Topic: Is Coinbase insured? - page 2. (Read 797 times)

Giving your wealth to a stranger, with a history full of strangers going bankrupt and getting hacked, is certainly not the safest.

Because they do it the wrong way. They are reckless and store them on Internet connected devices, with closed-source operating system, potentially affected with malware, and do not even verify the binaries. People who secure their wallet, the right way, and have lost them due to $5 wrench attacks are outnumbered by the number of victims who lost all their savings on Mt. Gox, FTX, BlockFi, Kucoin, Bitfinex and an endless list of others.

You're mistaken in the sense that you think a third party safeguards your wealth with legislation, as with houses or bank accounts, but this is different. It's easier to steal, and there is no insurance.

There's no such thing as being hack-proof—just like humans aren’t immortal. So, what’s your point here, and what do you suggest regarding the topic you raised?

Financial institutions, like banks, have similar practices where all deposits are insured but only up to a certain limit. It’s the same with crypto exchanges, where a portion of deposits is insured. Even laws aren’t perfect. No government can insure all Bitcoin held on an exchange; their role is to assist in investigations if a hack occurs to recover lost funds.

The fact that 98% of the assets are in cold wallets makes hacking difficult, though not impossible. As traders, we must be aware that this is all an exchange can offer. If that doesn’t sit well with you, then perhaps it’s better not to use an exchange, as they generally follow similar standards, with only slight differences in how they implement them.

If you don’t trust the exchange, then simply don’t use them—store your Bitcoin in your own wallet, where your keys are your control.

It is hard to trust these exchanges today. We just have to learn from the past with so many exchanges that have bitten the dust. Coinbase might be big and it has got some stocks listed on the stock market but that doesn't mean that they can't end up the same as FTX, mt.gox, any other exchange whether they'd be hacked or by lacking of actual proof of reserve for their acclaimed funds from their customers. And speaking for the majority of them, you'll never know what can happen and if some of them pulls out to the market due to bankruptcy or any unforeseen event. We have to look at each cycle, there's always a surprising thing that comes from these exchanges.

okay they are fdic for cash which means all cash up to 250,000 is insured.

for all other who knows what coverage they have.

they had lloyds of London but for what amounts I do not know.

i keep cash on the site set for buy the dip

when and if a dip hits i pull the coins.

I won't see it as a no promise, there is actually a promise there. Although we don't wish for something like that to happen, but if in the eventuality of things that it does happen, Coinbase saying they will make their customers partially whole, simply mean that, instead of you losing everything, they will give you certain amount to cover your loss. Though it might not be 100% recovered but something closer to that. I think it's a good assurance for Coinbase customers. It is better than those other exchanges that got hacked and their customers got nothing in return as a measure to recover their loss. So if you look at the word technically you will see that there is indeed a promise there.

I know you mention you don't want to pick on Coinbase specifically, but I do.  I'm not sure there's a worse exchange out there.  Maybe some of the very tiny newer exchanges that aren't known very well.  Coinbase has both screwed me and countless friends of mine over.  I wonder if there exchange still freezes all the time like it use to during any period of high volatility.  I felt that they were doing plenty of front running during this time.

I don't know more about Coinbase insured or not but its very important part regulation of exchange how to avoid bad possibilities in the future such as FTX and MtGox exchange. For my local Indonesian exchange market seems all insured and not scare when bad happening one day later because have third party will responsibility and refund all our assets back.
Have many exchange easily become scam although success become top trusted exchange like FTX, I think OP ideas about insured for exchange very good ideas and want to see which one top exchange global market have insured to protect bad thing happening in the future and all user assets keep secure under third party side controlling.

There's absolutely no 100% exchange to say it's 100% trusted because there're really ways which could lead to the lost of funds.
Coinbase is being sincere in letting you know that custodial risks can erupt where investors could lost their funds if paraventurely the exchange encounters bankruptcy also, if we must understand the high tendencies of scammers intelligences and tools used to crack privacies, of course despites how strong the security measures of the Coinbase maybe, it can be compromised if a right and advanced malicious hacking tools attacks it.
So believe it that anything is possible to happen with your funds at any exchange at all and then you personally could be more cautious with your security keys.

Storing your wealth in the safest available way is certainly not irresponsible. I think it would be the opposite.

Meanwhile, storing your own physical keys involves risks, and people lose their Bitcoin this way all of the time.

You are basically making the case that you should fly your own airplane to travel even though, statistically, you are far safer in a commercial airline. If you know "exactly what you are doing" then you can, individually, perhaps beat the odds. But generally that's not the case.

Your airgapped wallet can be breached by any rubber hose cryptoanalysis, and the idea of storing one's life savings physically in their own home, which could get invaded by men with guns who would come and kill you for this money, is pretty terrifying to most people.

Understand, by the way, that all of the rules change between "small" money and "big" money. I talked about this in the Anon Paradox: the way you treat the cash (e.g a "cache") in your personal physical wallet is very different than how you treat your life savings--or at least it is for most people.

This is simply irresponsible. There’s no insurance if Coinbase goes bankrupt. Instead of taking responsibility for your own money --Bitcoin's very purpose-- you’re trusting a broker that has every incentive to gamble with your funds.

The right approach is to learn how to properly set up an airgapped wallet and educate yourself on security. Relying on trust in others is unforgivable, when history is filled with breaches of that trust.

As a side note, I started this thread to ask a question about Coinbase and those like them, and also to possibly get people thinking about the subject of deposit insurance in general. I never meant this to be a thread about bashing Coinbase, and as others have mentioned, I would be fine putting some of my money in Coinbase, in the same way I get on a commercial airliner even though it's theoretically possible it would crash (although the scenario we are talking about here would be akin to all of American Airline's planes crashing all at once ).

In particular, despite the risks, I would say that putting your Bitcoin in Coinbase is far safer than physically holding your own keys since the risks of that are far greater than storing your keys with Coinbase. Holding your own physical keys for significant amounts of your savings, in fact, is downright dangerous and I wouldn't suggest anybody do it, despite any systemic risks with Coinbase.

(As for other brokers besides Coinbase, that would of course need to be decided on a case-by-case basis).

It's not even 'hack proof' or 'theft proof' or anything like that.
It's the security is good enough that the time and effort that it would take to get to the BTC makes it an uninviting target.

Yes people will keep trying, but there reaches a point that it's better to go after a bunch of smaller less secure places then try to get at their funds.
And to make it even more interesting, is that they might not even all be stored the same way so now after getting the prize you find that it's not all of it.

Still Not Your Keys, Not Your Coins. Just because your BTC is safe and secure, that does not mean they will give it to you.

Full disclosure: I do use CB and don't worry about leaving funds there for a while at times. But that's my risk tolerance.

-Dave

Yes, as I've said here several times now, clearly Coinbase has very, very good security measures, like any bank or financial institution has. I would trust Coinbase much more than I would trust holding my own personal keys, for instance.

But even with the use of cold storage, there is a non-zero chance of them losing their Bitcoin keys, or for them to be lost or destroyed. Again, just like any bank: it's extremely rare that a bank will lose people's funds, because their license requires strong safety standards (27001 for instance).

I'm only saying that, in the case of an FDIC insured bank, then if the unthinkable happens, then customers will not lose money. That is not the case for coinbase.



Ah, okay, so 98% of their Bitcoin keys are "hack proof". "Absolutely impossible" to steal or destroy. If you make an absolutist statement like that in front of any serious infosec expert they will probably throw something at you . Security is not an absolute thing. I'm not saying you shouldn't trust Coinbase in the same way you get on a commercial airliner and feel safe, but never say "never".

(As a side note, in case anybody was wondering: yes, I am in this exact business with Haypenny. Like any digital currency we have to worry about infosec, and we take very strong measures to secure our data including keys physically held by two different roles that are kept physically apart. However, we also have mitigation plans in case of a catastrophic hack that would limit damage to a tiny fraction of customers).

They are regulated, so before they were given a license, regulators required them to have a system in place and continuesly monitoring them to ensure that any entrusted bitcoins would be safe. Aside from crime insurance, which partially covers any lost BTC, they also have highly sophisticated security measures.

how they secure the bitcoins,

So only the 2% that's kept in hot wallets is more prone to hacking. The rest is stored in cold storage, making it much safer from cyberattacks.

Gox was a HUGE disaster and it is no where close to the monster Markets and their Reputation or Business will have to confront in case of such a significant drain.  It would destroy Coinbase forever, there is no way so many people would be stupid enough to continue allowing them to handle their Money after one such catastrophe.

$134.5B :

https://river.com/learn/who-owns-the-most-bitcoin/


I agree it's pretty unlikely, but... they would be completely ruined if they lost $120B in customer assets. There's no way they would ever be able to restore even a fraction of customer balances if that happened.

Almost all of those funds are held in offline storage where the risk of thefts is significantly lower compared to hot wallets. I’m sure they’ve eliminated any single points of failure, so it would require multiple people colluding with each other to pull off a heist. Even with insider collusion, forensic analysis would identify the culprits. The odds are not in the favor of the thieves being able to pull it off without facing significant legal consequences.

In the extremely unlikely event that all $120 billion was drained from cold storage all at once, I can only speculate on what would occur. They might not be completely ruined but it would destroy their reputation and credibility. They still have a lot of altcoins and fiat, which could cover some of the losses but it would take a long time to fully restore customers’ balances.