Re:Coinbase down for maintenance
by heartbreak on Thursday December 07, 2017 @04:13PM
(#15874300)
Coinbase isn’t a bank it’s an exchange. Why would they carry a reserve of anything?
It stores your shares for you, but it’s not loaning them out. The only way you get money out of Coinbase is if someone buys your shares.
They presumably have on hand the full amount of cash and Bitcoins that their participants have given them and don't loan any of them out. That means they have a full reserve.
Re:Coinbase down for maintenance
by will_hughes on Thursday December 07, 2017 @07:29PM
(#15875673)
They only need(* depending on TOS guarantee) to keep the full amount of Bitcoins matching your Coinbase wallet. They can take all the cash they've been given, pile it up and set it on fire if they like.
1 BTC at Coinbase is only worth whatever Fiat currency Coinbase is willing to buy it from you for. If that's $1 for all your Bitcoins, tough luck.
They're under no obligation to guarantee a sale price for BTC.
> They can take all the cash they've been given, pile it up and set it on fire if they like.
Then how do they pay you when you come to withdraw your cash?
Hopefully and unlike the exchanges using Tether.
You aren't buying the bitcoin from Coinbase...
Fractional reserve banking is a prisoner's dilemma, we all marginally benefit from the status quo of credit/debit/interest, but in a crisis, the first people to pull out win, and everyone else loses.