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Comment by dsil | Hacker News Reader

Unless I'm misunderstanding, they're really saying they're now insured for ~3% of the BTC they hold. For security, they've always said they only store about that much online, the rest is offline cold storage, but this post says:

"Coinbase is now insured against theft and hacking in an amount that exceeds the average value of bitcoin it holds in online storage at any given time."

So you're still at the mercy of their offline storage security. Not saying there is a better option for most people, but this wouldn't protect you against a Gox-like breach.

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> The insurance covers losses due to breaches in physical or cyber security, accidental loss, and employee theft.

I'm not convinced that this even protects the online wallet against Mt Gox style corporate malfeasance, where much of the damage was done as an intentional corporate decision by the leadership. (I'm conjecturing that's what happened at Mt Gox; regardless, this seems not to cover against them trying something intentionally with their coins related to trading, and then losing them all.)

Additionally, as you pointed out, this only covers a very small portion of their holdings - a percentage smaller than the number of Mt Gox coins that were "recovered" (about 25%).

Finally, Coinbase being insured against the value of the bitcoin loss doesn't translate in to you being covered, as Coinbase may accrue other debts they have to pay off before your holding in the event of a hack large enough to cause a serious business disturbance, such as paying off creditors with higher standing.

That's key: Coinbase is insured.

With FDIC, the depositor is insured, not the bank. This is the bank being insured, not the depositor.

And in the case of FDIC, evidence of gross malfeasance on the part of the bank would likely result in a seizure of the bank and its assets. The FDIC then becomes the "receiver"[1], entrusted with ensuring as many of remaining funds can be returned, and any covered and outstanding amount paid by the insurance.

[1] https://www.fdic.gov/about/strategic/strategic/receivership....

"Finally, Coinbase being insured against the value of the bitcoin loss doesn't translate in to you being covered"

Additionally I'm very curious why they never disclosed this publicly before. It's a decent marketing and selling point so there must be some reason they decided (or were required) to keep it under wraps for so long.

>>So you're still at the mercy of their offline storage security. Not saying there is a better option for most people, but this wouldn't protect you against a Gox-like breach.

Just FYI, Coinbase's staff is infinitely superior to the embarrassing shenanigans of MtGox. If you want to get an idea of what they're doing, jump to 12min30secs in this video https://www.youtube.com/watch?v=ZwG1roO70co

Assuming that Bitcoins won't be FDIC insured in the foreseeable future, this is as good as it gets imho unless you feel better moving the majority of your coins to your own address and keeping the private-key yourself.

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And as always, Disclaimer: Bitcoins are not FDIC insured and it's still wild-west out there. Don't play with money you cannot afford to lose without any recourse.

That was the impression I also got from the post. It would be nice to have someone from coinbase clarify.

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