is processing ($100M/day [0]) they should be making $100M in gross profit every year [1].

[0] https://coinmarketcap.com/exchanges/volume/24-hour/#gdax [1] $100M * 0.0025 = $250K /day, or almost $91M per year.

Zephyr3142• 9 years ago

There is currently a 0% fee for "market making," or when you do a limit buy/sell. The 0.3% fee only applies when you make a market transaction (instantly filled) [0].

[0] https://www.gdax.com/fees/ETH-USD

pmorici4• 9 years ago

their bank transfer charges are proportional to amount transferred instead of standard flat fee.

I don't think that is true. From everything I've seen they only charge a nominal fee of 15 cents to do an ACH transfer.

Zephyr3142• 9 years ago

There is a $0.15 minimum in the US, but they will take the max of that or 1.49% (to a bank account) [1]. Different countries and output methods vary, but most are proportional to the amount transferred.

[1] https://support.coinbase.com/customer/en/portal/articles/210...

aresant4• 9 years ago

Edit - Moved to comment I was trying to address -

jorvi• 9 years ago

Crypto could become the "people's" wealth vault, and undercut nations ability to tax & control markets by truly privatizing wealth. All it takes is MOST of us to decide.

You say that like its an admirable goal we should strive for. Taxes built the roads and bridges you drive on, the crystal-clean water that flows from your tap, the lines that your internet runs over, and the (admittedly glacial) bureaucracy that prevents your city, municipality, province and country from descending into unorganised chaos.

aresant4• 9 years ago

I am illustrating use cases, not advocating.

The minute you realize the use case around privatization of global wealth you can begin to underwrite its probability.

Because the crypto platform provides the OPTION for that to happen at scale.

And crypto gives people globally the opportunity to make the decision and vote with their personal wealth (and mining power).

eliribble• 9 years ago

Just because tax enable those things in the United States right now does not imply that is the only way they could be provided

ringaroundthetx4• 9 years ago

Roads, bridges and schools were built before national governments began passively levying taxes on income. this is a 100 year old concept.

Taxes on capital gains are a 70 year old concept.

Just recognize the amorality of it. It can only be billed as a "duty" for "roads and schools" when pandering to the lower classes who have no choice in the matter, while recognizing those classes have the numbers to get you in office. But "taxes" are not an absolute on the concept of how a government can fund itself. Governments have to balance the consequences of how they attempt to raise revenues, by being competitive amongst other countries, as their ecosystems primarily rely on attracting or incentivizing investment.

pedrocr3• 9 years ago

Your currency use cases sound fine to me. The wealth ones however look dangerous to me.

Crypto could be the biggest store of value. The beautiful math behind bitcoin (and others) is self-limiting creating real scarcity. With mass adoption will come stability.

Currencies should never be used to store value. No one should hold large amounts of wealth in Euros or Dollars and almost no one does. You hold wealth in actual productive assets like land, stocks, bonds, etc. That we price these in Euros or Dollars is irrelevant and we can price them in Bitcoin just as well. Nothing the central banks that control fiat currencies do changes the underlying worth of these assets even if they can generate temporary valuation swings.

Crypto could become the "people's" wealth vault, and undercut nations ability to tax & control markets by truly privatizing wealth. All it takes is MOST of us to decide.

This to me sounds even riskier. People shouldn't be going out and buying bitcoin to do any of this when there are plentiful cheap instruments out there to actually invest in assets. Go buy ETFs of broadly diversified asset classes (stocks and bonds would suffice but real estate ones also exist) and leave the innovation in crypto currencies to sort itself out.

ryanSrich2• 9 years ago

Hopefully they spend all $100mm on support. I've never experienced such bad support.

joering23• 9 years ago

At this point me and many of friends with Coinbase account came to conclusion that there is NONE. I don't believe a single person works in customer support.

I also heard that it is such a big issue that some California attorney is advertising heavily in top 5 states to gather traction for a class-action lawsuit regarding this problem. Unfortunately I haven't stumbled upon his advertisement yet, but wouldn't be surprised if judge will give it a green light.

trjordan• 9 years ago

According to LinkedIn, they have 7 people who work in support.

At a company of ~200 people, that's not an unreasonable number to have. It feels mean to say they have none.

shatterpop• 9 years ago

Yes! I've been trying to get an answer about if message signing will ever be fixed for months. They just closed my email ticket saying they're sorry they didn't have time to respond to it.

dahdum2• 9 years ago

They added 1 million users in just 1 month (June), so the volume of inquiries went off the chart. They weren't prepared for that, and I can't say I blame them.

Domenic_S2• 9 years ago

They've always been awful

justinzollars2• 9 years ago

What type of support?

asciimo• 9 years ago

It's nice to see that, until this comment, CTRL-F yields nothing for "ponzi" or "scam." "pyramid scheme" and "drugs" are still making appearances, though.

ringaroundthetx4• 9 years ago

So that's why they refunded everyone after they got taken advantage of in the flash crash.

Maintaining confidence had greater consequences than not.

All about those user numbers, or attracting other people attempting to exploit the same glitch. Pretty efficient market in that regard.

tryingagainbro• 9 years ago

They have been doing this since 2012 when Bitcoin was essentially free...I guess they took the money just in case.

jefe_2• 9 years ago

Definitely late to the game, but finally bought bitcoin this week. I've followed bitcoin since ~2010, but it's volatility and financial constraints had prevented any real action. Here are some notes if there are any other holdouts out there: I used Coinbase and Gemini. It was surprisingly difficult to get money into these places, which was a bit frustrating, but in the same sense reassuring that they are playing by the rules. I actually setup on Gemini because Coinbase kept cancelling orders on my debit card (Schwab), and I was able to setup wire transfer with Gemini, and then transfer that to Coinbase to fund the GDAX account. I set out Saturday morning to buy bitcoin and didn't ultimately have any until Monday afternoon when the wire transfer reached Gemini (standard account for ACH transfer is now approved on both platforms, Gemini took 2 days, Coinbase 4). Coinbase has a nice app to monitor accounts and price charts, but it doesn't seem to link to GDAX (their exchange), so you can't get a unified view of holdings in one spot. Gemini doesn't have an app, but has a web application which is annoyingly secure. It remembers a device for 24 hours, after which it requires 2 Factor SMS verification. Security is great, but it's a bit annoying when all you want to do is check account value once a day. Gemini trading volume seemed a bit low, and their API didn't offer any compelling features over GDAX, which is why I've transferred from Gemini to Coinbase (took about 1.5 hours to go through) and then GDAX (Coinbase to GDAX is instantaneous). Both offer websocket feeds and the APIs are well documented. The C# GDAX sample application was last updated in 2015 interestingly, but it still has many useful pieces. Another bonus for GDAX is their fee structure, which is simpler (and cheaper) than Gemini's, maker orders are 0% fees. I've always been intrigued by automated trading systems, but the barriers to entry are so high in the stock markets (data, platforms, high fees, account minimums, day trading rules), to the point where you can't really just 'try it out.' 6 days into this adventure and I'm maintaining my own order book and programmatically making trades with tiny amounts of money. Next step is to work on strategy.

shpongled• 9 years ago

I have actually already created a C# Gemini API wrapper[0], if you are interested. Along with a GUI for it [1]. Both are open-source.

I used my library to write an automated trading system that's running on Gemini (not open source, obviously). I like Gemini much more than it's competitors.

[0] https://github.com/lazear/Gemini

[1] https://github.com/lazear/Libra

jefe_2• 9 years ago

Awesome, thank you for sharing, I will check it out!

justinzollars2• 9 years ago

Great news! I'm very bullish on digital currencies.

discombobulate6• 9 years ago

*Crypto currencies.

Without cryptography, we may fall into 1984 -- or something like that. Cryptography grants us privacy.

cft• 9 years ago

With this trading frenzy on gdax and on coinbase itself, why do they need round D? They are charging hefty fees on coinbase, and some fees on gdax too. It's "pure play" , there's no fixed real world expenses

qhwudbebd• 9 years ago

Does this means they'll be arsed to reply to customer support queries more rapidly in future? Say a 1-2 month turnaround instead of 2-4?

Meekro• 9 years ago

Even in the bitcoin community, I think many people don't realize just how big Coinbase is. I have a paid Alexa account, so I can grab traffic data to for any website. Let me show you how Coinbase compares to several other sites you guys might be familiar with:

  coinbase.com - 4.8 million monthly unique visitors from the US
  4chan.org - 5.3 million
  chase.com - 47 million

So Coinbase is almost as big as 4chan, and is 1/10 the site of Chase.

Let me repeat that again: The largest bitcoin exchange has 1/10 of the traffic of the biggest general banking site in the world.

That is huge.

vadym909• 9 years ago

Unrelated, but it still blows my mind- that the creator of this cryptosystem thats now worth $50B is still unknown.

He has to have been lived somewhere, gone to school somewhere, studied, worked somewhere, left some track somewhere about who he was.

keypusher• 9 years ago

Dave Kleiman - Look him up. It's actually all a kind of sad and sordid story. The myth is far better than the reality.

sillysaurus3• 9 years ago

I think that story was largely debunked. It even turned into a dicey situation for gwern, though I respect his commitment to chasing down a lead.

discombobulate6• 9 years ago

I don't think coinbase are going to add Monero. It's too much like cypherpunk money.

corford2• 9 years ago

Can anyone recommend a decent exchange that supports deposits and withdrawals from a UK GBP bank account without needing to do a SEPA or SWIFT transfer?

Neither Kraken nor Bitstamp do :(

jamies888888• 9 years ago

I can't find one either. I've decided the best option is depositing/withdrawing using localbitcoins.com, then transferring in/out of there to your preferred platforms.

corford2• 9 years ago

Yeah, it's infuriating. I'm hoping Revolut enables bitcoin on their platform soon. Until then, will check out localbitcoins.com, thanks.

zebnyc• 9 years ago

Can anyone who has been investing in digital currency provide some alternatives to Coinbase vis-a-vis fees?

If I am plunking down $65k, then that is almost $1k in fees. In comparison, if I buy stocks, I pay around $7 in commission. I know that it is not a direct comparison cause there is currency conversion fees involved.

Are there any better alternatives? How do you guys invest to avoid fees?

Thanks

pmorici4• 9 years ago

If you are investing that kind of cash you should be using Coinbase's GDAX exchange not their brokerage service. If you place limit orders on GDAX with the "post only" option checked you will be able to buy coins with zero fees.

Other exchanges have similar fee structures so if you don't want to pay the 1% brokerage fee you really need to learn how to use limit orders regardless of what exchange you ultimately use.

koolba• 9 years ago

Why not do a Coinbase tier2 not-stock-but-we'll-pretend-it's-stock ICO?

Could raise even more money with zero actual equity dilution.

Coinbase raises $100M Series D led by IVP

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