Funny, after reading the article I decided to go to Coinbase to see the Bitcoin prices, and this is what I find:
We have reason to believe you reside in a country in which Coinbase is prohibited by law from doing business (Iran, Islamic Republic Of) per the sanctions imposed by the U.S. Treasury Department's Office of Foreign Assets Control. As a result, we’ve unfortunately had to close your Coinbase account.
I'm not Iranian and I'll comply with their KYC requests, but every day Coinbase feels more and more like PayPal. I thought this is what we were trying to avoid in the first place.
PS: Happily, I had no funds on the account. I hope this helps as a reminder to others: keep your money in your own private wallets.
> Coinbase is prohibited by law from doing business
The premise that bitcoin frees you from normal legal requirements is the problem here. Or the US attempts at global jurisdiction for KYC, take your pick.
Paypal is not gratuitously bad. Every annoying decision they make is because they're backed into a cost-minimising corner by fraud and compliance problems.
The bitcoin community believe that purchases should be fully caveat emptor, and as a result there's a high level of fraud and theft which is going to put off non-ideological adopters.
> The bitcoin community believe that purchases should be fully caveat emptor, and as a result there's a high level of fraud and theft which is going to put off non-ideological adopters.
> The premise that bitcoin frees you from normal legal requirements is the problem here.
This is misleading, because majority of coinbase's job, the part that is their most difficult task, is to deal with correctly handling fiat currencies (dollar, euro.)
Try using something like shapeshift.io (which doesn't handle fiat currencies) and you'll find a much more pleasant end user experience there than with either paypal or coinbase.
> The premise that bitcoin frees you from normal legal requirements is the problem here.
I'm not expecting Coinbase to do illegal things and I'm happy to provides documents when needed (as I mentioned in the original post). They also have my ID, passport and bank statements on file, so they could've checked that. Instead, I was perma-banned when I contacted their support to see how I could unlock the account.
Please be careful when dealing with this company, there are better alternatives whether you live in the US or not.
> The bitcoin community believe that purchases should be fully caveat emptor, and as a result there's a high level of fraud and theft which is going to put off non-ideological adopters.
The site you've linked seems to be talking about thefts, similar to losing your credit card and someone running rampant with it, not purchase fraud.
In the case of credit cards, someone's still paying for it, it's just not you. There's no reason why this same system can't be applied to Bitcoin, without having to change anything in the protocols. It's just an extra intermediary in the middle who suffers the loss instead of you.
Got any sources that relate to purchases per your original?
What fraud or compliance problem did Paypal face when they banned the Wikileaks account? They did it because they "violated terms of use" in that they "encourage, promote, facilitate or instruct others to engage in illegal activity”. But as far as I can tell, Wikileaks itself didn't do anything illegal, and didn't operate any differently than any other journalistic enterprise.
> I thought this is what we were trying to avoid in the first place.
Well, yes. Doing anything with USD (or most other currencies) is a complete nightmare, especially including converting them to other currencies.
The goal is that eventually you might want to accept some or all of your pay as bitcoin, which would've been paid to your employer as bitcoin, and thus the loop is closed and nobody has to implement any KYC procedures. Converting from <currency> to bitcoin to pay somebody for them to turn it back into <currency> suffers from all the legal issues that affect <currency> - which should be obvious.
Also obvious is that this will pretty much never happen on any large scale, rendering bitcoin near-worthless for most people.
I should clarify I was not looking for fiat money at any point, I just wanted to check the Coinbase price at that moment. I don't think I have used the account since I last referred a friend a couple of months ago.
Now, even if I wanted to use their wallet or vault, I can't. That's not a bad thing in my mind though.
The issue is that you need a large amount of people to be using bitcoin - enough that some significant amount of them will pay your company in bitcoin - before you can start offering to pay your employees in the bitcoin you receive... and significant amounts of people are unlikely to use bitcoin until they're being paid in it.
Update: I tried to contact support to see what was the best way to send them the documents they needed for unblocking my account. This was their response:
Thank you for your interest in Coinbase. Our primary goal is to make our platform safe and secure for our customers. Coinbase is a regulated Money Services Business under FinCEN (FinCEN.gov), and as part of our responsibility, we are legally obligated to implement regulatory compliance mechanisms.
We regret to inform you that we are no longer able to support your Coinbase account as well as any other accounts you may have created. Please note, we have not blocked access to the balance currently in your Coinbase account; while we can no longer process brokerage orders via our banking relationship, you may still send your balance offsite to an external address.
Please be careful when dealing with this company, and remember that even if you're in the US there are many alternatives (LocalBitcoins, Circle and Gemini come to mind).
I don't think it was random, I happen to have a Colombian passport and I use VPN's on a regular basis. These two don't go well together as you can imagine.
I live between various countries (none of them embargoed by the US, which AFAIK are the only ones excluded from Coinbase) but I have a US company and a passport with those shiny stamps that could clear any doubts about me sneaking through "El Hueco". I was not given a chance to show them however, so I'm just glad I don't use them regularly.
I'm sorry I don't have a great mistery story behind this :P
Understandable, but wasn't this always going to be inevitable given people treating BTC as an investment for USD instead of as a crypto currency? Sooner or later, regardless of the Government/Country combination, you're going to get the attention of various agencies when an online currency starts to be used to store irl currency. It's why it's always been somewhat ironic to me that despite the original intent of cryptocurrency, people still listed their holdings in USD, as if BTC was their portfolio.
I understand to a degree the argument of what you do with your money should be your business, and if you want to store it in BTC and believe you can convert it to necessary currency later on, that's fine; I'm not being sardonic either, that's your choice with your money. But I don't think that BTC was really designed or intended for this purpose as it brings the exact sort of scrutiny that one would hope to avoid with a cryptocurrency, and with scrutiny, regulation. Maybe if the total value of exchanges on BTC without the injection/interaction of irl currencies grew large enough (i.e., there were enough transactions for legal goods/services), the same scrutiny "might" be applied, but I'm not really convinced that governments would care much one way or another.
Bitcoin's own reputation has also helped bring this scrutiny down - even if the level of anonymity is questionable, most government officials and agencies hear "anonymous" and "exchanges" and immediately want to have controls set in place. Even if they figure out that there is a very traceable paper trail, there's still an interest in ensuring that it's not being used to launder. Their curiosity will not be satisfied with people's assurances that "it's an online currency, that's all."
Basically, the gold rush with BTC sort of led it exactly to the state it's in, and brought the eye of government to it. As long as people treat it like gold or silver or any other commodity, the government is going to want a piece of it, or at least keep a solid eye on it.
> Understandable, but wasn't this always going to be inevitable given people treating BTC as an investment for USD instead of as a crypto currency?
Fundamentally inevitable, no — there's no inherent reason for countries to care about the movement of currency — but practically inevitable, yes. As long as we have such financial 'crimes' as money laundering (which is only against the law because it's easier to prove than the real crimes it's designed to hide), we're going to have KYC requirements and all the rest of the incumbent-protection measures which make it so hard to have a financial startup.
> there's no inherent reason for countries to care about the movement of currency
Wouldn't appropriate taxation give them reason? Say, for example, buying cigarettes in a US state with a high sin tax. Or suppose a workplace that pays employees in BTC; how do you apply holdings to that?
I would imagine that if it gain significant traction, it would warrant interest.
With an inflatable currency, a government could always just inflate its currency in order to fairly tax everyone who holds any of it.
It's also possible to build an anonymous, auditable cryptocurrency such that a government can verify that taxes on transactions have been paid, but not not know the identities of the transactors unless they don't pay. Which is pretty neat.
Fundamentally, governments don't need to tax currency movement. If they implemented a flat income tax only, or even better a flat consumption tax, it could survive off a single tax and not need to worry about income or movement.
I guess I must admit that my original statement came with an assumption of "BTC deployed in the current real world setting." I do agree that given the scenario you and the other commenter provided would not require government scrutiny as they would have no interest.
Though, also both scenarios exist as "what-ifs" of the real world and an ideal world setting for BTC, not an idea use scenario for BTC>
Of course the difference being that if you need to use PayPal for a transaction and if PayPal rejects you you have no recourse, however if you need bitcoins and if Coinbase rejects you you have many Bitcoin exchanges to fall back to. That's what a distributed system and economy is all about :)
Well, it's either Paypal or it's Mt. Gox; you pays your money and you takes your chances. The Bitcoin market, libertarian-utopian rhetoric aside, seems increasingly to prefer the former to the latter.
Yeah, I changed states not too long ago and had a bunch of money tied up in Coinbase's Exchange. After numerous emails I had to accept that my money was locked up for the foreseeable future.
Any time I purchase or sell Bitcoin on Coinbase I immediately move the funds out. I don't know whether it's Coinbase themselves or just onerous government regulations, but I don't trust them not to randomly lock my account one day with no recourse.
You could feel the same way about your bank or Paypal or your home if you have a mortgage, but I still don't feel it's unreasonable to both use these services and expect them to serve the purpose they were built for legally and ethically (the legal requirement ostensibly being what he ran into here).
I think most people would agree that keeping large amounts of cash is both fruitless (no interest) and irresponsible (higher probability of theft) and keeping your bitcoin in a personal wallet doesn't seem terribly different, except that theft can happen from anywhere not just your physical location. This isn't to say I don't understand the feeling, given the relatively unregulated, shady nature of the bitcoin economy. Additionally, money has value because it's useful, and Coinbase makes bitcoin much more useful to me (easier to buy and spend, which is the point of money).
So you're not wrong, but I also believe that's a criticism that ought to be tempered with reality.
Friendly reminder that people still aren't using decentralized exchanges in 2016 even though Coinffeine (Crypto / USD), Bitsquare (Crypto / Bank), and Bithalo (Crypto / Crypto) exist which are all quite mature now.
Technically we've had the smart contracts to solve these trust problems since 2013 but still nobody is using them. Mostly the problem is these projects haven't received the funding (or attention) they need so there's no money to build momentum and overcome the initial brutal networking effect. It's also surprisingly hard to bootstrap an exchange, much less a next generation exchange using smart contracts (first hand experience) because of the serious engineering required, especially when you can probably make far more money with a traditional exchange by cutting corners.
I think there will eventually be a legitimate VC backed company who fixes this horrible security mess but for now we're forced to watch history repeat itself. Sorry for the rambling post hacker news, but as a guy who tried to fix these problems myself after Mtgox was hacked and failed for non-technical reasons, it's depressing to keep seeing the same hacks and thefts in the news. Startups in the FinTech space really need to stop being such hypocrites and learn what Bitcoin has to teach us.
Protip: Bitcoin is a lot deeper than a currency or consensus system. It can also be used as a general purpose philosophy for designing high security systems in general.
But "these people" are also "most people". "Most people" also don't use PGP, for many reasons, but IMO chiefly that it's hard to manage keys without outside (centralized) help. If Google managed PGP keys for you, there'd be little problem with muggles sending and receiving encrypted (albeit insecure) email.
Since Bitcoin needs a critical mass to be successful, centralized exchanges and wallets are needed to build it up so it's generally useful.
These services are far from mature. For example, Coinffeine's 'getting started' page is empty, other than a link to join the development mailing list !
Only two marked "insider"? There have been more than that. There were several incidents where the insiders initially claimed they were robbed, but that didn't hold up upon closer examination.
In the altcoin world, "take the money and run" is almost standard operating procedure. Remember Paycoin?
Some of these incidents didn't completely destroy the company or cryptocurrency. For instance ShapeShift.io is on the list but they recovered from their theft incident and are now going strong.
Yesterday I noticed that blockchain.info wallet now asks for an E-Mail address and features a JS based UI which doesn't render properly in Tor Browser. At least not from scratch.
Anyway - just would like to state that I am actually using BTC as a currency - to buy stuff :)
Very likely, along with many others. The official SR2.0 explanation doesn't make sense, for example. Many of the early online wallets were set up completely anonymously. Maybe they were not set up to be scams but the temptation must be considerable when no one knows who you are.
We have reason to believe you reside in a country in which Coinbase is prohibited by law from doing business (Iran, Islamic Republic Of) per the sanctions imposed by the U.S. Treasury Department's Office of Foreign Assets Control. As a result, we’ve unfortunately had to close your Coinbase account.
I'm not Iranian and I'll comply with their KYC requests, but every day Coinbase feels more and more like PayPal. I thought this is what we were trying to avoid in the first place.
PS: Happily, I had no funds on the account. I hope this helps as a reminder to others: keep your money in your own private wallets.