Bitcoin Forum

Major cryptocurrency exchange and wallet Coinbase recently made what it claims is the largest transfer of crypto on record, a company blog post reports Dec. 19.

According to the post, 5 percent of all Bitcoin (BTC), 8 percent of all Ethereum (ETH), and 25 percent of all Litecoin (LTC), along with “many other assets” were moved to new cold storage infrastructure in what the firm “believe(s) is the largest crypto migration on record.”

Coinbase reports that last week, the firm “completed an on-blockchain migration of approximately $5 Billion (as valued the week ending Dec. 7, 2018) of cryptocurrency from Generation Three to Generation Four of our cold storage infrastructure.”

CT | https://cointelegraph.com/news/coinbase-moves-5-billion-reports-largest-crypto-transfer-on-record

Coinbase moving insane amounts of coins is completely different from what people assumed it was, a mega whale institution buying the dip. :D

In all seriousness, these insanely large amounts are a reflection of how much trust a centralized entity enjoys here, which I see as a bad thing, regardless of how well managed and compliant Coinbase is.

It could be that the popularity of Coinbase makes people stick to that platform for the sole purpose of instantly moving funds back and forth for free. None of the other exchanges hold that many crypto assets.

What's going to happen if Coinbase accumulates 51% of all Bitcoins?

i think it's a reflection of their market. they're the most popular service for onboarding noobs (by far). naturally, lots of their customers use them as a wallet just like they did with mt gox years ago. i think most of their non-corporate and non-daytrading customer base uses the coinbase interface (not gdax/coinbase pro) so only transfers to other customers by email address are free. i remember coinbase bitcoin withdrawal fees became really high last year---probably encouraged people to use them as a wallet.

The real news is the method they're going to use to store the private keys. Shamir's Secret Sharing Scheme is a reasonably simple, low-tech method. But revolutionary and extremely safe;

interesting, there were many who thought exactly that, Coinbase either buying the dip or panic selling, haha
I read an article of how seriously they take security of the coins, moving these amounts is not an easy one hour task
this one describes their new system,moved from generation 3 to generation 4 cold storage:
https://blog.coinbase.com/a-behind-the-scenes-look-at-the-biggest-and-quietest-crypto-transfer-on-record-682ff4a6d9e4

Nothing. Bitcoin isn't a POS coin and right now there is no way to force through your will by abusing the power that holding such large number of coins do.

It could potentially be abused in case the developers suddenly want people to vote with their coins to approve or reject certain proposals, but that with a high probability will never happen. On top of that, Coinbase has its 'majestic' reputation at stake; one wrong move with people's funds and they may regret it for ever.

It will be interesting to see what happens when Ethereum switches to POS though, because Coinbase's Eth holdings are just as dizzying as their Bitcoin holdings. Perhaps that people will be incentivized to take care of starage themselves.

do you think they would stake with customer deposits? that seems unlikely from a PR standpoint, right? the optics are obvious horrible with sites like yobit because they literally block withdrawals for weeks while staking. it seems pretty sleazy even if customer deposits are always available, but is it unacceptable behavior? i assume cold storage staking will be possible in ethereum.

the POS transition will be a big incentive for people to withdraw ETH to their own wallets. it'll probably pump the price a good deal.

Exchanges does not own the coins that are deposited on their sites. Most people say, "Not your private key, not your coins" but regulated exchanges like Coinbase will never do a exit scam with people's coins, because they are making millions off the trades of these coins over time and they have to adhere to stringent regulations to operate the business.

They will lose a lot, if they run with the coins.  ::)

I'm sure that Coinbase, as money hungry that it is, will find a way to allow users to gain the benefits of it, all to not have them withdraw their funds. If Coinbase even gets to keep like 2'ish % of the rewards and whatnot, it's an extra revenue stream they otherwise wouldn't have. It's all in their favor to have people not withdraw their funds.

I'm however not sure how they will deal with voting rights, but that's probably not what most of the people storing their coins there are worried about as long as they are rewarded accordingly.

I suppose just the same if it accumulates 53% or 49%. Nothing serious. They just hold users' assests, and the're responsible for holding them. Stronger liabilities maybe...

Nothing.

Also:
1. Who is entrusting all this to one centralized entity?  People don't learn.
2. Why would Coinbase trust a single new system? It is a recipe for disaster if it fails for coinbase and a recipe for disruption for bitcoin as a whole if it were to be hacked.

I never thought about it, but that would a win-win for them. They can keep a percentage of the reward as a fee for staking but more importantly, they retain that investor's liquidity. When someone stakes in their own wallet and decides to send the coins to an exchange, they have many choices of where to send. If they were staking on Coinbase, they'll obviously keep their funds there for trading.

They've already got a lock on the fiat gateway market. With their new approach to altcoins, it seems like they saw how much of their customer base withdrew to Poloniex, Bittrex and Binance in the 2017 bubble and they want a piece of that market. They want to be a one-stop shop for casual investors. Staking for a fee fits the scheme well.