Coinbase Launches Instant Exchange
blog.coinbase.com
blog.coinbase.com
"You can also receive bitcoin and Coinbase will execute an instant sell in the background."
If I can use my money to send you bitcoins that'll be automatically sold and credited to you as your local currency... then how about secretly skipping the bitcoin step and just move money like Western Union or any other bank? ;) It'd be more profitable for them and lower risk, I think. Whatever transaction fee Coinbase charges, I'm sure it's less than what I pay Western Union to send money to my family in Nigeria.
I looked at their support FAQ for a minute, I didn't find any clear statements about who participates in any given transaction.
Try to do that without bitcoin and you cannot do it instantly unless you want to assume the risk that the senders money doesnt arrive, or you make the person being paid wait 7 days for the international wire transfer to be completed.
By contrast, big banks offer large scale international currency transactions for fractions of a percentage assuming you maintain a minimum balance. Coinbase could profit by making the exchange rate advantage cover the bank's very small fee.
Alternatively I send a wire transfer to a US bank, now I have to pay a fee (around about £25 flat fee plus a % on the exchange rate conversion from USD to GBP, or I send it in GBP and let the receiver worry about converting it to USD). The wire transfer takes 5 days to acheive what was achieved using bitcoin in a matter of minutes.
So they are not the same service unless coinbase wants to take on the risk of paying out immediately in USD to the recevier and the wire transfer not arriving or of a change in the exchange rate that results in a loss for them as they receive less USD than the GBP they received. Also they have to eat the £25 wire transfer fee as the bitcoin transaction has no fees.
So ultimately the bitcoin based exchange is faster, cheaper and more secure than the legacy banking system wire transfer.
Yes coinbase could profit a small amount on exchange rate fee but that comes with accepting a significant amount of risk and making the process as long winded as the current wire transfer system is. The pointof this is that it all happens pretty immediately and at little cost.
This is how i imagine bitcoin will ultimately succeed, we wont use it in day to day transactions (with the exception of online purchasing) but it will underpin the transfer of fiat currencies from country to country or person to person.
Right, but that's you as a small timer. Try holding a minimum balance of $250k in your Citibank account (which would be feasible for coinbase), and see what rates they give you for international transfers at that point. Hint: cents, not dollars, per transaction.
However, it's a set of interactions that presents a problem. Suppose two Coinbase accounts set up for instant recieve.
(1) Someone double-spends a transaction from a non-coinbase account to both accounts
(2) Both accounts immediately "instant send" their balance to a non-coinbase address.
(3) Some time later, the next blockchain confirmation goes through.
What happens? Either the transactions are not instant or Coinbase is defrauded.
This simply removes that step and executes your buy order against the Coinbase Exchange presumably.
Instant exchange let's you send bitcoin from your USD wallet, meaning you don't have to hold bitcoin to use it, because your local currency is "instantly exchanged" into bitcoin when you send it.
It has nothing to do with on/off Blockchain transactions.
I tried it 3 times and every time it does that. Latest Firefox on Linux Mint.
I will not put my money there.
FireFox devEdition 40.0a2 (2015-06-17)
pikachu@POKEMONGYM ~/Music $ cat /etc/issue
Linux Mint 17 Qiana \n \l