> What coinbase needs are IRL offices where you can go and do things like account recovery, and where people trying to steal money can be caught and prosecuted (and makes a huge barrier for the overseas thieves who are usually doing this)
That's just a bank.
Beyond the regulatory-dodge and crypto marketing explain to me how Coinbase is NOT a bank
Well, right now they’re applying for a charter which suggests they don’t think they’re a bank, but I can think of some other reasons, too.
I mean this isn't the criteria you're looking for but I can trade assets within coinbase's website. It looks like a stock trading platform. I don't for the record.
I don't think commodity, forex or stock trading is built into any bank interface but I don't have enough money to know for sure.
So it's different in that way I guess.
lol they even do fractional reserve things like banks, except they're more shady and don't acknowledge it, now I'm either connecting dots that shouldn't be connected or some withdrawal locks that happened through some big arbitrage opportunities were very suspicious.
Correct. Coinbase is a bank that holds cryptocurrency.
Watching crypto enthusiasts run into every problem that society already tackled with in the past when developing currency and its controls, and then coming up with solutions that look exactly the same as what dirty fiat currency uses, has been a source of much entertainment the past few years
> every problem that society already tackled with in the past
More KYC creates more problems while solving some others. Why didn't the same society despite KYC/AML tackle the problem pointed at in a previous comment? "Florida teens kidnap Las Vegas man, drive him to Arizona desert, steal $4M in cryptocurrency"[1] Why is there this crime?
Without mandatory KYC laws, this particular attack would be near pointless. No name tied to account, bookkeeping doesn't archive wire transaction details for the past 10 years.
Let businesses easily accept cryptocurrency (like... regular cash?), without a blade to their throat held by the government, and the need for such centralization points will greatly diminish. People get in trouble by p2p-exchanging money with unknown peers; in some instances this "trouble" has the unit of "years".
It's in nobodies' interest to protect cryptocurrency payments as the alternative, other than the activists, and the big groups jumping in on it for the speculation purposes - something they had refined decades ago. There's CBDC is on the horizon.
> Without mandatory KYC laws, this particular attack would be near pointless. No name tied to account, bookkeeping doesn't archive wire transaction details for the past 10 years.
But this attack is already fully pointless with traditional finance. You can't steal someone's bank account at gun point.
Conversely, even without KYC, blockchain based currencies paint a huge target on anyone who uses a small number of wallets to store a large amount of money. Dedicated criminals and even state actors can figure out who owns the wallets by tracking transaction patterns, getting information from vendors, etc. As long as you're actually using your crypto wallets (unlike, say, Satoshi), you can quite easily be tracked. Anyone who you order a pizza from in BTC knows the address of whoever has that wallet. Sure, you can take a lot of steps to protect yourself from it, but it's hard, and one slip-up is all it takes. Opsec is not for the careless.
Also, crypto's reliance on secrets instead of legal personhood to ascertain ownership fundamentally makes it prone to stealing money in this way. Since the money doesn't belong to a legal person, but to whoever knows some secret key, that key can be stolen from whoever has it through simple violence. Even if you're extremely careful not to leak details of your accounts, use XMR for untraceable payments, etc - someone who is physically close to you could see that you're rich and decide to attack just on the chance that you may have crypto, without knowing anything specific.
Yea see the problem is that you are arguing under some implicit idea that you’ll just accept the results of the system.
Every single crypto property I’ve talked to has ended up at a point where they believes that someone cheated them outside the bounds of the system and then look to authority figures to rectify the situation, like the government.
If you are someone who actually believes that crypto transactions should be unmodifiable by any third party then what you said makes sense. I just don’t think that anyone telling me they believe that isn’t lying to themselves at best, and lying to everyone else at worst
As others have said, it has nothing to do with crypto, it is an exchange problem, and a government intervention problem.
As I understand, the root of the problem is that Coinbase kept lot of sensitive information, including photos of IDs. If Coinbase was fully anonymous, and didn't require any KYC, the impact of the leak would be insignificant because it would be difficult to link user number 12345 with some real-world person.
So if we want to constrain impact of such attacks, we must make companies keep less data and delete them faster. For example, instead of storing a photo of ID, store just a checkbox that the person showed their ID and it was valid.
This applies not only to cryptocurrency, but to any company like Google, Uber, Amazon etc - if they didn't keep extra data, there would be little value in the leaks.
So the blame is not at cryptocurrency, but on companies not wishing to delete the data and governments demanding them to collect the data not necessary for operation. It's the government and capitalists who create problems out of nowhere.
> store just a checkbox that the person showed their ID and it was valid.
Doesn't work at scale. You get bribes, rogue employees, socially engineered employees. In the US, look up the articles about phone/SIM unlocks and SIM card copies. Russia has a problem with e-signatures, that most people have no idea about. It's possible to sell somebody's real estate with one of these. Loans granted just based on passport data. Neither politics nor media highlight these issues. Overall in this case your suggestion tries to handle the symptoms of the KYC requirement.
Here's a more extreme treatment: let people change their full legal name at will. Gender's already kinda possible.
In Russia one can change their name, although it is a lot of pain as you need to change it in all agreements (like bank agreement) and documents. So a better idea is simply not store customer names.
This is an exchange problem, not a crypto problem. You don’t need an exchange to hold crypto.
But they need exchanges to get real money to flow in and out of cryptocurrency easily. Without it, cryptocurrency by itself would likely be worth far less than it is today.
Yes that's true, but no need to hold your crypto there as a permanent storage. Once your fiat is exchanged to crypto, immediately transfer the crypto to your private wallet.
This just trades the unsolved exchange hacking problem for the unsolved lost/stolen keys problem.
That problem is trivially solved by backups.
Backups don't solve seed phrase phishing for example.
As opposed to the bank's ...? Or your other account's ..., what exactly, passwords? Phising is everywhere. How many times have you heard the elderly have their money stolen, both online and in real life? It happened to my grandma. The mailman is bringing her own pension as cash, and guess what, he has scammed my grandma for years! The food delivery guy who has been delivering lunch for my grandma, guess what he did? He scammed my grandma out of her money! We are talking about cash, right now, and no phising involved, just good old "lying".
Hence why cryptocurrency would never replace regular banks for regular people. The situation with scams and thefts has only gotten worse. Not your keys, not your coin.
I definitely cannot imagine my grandma making use of crypto, or PayPal, or her bank's online site. :)
Theft or loss has always been a problem since life evolved on Earth.
I don't think anyone claimed that crypto was un-losable or un-stealable. It's not magic.
You need an exchange to do some core things that people want to use cryptocurrencies for.
It may not be a crypto-as-a-theoretically/ideologically-pure-construct problem, but it absolutely is a crypto-as-a-real-world-asset problem.
Yes, I think I’m familiar with the crypto enthusiasts defenses that all boil down to looking at a single aspect of their system in a vacuum and not realizing that if anyone wants to functionally use crypto as a currency and not as a speculative asset or tool in crime, then all these aspects actually have to work and work together
I don't really care about crypto personally (volatile shitcoins) but I think that's a straw man argument. They all know it gets troublesome when it comes to dealing with fiat transactions. The hardcore crypto enthusiasts want to avoid fiat entirely.
If only hardcore crypto enthusiasts who didn't want any fiat had cryptocurrency bitcoin would be worth a couple dollars a piece and 99% of other cryptocurrencies wouldn't exist. The vast vast majority of people who have crypto are doing it because they think they can get rich from it and that's why anytime it's talked about it's talked about in terms of fiat values
Is there anything crypto does that paper currency doesn’t?
Paper currency can be devalued by the government by printing lot of paper (this has happened many times in our history). Cryptocurrency cannot.
Is there anything crypto does that paper currency doesn’t?
Gets you the equivalent of mugged by people on the other side of the planet?
At least with cash, it's a one-on-one involuntary transaction.
Yes, electronic transfer.
Come on, if you’re going to copy someone else’s snark, pick a good one.
"Cryptocurrency" is a misnomer, because none of them are actual currencies.
Cryptocurrencies are classified, for now, as securities.
Currency is currency and cryptocurrency is not. So please do not attempt to compare apples to oranges here.
https://en.wikipedia.org/wiki/Security_(finance)
If you wish to compare cryptosecurities to other securities, then do that, but don't try to act like it is some sort of future utopian currency.
Cryptocurrencies are not classified as securities. Bitcoin and Ethereum, the largest cryptocurrencies, were both declared as non securities by the SEC.