Can I trust Coinbase?

Can I trust Coinbase?

CC BY 2.0 : Steve Jurvetson from Los Altos, USA – Cryptocurrency Cachet

We reached out to the Johns Hopkins Business School Professor Jim Liew, one of the top Crypto minds globally and Professor Liew told us that:

“There’s a real opportunity for a company that safe-guards cryptos and provides a better UX than Coinbase. If the fees are less and it’s legit, consumers should migrate over. That’s the major threat facing COIN at this time.”

The core product of Coinbase is to let people buy and sell crypto. That’s it. After many tries and pivots. Turns out, just merely bridging the legal gap and allowing Americans to exchange their dollars into crypto is good enough to scale big.

The fees are relatively high. But, the userbase is growing steadily on the rising value of the asset. And, eventually, the company goes for an IPO.

Then the founders take out cash bonuses and buy stuff. Like a good old brick & mortar mansion. For good old US dollars. No crypto in sight!

And now, as it turns out, if Coinbase goes bankrupt, its users’ holdings are not even protected. I.e., the investors would be paid out before those who paid their $$$-s for Bitcoins et. al.

And, during all this time, the company can plausibly say it has operated in a 100% transparent way.

Users can move their crypto into their own, off-platform, wallets, any time. Thus, if the company goes belly up and somebody’s crypto disappears, they only have themselves to blame.

Much of the “value” Coinbase brought was simply in enabling the “EFT in, BTC/ETH/DOGE/etc. out” protocol link.

Then, instead of competing with other such providers on fees and guarantees. Coinbase decided to go ahead and build a Web 2.5 app around this protocol link.

Conveniently, people loved keeping their “assets” on Coinbase “accounts”. If they keep paying, why not keep growing, right?

Lastly, the app soared on the rising crypto prices. As well as on the shortage of other options for your average Joe to convert funds in their bank into crypto.

In conclusion, investors learning from the press that they may not have a say in where their money would go in case of the company closing down frightened clients across the globe. 

Now, we will see what happens.

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Jim Liew

Can I trust Coinbase?