Coinbase discourages anonymity!

[BasementMiner!]

# Coinbase discourages anonymity! (Your daily FUD)

Although it shouldn't be a surprise, given the company is run by wankers, Coinbase is a leading player in the Bitcoin world that discourages anonymity, unlike similar online wallet services.

What Coinbase does, unlike others, is put a container in each account's coins. This means, all coins belonging to an account stays within that account. Withdrawals from one account to a Bitcoin address/"external account" (as they call it) only uses coins in the user's balance. There is no global pool of coins that a single user deposits into or withdrawals from. Transactions in/out, at the low-level, use coin inputs only found from an individual's account.

This means there is no mixing. No mixing means no anonymity. Coinbase offers no additional protection for Coin tracking even though its a hosted wallet. You give them your private keys to your coins and get no advantages. You might as well go with Blockchain.info's My Wallet (it works much better and you keep control of your coins!).

/Do not use Coinbase./ Mt. Gox is half better than this crap.

[sunnankar]

With money and currency there are three main costs: (1) time/convenience, (2) money and (3) privacy.

Coinbase is slower but very convenient, cheaper and less private than some alternatives.

MtGox is about the same speed, about the same fees but no significant privacy enhancements.

BitInstant is faster but less convenient much more expensive but more private.

LocalBitcoins is slower and much less convenient with higher fees but significantly more privacy.

So, it really just depends what the buyer or seller wants in terms of costs they are willing to pay in time/convenience, money and privacy.

It would sure be nice to find an exchange service that is instantaneous from anywhere with no fees and absolute privacy. If you find the unicorn then please let me know.

In the meantime, trade-offs like everything else in life.

[farlack]

coinbase > all

[kangasbros]

The average user doesn't care about anonymity that much. I think it is fine to have variety in the marketplace, and it is good to have coinbase in bitcoin.

[matonis]

With money and currency there are three main costs: (1) time/convenience, (2) money and (3) privacy.

Coinbase is slower but very convenient, cheaper and less private than some alternatives.

That's true and there are trade-offs. However, since Coinbase is mostly frequented by newbies, it would be wise to understand their identity process and their wallet logs and their bitcoin address logs, especially if a brand new user is going directly from Coinbase to purchase a VPN for torrent downloading/uploading or to play online poker from the US jurisdiction. Don't you think? Thanks to the OP.

http://www.paymentssource.com/news/swapping-bitcoin-privacy-for-banking-convenience-3013278-1.html

[Stephen Gornick]

There is no global pool of coins that a single user deposits into or withdrawals from.

This "global pool" is what is sometimes referred to a hosted (shared) EWallet.  Even with a hosted EWallet the exchange is likely recording the blockchain transaction ID for any withdrawals, making there be a complete audit trail of the exchange from USD funds to the withdrawal of BTC funds.

So if transaction privacy is preferred then some method of mixing should be considered regardless of the exchange you use.  This can be as simple as sending the coins to an Instawallet and manually splitting the amount up by manually withdrawing a fraction of that amount over a period of time.  Or paying the fee to have Blockchain.info/wallet's mixer take care of it:
 - https://blockchain.info/wallet/send-anonymously

[matonis]

So if transaction privacy is preferred then some method of mixing should be considered regardless of the exchange you use.  This can be as simple as sending the coins to an Instawallet and manually splitting the amount up by manually withdrawing a fraction of that amount over a period of time.  Or paying the fee to have Blockchain.info/wallet's mixer take care of it:
 - https://blockchain.info/wallet/send-anonymously

Excellent points. Privacy is not by default. Many first time bitcoin users go to the honeypot Coinbase (and other eWallet sites) mistakenly thinking that it offers the same features as a standalone bitcoin client.

"oh look, ma!  It's super convenient. They even let me do a direct link to my US bank account, just like PayPal."

[paraipan]

...

"oh look, ma!  It's super convenient. They even let me do a direct link to my US bank account, just like PayPal."

Lol, true fact, let's hope they don't ask Coinbase support if they are allowed to withdraw to a SR account...

[debianlinux]

MtGox wants a stool sample before they will sell you coins.

Blockchain.info doesn't sell coins.

Trying to compare Coinbase to these 2 as if they are somehow superior ways to buy coins because Coinbase lacks coin mixing is disingenuous.

That said, it is good information so that one who buys coins using Coinbase's service can perform their own mixing elsewhere.

[Peter Todd]

That's true and there are trade-offs. However, since Coinbase is mostly frequently by newbies

I'll suspect Coinbase works the way it does so that newbies don't lose their Satoshidice bets...

[darkmethod]

The average user doesn't care about anonymity that much. I think it is fine to have variety in the marketplace, and it is good to have coinbase in bitcoin.

+1

[Wingman4l7]

Although it shouldn't be a surprise, given the company is run by wankers, [...]

Oh look, an unsubstantiated ad hominem attack.  How cute.  This totally makes me want to listen to the rest of what you have to say.

What Coinbase does, unlike others, is put a container in each account's coins. This means, all coins belonging to an account stays within that account. Withdrawals from one account to a Bitcoin address/"external account" (as they call it) only uses coins in the user's balance. There is no global pool of coins that a single user deposits into or withdrawals from. Transactions in/out, at the low-level, use coin inputs only found from an individual's account.  This means there is no mixing. No mixing means no anonymity. Coinbase offers no additional protection for Coin tracking even though its a hosted wallet.

If you're looking for anonymity, going to Coinbase would be ridiculous.  Most users are going be be using that as their BTC purchase point, which means they're linking their bank accounts, at which point anonymity goes out the window.  At that point, independent accounts is nice because it means it's that much harder for one guy to run off with everyone's BTC -- and it probably makes accounting easier.  Such a "global pool" is a façade of anonymity in any case:

This "global pool" is what is sometimes referred to a hosted (shared) EWallet.  Even with a hosted EWallet the exchange is likely recording the blockchain transaction ID for any withdrawals, making there be a complete audit trail of the exchange from USD funds to the withdrawal of BTC funds.

[Severian]

LOL! Coinbase is Goldman Sach's forward base in Bitcoin. Their co-founder is Fred Ehrsam, Goldman Sachs Forex trader. Coinbase is how GS is collecting bitcoins using other peoples' money.

[Wingman4l7]

LOL! Coinbase is Goldman Sach's forward base in Bitcoin. Their co-founder is Fred Ehrsam, Goldman Sachs Forex trader. Coinbase is how GS is collecting bitcoins using other peoples' money.

So a guy who used to be a former Forex trader for Goldman Sachs helped build Coinbase, and somehow that makes Coinbase Goldman Sachs' bitch?  Coinbase is a Y Combinator-funded startup.

As far as GS goes, how many Forex traders does GS have working for them?  I'm guessing more than one.  If you used to work for Microsoft, and you later worked on a Bitcoin business, does that mean that you're Microsoft's foray into Bitcoin?  I think not.

[🏰 TradeFortress 🏰]

That is not really a bad thing. You'll be able to play satoshi DICE, etc with it.

[Severian]

As far as GS goes, how many Forex traders does GS have working for them?  I'm guessing more than one.  If you used to work for Microsoft, and you later worked on a Bitcoin business, does that mean that you're Microsoft's foray into Bitcoin?  I think not.

GS is akin to a religion. I've watched "former" GS employees take over a state institution where I live. Goldman Sachs is now issuing the bonds for said institution.

Coinbase exists for Goldman Sachs, not for Bitcoin users.

[Wingman4l7]

As far as GS goes, how many Forex traders does GS have working for them?  I'm guessing more than one.  If you used to work for Microsoft, and you later worked on a Bitcoin business, does that mean that you're Microsoft's foray into Bitcoin?  I think not.

GS is akin to a religion. I've watched "former" GS employees take over a state institution where I live. Goldman Sachs is now issuing the bonds for said institution.

Coinbase exists for Goldman Sachs, not for Bitcoin users.

That's a pretty shaky argument IMO.  What about the other guy who founded Coinbase?  Doesn't he have a say in where it goes and what it does?  What about the venture capitalists who are funding it?

[manicminer]

With money and currency there are three main costs: (1) time/convenience, (2) money and (3) privacy.

Coinbase is slower but very convenient, cheaper and less private than some alternatives.

MtGox is about the same speed, about the same fees but no significant privacy enhancements.

BitInstant is faster but less convenient much more expensive but more private.

LocalBitcoins is slower and much less convenient with higher fees but significantly more privacy.

So, it really just depends what the buyer or seller wants in terms of costs they are willing to pay in time/convenience, money and privacy.

It would sure be nice to find an exchange service that is instantaneous from anywhere with no fees and absolute privacy. If you find the unicorn then please let me know.

In the meantime, trade-offs like everything else in life.

I just found this old topic and it resonates with me. What are news on the trade-offs between privacy, ease of use and fees 18 months later?

Additionally: what do you think if Coinbase as a bitcoin checking account for a non-American, do not linking her bank account? Pros, cons, better alternatives? I don't like Circle requires 2FA (can't turn off) even just for buying a sandwich or a coffee. Not convenient for my purposes.

[juggernut]

That is why I never used coinbase.