I'll be honest, I am a Bitcoin fan. But I realize there is a relatively large chance that it might just fail entirely (or only be used by criminals and just be regulated to death).
Venture Capital investment in Bitcoin has been fairly massive - and from many top tier VCs e.g. a16z, USV & Accel (but notably not Sequoia nor Greylock). Some key investments: 75m for Coinbase, 20m for Xapo, 9m for Circle (still haven't launched) and many smaller investments.
VCs have also been putting massive amounts of money in to BTC itself.
If Bitcoin fails, SV will collectively look pretty silly. Its going to be interesting to see what happens when either the US economy takes a dump, or interest rates rise and VC funding dries up...
That said, Chris Dixon, Balaji Srinivasan & Marc Andreessen (all a16z partners) have been pumping BTC harder than a sump pump. Not sure that blog post is the best example.
> Its going to be interesting to see what happens when either the US economy takes a dump, or interest rates rise and VC funding dries up...
We just had a financial crisis 6 years ago in which the U.S economy "took a dump" and caused a global panic/recession/depression (pick your favorite euphemism). Investors poured their money into Treasury bills, and in such numbers that in 2008, monthly T-bill rates were actually negative. Don't count on people rushing to Bitcoin during the next financial crisis.
Or the difference between a currency or a payment system, possibly cheaper method of keeping books, or political movement? Any one of these (including currency) can collapse faster than you can say Friendster.
I don't think AOL ever owned myspace, maybe you guys are thinking about News Corp (Fox)?
But in any case, myspace was still really popular when it was sold and was still growing for a couple of years after; it didn't start getting creamed by Facebook until 2007/2008.
You're right, my mistake. I'm old enough that I should remember, did it look silly when Time Warner was bought by AOL for $164B shortly before AOL's growth and profits stalled (leading to a $99B write-off and tanking the stock from a market cap of $224B down to $20B)? Yeah, maybe a little.
> I don't think AOL ever owned myspace, maybe you guys are thinking about News Corp (Fox)?
I suspect the first poster may have been referring to the sale to Fox, I actually saw the reference to AOL purchasing MySpace and made a false connection to the sale by Fox misidentifying AOL as the purchaser.
I don't think it can fail entirely, because it's not even clear what failure for Bitcoin would look like. Even if the value of a BTC plummets overnight, it's still useful as an intermediary, which is what all the big Bitcoin startups are using it for.
The only failure scenario for Bitcoin that I can see is a technological one: if someone finds a way to break transaction integrity, that would be very bad. But the basic premise is sound, so even if Bitcoin falls in this manner, some other cryptographic value transfer system will continue to exist.
Name a major currency in fiat money ($,£,¥..) that isnt used by criminals? More people use US Dollars for crime than Bitcoin and it will always be that way especially if you consider military funding, Bitcoin doesn't need fancy investment firms, to invest in it, I'll consider as a "bootstrapped" startup. The total crypto-currency market is over 12 Billion Dollars. Bitcoin doesnt live and die with some rich people who live in California, its global
You may not be, but have you really missed the reports on how popular it is with criminals? The OP fears that if bitcoin goes down, the criminals might end up being the only remaining bitcoin users.
All this straw man stuff about how every currency has its criminals and not every bitcoin user is a criminal right now is totally irrelevant to that. But I guess some people suffer from jerking knees that interfere with their reading.
I hope he gets them off MongoDB. I still can't believe they let me double sell without even contacting me afterwards (I sold ~10 bitcoins when it was around $800 and the site was exceptionally busy -- had USD in my Coinbase account afterwards and the bitcoins never left, and I was able to transfer both the USD and BTC out afterwards).
Is this Coinbase? Sounds like they're not a lot better than all the others then: amateurs unaware of best practices for what they're dealing with.
MongoDB and similar NoSQL DBs are really cool when you need to deal with vast amounts of statistical data or stuff like that, but for financial transactions, you really need ACID transactions. There's just no substitute for that.
This happened to me and many others on Reddit. It's something that they manually audited it seemed and I got emails about it letting me know that they would be correcting the issue about a week after it happened. Sounds like in your case they never contacted you though? Wow.
Still, it made me wonder if I could have just ran with the money and drained the bank acct they had access to... Not a good thing for an exchange to be doing.
I think the problem is more with the architects of the applications than with Mongo. You can safely use a non-ACID database for financial applications. You just have to take care of the parts of ACID you need yourself.
It's tricky to get that right, though, so most developers would be much better off picking a database that does it for them.
I've worked on a few large scale financial databases and none of the ones I've worked on use transactions (using Oracle). Most of them are insert only with bi-temporal data: http://en.wikipedia.org/wiki/Bitemporal_Modeling
A simple entry into the field is to imagine that instead of storing a row in which you have a single balance, you would instead have an append-only table in which you store all transactions including their timestamp and auditing info.
The balance would then be calculated as the sum of transactions, and you could modify the query to view a balance in the past by only including transactions before a certain point in time.
A reversal or correction would be an append action, not a modification to existing data. Thus giving you an accurate history of the data.
This is a simple entry point, as bitemporal modelling usually affects the entire datastore and also has to handle potentially massive data and so requires ideas of how to archive old data, and provide performant ways of knowing the current state. There are lots of tricks here, and the sum of those tricks is how bitemporal modelling is achieved.
I've seen the before-and-after at a company that didn't use this sort of modelling and then added it. It was like night and day - suddenly we stopped making embarrassing errors with people's money. Even without really optimizing it for speed, and just using MySQL, and without changing any of the other data model, it works.
not in detail, but imagine: you have code that walks a complex object graph every day to figure out how much money to move. The business rules interact in complicated ways. Do you trust that you'll always get the same value out of that system? Versus "select sum(value)" as a single query...
Most people aren't going to want to hold their own keys as most people can't stop their computers from being constantly infected by malware. Just as people don't want to keep large amounts of cash in their safe, they will want someone else to take the responsibility of securing their coin.
Pretty much only the tech savvy will care to even understand what a key is or care to hold their own.
Bitcoin isn't a political movement to the masses, it's just a useful new technology; they aren't using it to kill banks or government and they don't care about the politics of the early adopters.
Bitcoin with central key escrow is completely and utterly pointless, unless the goal is to generate a lot of waste heat from servers.
> Most people aren't going to want to hold their own keys as most people can't stop their computers from being constantly infected by malware.
We have cheap, secure hardware crypto tokens that rely on two-factor auth. You don't need to keep millions of dollars on a Windows PC.
> Just as people don't want to keep large amounts of cash in their safe, they will want someone else to take the responsibility of securing their coin.
"Someone else" is called a bank. The bank is FDIC insured, and they and the federal government guarantee that your money will be there. They use a huge number of human, automated, and physical processes to keep money secure, and they don't just keep their entire holdings lying around in digital gold bars.
Unless Coinbase et al are going to become (heavily regulated) banks, then they're just another Paypal, and the crypto doesn't even matter.
I don't see how the regulation level of Coinbase affects anything. Some people will store their keys on Coinbase. Paranoid users will use hardware wallets like Trezor. And there's a lot of options in between. The point is that its that choice (for starters) which differentiates bitcoin from Paypal.
What if Paypal were to adopt bitcoin as a deposit/withdrawal method, right next to credit card and bank transfer? That won't change the public-private key nature of bitcoin crypto. The blockchain won't go anywhere. Coin mixers and dark markets will still be there.
Coinbase isn't going to take over bitcoin any more than MtGox did. I don't quite understand what you're worried about.
> I don't see how the regulation level of Coinbase affects anything.
There's no point to a crypto-currency with insecure crypto. If you have insecure crypto, you need centralized regulation. If you have centralized regulation, you don't need crypto-currency.
> The point is that its that choice (for starters) which differentiates bitcoin from Paypal.
Paypal moves money in a lot of currencies, and there are lots of choices other than Paypal to move currency.
> Coinbase isn't going to take over bitcoin any more than MtGox did. I don't quite understand what you're worried about.
I think the analogy you're actually looking for is:
"Coinbase isn't going to take over bitcoin any more than Google took over e-mail"
The decentralized nature of bitcoin is the entire point. If it's co-opted by cloud key escrow services, there's no point.
The decentralized nature of bitcoin is baked into the protocol, its a technical feature, not a social one. So it has less to do with market segmentation of the userbase, whether 80% of the people use bitcoin-qt, blockchain.info, or mtgox. My biggest fear was that we were going to see MtGox blow up in the early days, when it had 80% of the market. Luckily, it didn't happen until the later days (when it only had 30% of the market).
When the social/service distribution gets lopsided, it does present a huge risk. But its "only" the risk that service blows up, not a risk of the protocol getting co-opted. Even with 80% of users on MtGox, that never compromised the essential decentralized feature of bitcoin: having absolute control over your coins on the blockchain. The analogy to google mail is that Gmail users can still e-mail hotmail users (and send/receive e-mail from users on their own custom SMTP servers).
An example of a protocol getting co-opted might be Google Talk, which they announced last year was discontinuing support of XMPP. So now Gchat users can only message other Gchat users, not other XMPP users (though I'm not sure if Google has actually disabled it yet). This would be like if someday Coinbase announced that users couldn't send to any bitcoin addresses anymore, only other Coinbase usernames.
Less random than paypal when it originally started. States had to come up with laws designed just for paypal, because an e-wallet was something completely new.
“We’re in uncharted territory, so hard to say if this stuff falls under a particular state’s MTL [money transmitting license] statutes,” says co-founder Fred Ehrsam. “We’re still talking to states to figure out how each responds, but Coinbase is prepared to get licensed where a regulator deems it’s necessary.”
In the meantime, he is continuing to do business, relying on the fact that Coinbase has its AML and KYC processes established.
Google is a "random" company holding all your emails, Facebook is another one holding all the photos -and many interactions- of your lifetime (maybe not yet, but very soon), Apple is one holding all your music; etc etc.
> Google is a "random" company holding all your emails
Yes, that's a problem, and it's not even money. I don't use GMail, and it irks me that so many people willingly share our mutual correspondence with Google on my behalf.
Now, what if Google was holding my savings account and the only thing protecting me was ... what? A digital key, which they hold in escrow?
If you are interested we have an open source unminified client with independent blockchain data verification via the electrum network as well as a a quick video infographics.
The client can also verify that the P2SH belong to your HD seed and GreenAddress' all while not being identifiable as from GreenAddress externally unless explicitly requested in a coming feature within the payment protocol.
Looked at GreenAddress. Very cool. I have some relevant questions, that may be OT in this thread. Can we chat? I am at kalepune (google's email). Thanks
Most of these services fail to clarify whether they are web-based and rely on so-called "secure" javascript crypto: eg, where their servers are sending the ephemeral JavaScript code that they claim -- but can not under any circumstances guarantee should they be compromised -- will not send your private keys to the server.
Compare this to signed, native applications produced by third-parties who do not run the service in question, where code signing guarantees that the code distributed to you was validated by a responsible building party, and the signing key is not accessible from compromised front-end web servers.
1) Chrome apps can be silently updated; it's a huge security hole in Chrome's distribution model, as it removes all human oversight from the process of software distribution.
2) You control the distribution keys for the silently updating Chrome app, and your signing key, which means all you need is the end-user's signing key to empty people's wallets -- which you (or any adversary that compromises you!) can get by pushing a Chrome app update.
3) Unless you are actually pushing users to use externally downloaded, NON-AUTOUPDATING, code signed applications by default, you're making users insecure by default. An open source client on GitHub doesn't do anyone any good if your default is to strip away crypto-currency's security. This is no different than Microsoft's previous policy of shipping insecure services enabled by default.
Essentially, this boils down to "trust us" -- you control the infrastructure that protects one half of the signing keys, and you already have access to the other half.
It'd make a helluva lot more sense if a locally installed client was maintained by a trusted third-party, and it was the default user mode.
Cloud-focused web people are undermining the promise of bitcoin by simply not understanding why the cloud is so dangerous, whether we're talking about user data (creating a vast treasure trove for the government), or money.
1)The chrome app can be run from the GitHub repo as far as I know.
We are also trying to sponsor an Electrum plugin and our android app will soon work similar to the Chrome app (at the moment it uses appcache and it doesn't do the independent blockchain data verification via the electrum network.)
We are also working with hardware wallet manufacturers.
2) see (1)
3) We will update our website information to make the user aware but please keep in mind that 2FA (soon with transaction details) means malware has limited capacity. Also keep in mind that an attacker would have to attack both our service and our signing key at the store which are not in the same place and are kept encrypted when not used.
I am incredibly sick of hearing this. This is like saying "I recommend you stuff all your cash under your mattress instead of using a bank. With a bank, they are in control over your money, not you".
It simply isn't scalable. Sure, people who are on their computers 24/7 (eg. anyone who works in tech) might have the technical knowhow to deal with this, but for those who are very non-technical, Coinbase is a great way to invest in/hold Bitcoins without having to get into the technical nitty gritty.
I was initially not a Bitcoin fan. But I saw Fred Ehrsam (one of the founders of Coinbase) speak at SXSW, and it's clear that he gets it: he said one of the biggest things harming perception of Bitcoin is that the media keeps calling it a "currency", which it clearly is not. He seems to view it as a better transaction process that's more efficient than credit cards (the justification being that a credit card transaction cost is 1.5-3.0%, while Bitcoin is closer to 0.5-1.0%).
Viewed in this manner, Bitcoin starts to make sense to me. When all you're doing for a transaction is USD->BTC->USD, it doesn't matter what the price or volatility of BTC is. You're buying $30 worth of BTC which the seller is going to almost immediately convert it back to USD. It's cheaper than credit cards for two reasons: one, the risk of loss in the event a vendor is compromised is limited to the amount of the transaction, and two, the blockchain makes it really easy to automate transaction auditing.
Ehrsam was also pretty adamant that Bitcoin isn't a way around existing laws. The first generation of Bitcoin firms were run by amateurs; the second gen (which he considered Coinbase a part of) are run by people who have spent their lives working in banking and securities. This means they will operate a lot more like banks, which includes complying with all the legal regulations as well as the operational processes like outside auditing and information security. This also means that governments will still be able to restrict the flow of Bitcoin: if China decides that BTC->CNY transactions are forbidden, no trustworthy Bitcoin exchange is going to process them. Any that do are likely to be flagged as money laundering operations by the US Govt which will make it very hard for them to do business with a legitimate bank.
Again, when you look at it like this, Bitcoin is a disruptive new technology -- but it's not revolutionary. As always, the guys making the big money in a gold rush aren't the gold miners, it's the guys selling the shovels...
> Ehrsam was also pretty adamant that Bitcoin isn't a way around existing laws. The first generation of Bitcoin firms were run by amateurs; the second gen (...) are run by people who have spent their lives working in banking and securities. (...) As always, the guys making the big money in a gold rush aren't the gold miners, it's the guys selling the shovels...
This. Anarchists (crypto- and not) developed Bitcoin environment as a way to go around the laws, but now as it matures into a real tool, it's being taken over by people who are serious about making money. It's both a victory and a failure of Bitcoin - we have a potentially interesting new financial tool, but all the promises that "Central Banking / Feds can shove it" remain unfulfilled.
I think that's just a truth about the world: government and banking will always exist because the vast majority of the population believe the benefits of central banking outweigh the tiny bit of "sovereignty" you have to give up to achieve it.
I'm a fan of BTC and use coinbase as my central wallet of choice. Super excited about this news.
I recently switched from regular banner advertisements on my site ( http://www.spaceindustrynews.com ) - cheap plug - to taking BTC donations. The BTC community has been amazingly supportive throughout the whole thing.
I'm a fan of BTC and use coinbase as my central wallet of choice.
Please transfer your BTC to a wallet under your control immediately. Run, don't walk. Take it from me: it's a terrible feeling to lose your money because someone else lost it on your behalf.
Under no circumstances should you trust anyone to have access to your bitcoin. Do whatever it takes to accomplish that goal. Philosophically, that's one of the core reasons bitcoin is a big deal, because at no point in history has it been possible to do that until now.
If I had followed the above advice, then I wouldn't have lost a lot of money.
Given the nature of human greed, what do you think the chances are that someone who has access to >10% of a currency will simply let it sit there and do nothing with it?
Given the nature of computer security, what do you think the chances are that Coinbase is impregnable under every imaginable circumstance? What about a rogue employee? What if the founder himself steals?
Now, the question is, what's the best way to accomplish the goal of "Don't let anyone else have access to your bitcoin, ever"? There are solutions. Find one, use it. Please. Don't make my mistake.
Look, if you use bitcoins on the internet you're basically giving them away. What you do is you keep them under your mattress and ever so often you lift up your mattress and look at them and sing a sweet little song to them. They're your friends. Your secret friends.
As far as I know (IANAL) there is no law or precedent which takes the value of stolen bitcoins into consideration while sentencing. There is also no history (AFAIK) of prosecution, of serious prosecution which takes the effort to follow up on stolen coins may have been "mixed" etc., in cases of BTC theft.
Given this, does not an online service (like Coinbase) which holds a large amount of bitcoin in "stealable" form present, to potential criminals, a lot of incentive to break in and take it all away? I, for one, wouldn't keep up to 5000 USD in such a place, at least till the time there has been some serious prosecution and proportionate sentencing of BTC thieves. But of course to each their own.
If my bank had the sort of insurances, regulations and oversight over its operations that Bitcoin companies have over theirs (i.e. barely any), I assure you I would only trust them with about as much money I trust to my own physical wallet (i.e. barely any).
You do realize that losing a wallet is not the same as losing an email. A backup copy of the former is useless if it's stolen however that's not always the case with latter.
This is huge. Congratulations to Coinbase and to the Bitcoin community in general. To the latter because the risk he's taking means he believes a lot in Bitcoin which is exactly what the currency needs to survive.
Does Coinbase make money by speculating in the bitcoin purchase/sell interval?
For instance, when I buy 1BTC at $600 they have ~4 days to get it to me. I assume that if they believe Bitcoin is trending down, they will wait to buy at $550 or lower and then give me the "cheaper" Bitcoin and take home the spread. I haven't heard any confirmation of this but I'd assume they are doing this. Does anyone know for sure?
Brian Armstrong said "no" in a talk he did with Kevin Rose. He basically said they make money on that as often as they lose money on it, so not counting it as a profit center and assuming in the end it will all even out.
Does Mr McGeehan's move signal a move by FB into currency exchange?
Just imagine what FB would know: when and where you were born; who you are related to; who you know; where you shop; what you buy; how much you paid and how much money you have got left. Basically, your whole credit history is up for grabs.
That's got to be the most lucrative data set ever.
Venture Capital investment in Bitcoin has been fairly massive - and from many top tier VCs e.g. a16z, USV & Accel (but notably not Sequoia nor Greylock). Some key investments: 75m for Coinbase, 20m for Xapo, 9m for Circle (still haven't launched) and many smaller investments.
VCs have also been putting massive amounts of money in to BTC itself.
If Bitcoin fails, SV will collectively look pretty silly. Its going to be interesting to see what happens when either the US economy takes a dump, or interest rates rise and VC funding dries up...