I'm almost sure Coinbase practices fractional reserve and other forms of market manipulation, let's see how that bank run works for people.

Some examples:

- NuCypher goes up quickly on binance (a few months ago) because a whale is buying there, lots of people try to withdraw on CB to sell on binance, withdrawals start off working but then get locked for 5 hours straight, reddit and other social media had people complaining, no explanation given by CB, just technical issues as always.

- Try to sell a few tokens a few weeks ago, it doesn't allow me to put big orders, instead they make me do it in multiple times, in which time the bots (some of which are theirs), front run me and instead of sell at a 5% lower price in one hit I lose 10% just waiting for the UI to allow me to make small order after small order.

- Always blocking withdrawals in the most suspicious moments imaginable, just happened to me 3 days ago trying to withdraw USDC, had to wait an hour until that "unexpected error occurred" disappeared.

- Human greed, why would they be different from the banks? I see most people don't withdraw their coins, I lend their coins for interest and profit from it, shareholders are happy, I sell my stocks and make money, if a bank run occurs I'll declare bankruptcy or ask the government for help because like a bank if my customers lose their money they might become unhappy and cause the government problems (Coinbase will eventually become a bank if crypto hype keeps growing).

> I'm almost sure Coinbase practices fractional reserve

I'm not a crypto guy, so excuse the naive question: Can coinbase loan out money without actually transferring some sort of single-ownership keys for the amount loaned? If so, then indeed, they should be able to engage in fractional reserve "banking".

> and other forms of market manipulation

Modern money markets are based on fractional reserve banking. That's how most money gets created these days. I'm no fan of the prevailing economic system but it isn't some manipulation which moves you away from some pristine state.

The issue isn’t that modern banks all do this. It’s that crypto was supposed to be different, a response to the financial crisis where people were affected that didn’t even gamble on housing, a way to truly own and prove your money is your money.

> Modern money markets are based on fractional reserve banking

Bitcoin was developed to solve this.

> That's how most money gets created these days

Bitcoin is a deflationary asset. It’s not supposed to be “made” because a bank/Coinbase says so, but only via mathematical proof of work.

> I'm no fan of the prevailing economic system but…

Satoshi wasn’t either. That’s why he made Bitcoin. If the argument for Bitcoin becomes “it sucks but we need banks to lie to us for the economy” then there is no core argument for Bitcoin.

> It’s that crypto was supposed to be different

It is different. Nothing is stopping people from moving their crypto from the exchanges, and at least with crypto people have the opportunity to do that. What hasn't changed is human behavior and our affinity for the path of least resistance.

No technology is going to change that.

Bitcoin has no opinion on fractional reserve banking. If entrust your assets to someone else, your contract with them can specify what they do with those assets until you ask for them. If you don’t like that, find someone else to hold your assets who doesn’t ask for those terms, or hold your assets yourself. But then you become responsible for preventing theft and destruction.

> crypto was supposed to be ... a response to the financial crisis where people were affected that didn’t even gamble on housing, a way to truly own and prove your money is your money.

I really don't see how that is the case. In fact, there is no such thing as "truly owning" things. Ownership is a social construct.

> Bitcoin ... is not supposed to be “made” because a bank/Coinbase says so, but only via mathematical proof of work.

Well, so is, say, gold, but once it seems some significant use as money, financial institutions start dealing in debts-of-gold, or debts-of-X, which _are_ supposed to be made because a bank/Coinbase says so.

> Satoshi wasn’t either. That’s why he made Bitcoin.

I dunno, it seems like he started Bitcoin to get filthy rich off of a pyramid scheme, which he has. Wikipedia estimates "his" worth at 73 Billion USD in BitCoin. Although.... it's BitCoin, so maybe it's not really worth that much.

Money is not created through fractional reserve banking. Money is loaned into existence by commercial banks. Similarly Coinbase can sell you coins which don't exist. Like a bank it doesn't have to make good on this IOU until you withdraw your funds.

It is fractional reserve banking which allows banks to loan money into existence, as long as their reserve is at least a certain fraction of their total loans. The alternative is full reserve banking, where banks aren't allowed to do that - or no-reserve banking I suppose...

Which with the volatility of Bitcoin puts them in a situation where they can underprice an asset if they loan it out. Bitcoin loaning is rather rare because of this.

This feels similar to buying a stock’s street name (a proxy for the actual share) vs directly registering a stock in your name. A key selling point of crypto has always been eliminating central control. If someone else is managing your keys, it’s a given that they’ll borrow against those entries in one way or another (putting the money to work so to speak). Risk assessment depends on which someone thinks is more likely, a lost key, or a default. We are living in some pretty wild times given that the later may trump the former.

In the case of cede & co going bankrupt (a nearly impossible thought) your street side shares would not be used to settle their debts. You don’t need direct registration for that protection. The same is true for your brokerage.

This should either be so obvious it doesn't have to be said at all, or so important to those unaware that its the top comment. Somehow HN failed both of those but given their predilections on 'crypto' I'm not surprised.

So if I wanted to move stuff to my own wallet, what’s the best way to do that these days? Anything that can support more than just Bitcoin?

I assume I’d just stick any private keys in a password manager vault that I already trust, and/or Yubikey. I’m not sure I trust the dedicated hardware wallets as that seems more prone to failure than a pure software approach.

Most hardware wallets use the same standard to generate your keys (BIP39, BIP32 and BIP44 I think) from a long recovery phrase of words. So you could for example restore your wallet in a wallet software if your hw wallets dies. As long as you have all the words and the correct order you should be able to restore your funds somewhere else.

But at that point I effectively don’t need the hardware as I’ve stored these words elsewhere.

The problem with your current approach, and software wallets in general (as well as these recoverable wallets) is the private key is retrievable. Which sorta negates the protections given by having a single owner of the cert (the hardware wallet).

I’m not terribly worried about that scenario. I haven’t had my 1password breached — lots of bad things could happen if I did. I don’t own enough crypto to make this my biggest concern. I’d rather have a robust system that will hold it without failure, or in Coinbase’s case, bankruptcy.

Then you have some false sense of security and clearly aren’t holding any real value in this wallet.

Real value is all relative.

It's all about ones personal trade offs. I have more faith in cryptography in a software world with backups than I do in a random hardware device with a maker that's unlikely to last the test of time.

Oh I’m right there with you on hardware wallets, I’m just pointing out that your software based wallets are very vulnerable. The only safe key is one that nobody can retrieve.

Atomic wallet

Mt. Gox take N! I wish I could withdraw my ETH but it’s staking and Coinbase doesn’t have an option to stop staking or move it in any way

Isn’t that because you converted your ETH to ETH2 for staking? They are pretty clear ETH2 cannot be transferred or traded, and it’s because the ETH2 network isn’t ready yet, not some sinister plan of theirs.

Yes that’s the case