> Do not leave funds idle on exchanges or fiat on-ramps.
This warning has been publicly repeated hundreds of times since 2010, yet people still insist on ignoring it.
The author didn't lose anything. He gave Coinbase his bitcoin in exchange for a promise to pay it back. That deal backfired.
> I knew the risks better than most, but never thought something like this could happen to me.
There's knowing the risk, and then there's knowing the risk. I'd suggest that the author didn't really know the risk, or he would never have considered leaving such a valuable asset in the care of an organization so ill-equipped to safeguard it.
And yet if he'd kept it on his own machine there's myriad other vectors from compromised wallets to typos that would separate even the veteran "investor" from their crypto. And we'd be blaming him again, just as you are now, because in the land of Crypto anything bad that happens is your fault, not the insanely problematic technology. This is the fundamental problem with crypto, it's irreversible and decentralized. These aren't features, they're bugs.
If this were real money or real assets, he'd be able to call his bank and be made whole by the close of business, I wager. Instead he's out a down-payment, SFYL.
I can't believe these shenanigans are allowed to play out as though we're all okay with this being the future of currency.
>because in the land of Crypto anything bad that happens is your fault, not the insanely problematic technology
Cars are designed to travel at lethal speeds. If you were reckless and killed someone or yourself, do you also declare it to be an "insanely problematic technology"? The problem here is that people are not aware of the risks associated with cryptocurrencies and so are not taking the required precautions. After all, you can be pretty reckless with your credit card numbers or bank login and still be fine, because the finance system has an undo button for everything.
>This is the fundamental problem with crypto, it's irreversible and decentralized. These aren't features, they're bugs.
I wouldn't call them "bugs", just design decisions or trade offs. Bug implies it's somehow fixable, but if it's not. What if you want to make an irreversible payment, or want to be able to send money to whomever you want without the government stepping in the way, all while being trustless? Is there a way to achieve that, and still being able to hit undo when you make a mistake?
> Cars are designed to travel at lethal speeds. If you were reckless and killed someone or yourself, do you also declare it to be an "insanely problematic technology"?
Possibly: see the numerous self-driving efforts underway.
> Cars are designed to travel at lethal speeds. If you were reckless and killed someone or yourself, do you also declare it to be an "insanely problematic technology"?
More aptly though, I would declare it problematic if I couldn't drive 10 feet without someone carjacking me in my ostensibly armored car, or if pressing the button on my radio caused the car to explode. I'd call that 'problematic' because if it were my fault, I'd be in jail, and if not, the automaker would be on the wrong end of a huge lawsuit.
You know who we have to thank for their current level of safety? The DOT, NHTSA and legal system.
> The problem here is that people are not aware of the risks associated with cryptocurrencies and so are not taking the required precautions.
He had his coins on probably the only legitimate exchange in all of crypto. He had 2fac. He had 2fac on his gmail. If this isn't sufficient to keep your money protected, we need to stop blaming the victim. He's probably one of the most competent technical individuals owning crypto. If he can't keep it safe how on earth would your grandmother?
> After all, you can be pretty reckless with your credit card numbers or bank login and still be fine, because the finance system has an undo button for everything.
Isn't that awesome? We've recognized people make mistakes and created for them a path to remedy said mistakes. Pretending they don't happen and that it's the victims fault if they do isn't a replacement.
> What if you want to make an irreversible payment.
Wire transfer. You can opt in to irreversibility, it's not the default, and that's completely reasonable IMO.
> ...or want to be able to send money to whomever you want without the government stepping in the way.
AKA breaking the law. Yes, you shouldn't be able to send money to people on the OFAC list, to terrorists, or to sanctioned countries. That's fine with me, and all your fellow citizens. That's why we have those laws. Let's not mince words, "sending money to people the government doesn't want" is financing international terrorism, narcotics trafficking, human trafficking and so on. No, you shouldn't be able to do that.
> ...all while being trustless?
Again, why do you need this without the illegal use cases? Either way PoW cryptos aren't trustless, Beijing has over 80% of the hash power one strongly worded memo away. Decentralized and trustless are not a feature of Bitcoin or most other cryptocurrencies. They are centralized in the PRC. You would give up sovereign control of your money system to the PRC?
> Is there a way to achieve that, and still being able to hit undo when you make a mistake?
No, you shouldn't be able to break the law. An open challenge to all crypto advocates: Provide me one legal use case better suited to cryptocurrency than the US dollar.
> Surprisingly not everyone overseas is linked with international terrorism as you imply.
Unless you're trying to send money to North Korea that wasn't my implication at all, I have family overseas to whom I manage to send money without crypto or getting overcharged.
There are tons of international remittance services already including Andreesen-backed TransferWise which charges ~0.85% or less to move money internationally. Much less than the sum total of the cost of buying coins on an exchange in one country, paying an on-network transaction fee, risk of huge swings in the asset value and fraud along the way and one more exchange transaction fee in the destination country.
Generally even WU is quite competitive. In markets where they appear pricey the cost is usually to de-risk things like political issues which are all borne by crypto too but opaquely.
For instance, the USD-INR corridor is almost fee-free on all services.
If you've got a ton of money to move, you may be best off opening an Interactive Brokers account and performing the exchange there. They take a commission minimum of $2, or 0.002% ($2000 per million) for the trade. [1] It's a $5.1T per day (legitimate) market after all.
This is not a particularly good example, it's a solved problem.
Uh sorry, Interactive Brokers is so cheap my math was off. They charge 0.2 basis points which is 0.2/100 of 1% (0.002%, minimum $2). So a $100,000 exchange would cost $2.00 and a $1,000,000 would cost $20.00
That line of thinking is part of the problem. It's terrible that the author lost his money, but misconceptions only ensure this will happen over and over.
Coinbase != bank.
The banking system has a safety net for recovery of stolen funds. Coinbase has pretty much jack squat in that sense.
True, Coinbase is insured against loss from its hot wallet. But if Coinbase were to suffer a loss from its cold wallet, you'd be left with zilch.
Likewise, Coinbase's terms of service put all of the responsibility for security on you, the user.
Your bank is a different story. It's FDIC insured. It has in place numerous security measure that enable it to claw back any digital theft and make you whole.
Coinbase is not regulated like a bank. Just to pick a relevant point, if someone makes an unauthorized withdrawal from your bank account, that is fraud and your liability is limited. The bank has responsibility for making sure they identify you. https://budgeting.thenest.com/banks-liability-there-identity...
This is the first analogy that sprang to my mind as well but as they noted Coinbase gets all the upside and you get little in return. When you put your money in a bank typically you earn interest in exchange for the bank having your money.
Someone please correct me if I'm wrong, but at least in the US banks take on all risk of fraud. If someone starts writing bad checks in your name, that's ultimately the bank's problem rather than yours.
This warning has been publicly repeated hundreds of times since 2010, yet people still insist on ignoring it.
The author didn't lose anything. He gave Coinbase his bitcoin in exchange for a promise to pay it back. That deal backfired.
> I knew the risks better than most, but never thought something like this could happen to me.
There's knowing the risk, and then there's knowing the risk. I'd suggest that the author didn't really know the risk, or he would never have considered leaving such a valuable asset in the care of an organization so ill-equipped to safeguard it.