Facebook Security Director Joins Bitcoin Startup Coinbase
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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...
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.
Is there a deeper point here which I'm not gleaning?
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.
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.
That barely breaks a billion. It doesn't seem massive to me in relation to the rest of Silicon Valley. For comparison: Instagram.
If you're taking about Instragram's exit valuation, I don't see the relevance.
The failure of Bitcoin won't make SV look silly. It will be business as usual.
Name one that is only used by criminals.
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.
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.
Is it because it doesn't have transaction integrity?
It's tricky to get that right, though, so most developers would be much better off picking a database that does it for them.
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.
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.
Unlike btc-e.com, I don't think you can have a USD balance on coinbase. If you sell your BTC, you _must_ select the bank to have your money wired too.
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.
With those services you hold the keys to your Bitcoin, not Coinbase. With Coinbase they are in control over your Bitcoin, not you.
GreenAddress is the only wallet for Bitcoin with a 2-2 model Multisig offering a Bip0032 wallet with nLocktime on the Bitcoin blockchain.
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.
“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.
[1] http://www.coindesk.com/coinbase-gmail-bitcoin/ (Oct 28 2013)
It's not much of a cryptocurrency if you hand the plaintext keys over.
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?
> 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.
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.
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"
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.
I don't quite understand what you're
worried about.
It's the "largest and most established", until it isn't and your deposits have vanished like a fart in the wind.
You've confused Bitcoin for a political movement; for most, that's not what it is and never will be, it's simply a payment network for e-cash.
Even better with an anti tampering hardware wallet talking to a service provider for 2FA for most security
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.
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.
Lots of questions and links here: http://www.reddit.com/r/Bitcoin/comments/20puhg/while_blockc...
Please feel free to ask any question or to suggest any feature.
Source code https://github.com/greenaddress/
Cheers!
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.
we have a chrome app non minified and open source on github. That client is local and no JS can be injected as it connects via ws.
Furthermore it verifies data against the electrum network and provides nLocktime transaction unlocking your funds.
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.
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.
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...
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 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.
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.
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.
I don't run my own mail servers. Nor do I run my own DNS, generate my own power of, gasp, keep my money stashed in a jar in my back yard.
And neither should you.
Pay somebody else to do the awesome things that coinbase is doing to keep your coins safe.
--
(This advice is void for people holding HUGE sums of coins. For people holding <10 coins or so, I don't see a problem using coinbase. At all.)
Is it, even after MtGox?
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.
Awesome things like what MtGox did?
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?
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.
Damn - too late again. Back to the day job ...