[2020-01-25] Coinbase's Bitcoin Holdings Could Surpass 1 Million BTC Next Month

[bbc.reporter]

Some readers might easily interpret this as good news because the investors are increasing, however, this is making it easier for the government to get 1 million bitcoins under their control.

The government has a history of shortcutting the system to do what they want.



San Francisco-based cryptocurrency exchange Coinbase could soon hold over 1 million bitcoin on its cold wallets, showing bitcoiners are still storing funds on trading platforms en masse.

According to a report published by data source Longhash, Coinbase’s cold wallets contained roughly 970,000 BTC, worth about $8 billion, at the beginning of this year. A graph shared with Longhash’s readers shows that the exchange’s bitcoin holdings have been growing steadily.

In comparison, the bitcoin holdings of other cryptocurrency exchanges’ bitcoin holdings haven’t grown exponentially last year, with no other trading platform having over 250,000 BTC in cold storage.

Read in full https://www.cryptoglobe.com/latest/2020/01/8-5-billion-coinbase-s-bitcoin-holdings-could-surpass-1-million-btc-next-month-report/

[gentlemand]

Hey,at least it's voluntary. For now.

Interested to know how much is institutional money and how much is minnows.

Maybe some day soon Brian coinbase will actually admit that bitcoin isn't shit since he is responsible for 5% of all of it. He's even managed to write the word a couple of times recently.

[1Referee]

Even if we ignore the 'not your keys not your coins', hacks, and government seizing their coins parts, it's still bad because most people have their coins ready to sell in their accounts. Only users who use the vault feature offered by Coinbase can't sell instantly because there is a 48 hour waiting period for your withdrawal to be processed. In other words, there is nothing good about this.

I find it actually more shocking that an exchange such as Huobi has 255,000BTC in its cold wallets. Currently ranked 1st in Bitcoin's top 100 richlist. Binance once held +400,000BTC, but currently only 250,000-300,000BTC can be found in its cold wallets. Where is the rest? 

[Lucius]

I know I already read about the same topic last year, so I don't consider this to be any new news, but only just repeating old news with little spice. I can only say that a concrete example shows that people are far from being able to become their own bank, and also how important it is for some to be able to sell their coins at any time.

bbc.reporter, how the government (USA) could seize what belongs to Coinbase? Do you think Coinbase is actually a three letter agency operation with the sole objective to come into possession of large quantities of BTC? It doesn't seem like a bad conspiracy theory, especially in a country capable of far more dirty games...

[cr1776]

I know I already read about the same topic last year, so I don't consider this to be any new news, but only just repeating old news with little spice. I can only say that a concrete example shows that people are far from being able to become their own bank, and also how important it is for some to be able to sell their coins at any time.

bbc.reporter, how the government (USA) could seize what belongs to Coinbase? Do you think Coinbase is actually a three letter agency operation with the sole objective to come into possession of large quantities of BTC? It doesn't seem like a bad conspiracy theory, especially in a country capable of far more dirty games...

The problem is that once governments have established the precedent that someone else's needs justify the seizure of my means to pay for them, it isn't a stretch for those governments to want to seize something like bitcoin since it gives people an escape hatch from the government controlled fiat system.

I doubt that Coinbase is a three letter agency, but if you get an administration in that believes it is their right to "redistribute" wealth in order to pay for an authoritarian government bitcoin will be a prime target if it is concentrated at one place.  Particularly if the US Supreme Court has been packed beforehand in order to green light this type of socialist/fascist/communist program. 

Will it happen any time soon?  Probably not, but the lure of "free" stuff could turn the US election in 2020 to a government that will eventually need to pay for all the promises they've made.

[buwaytress]

Add that to BitGo's supposed 20% of all Bitcoin tx (their own claim in 2019) and Xapo all having supposedly massive undisclosed amounts sitting quietly in offline vaults and we've got 2 big holders of Bitcoin (on behalf of customers anyway). Both promise it's all safe and insured but yeah I'd love to see what happens if the US does what it always does OR if some other force majeure happens. Because even if insurance kicks in, those actual bitcoin could be lost permanently.

[gentlemand]

Coinbase bought xapo so I presume they've rolled their holdings into that figure.

Since xapo's big bucks were a small bunch of OGs from 2012 or so I wonder what they feel about it.

I wouldn't want a place I trusted bought out by someone I may know nothing about.

Ah well. the alternative is there and waiting.

[squatter]

Binance once held +400,000BTC, but currently only 250,000-300,000BTC can be found in its cold wallets. Where is the rest?  

Speculation: Without doing a deep dive into their wallets, I would assume there was an exodus when they prohibited US signups last June and officially kicked out US customers in September. I wouldn't be surprised if Americans previously comprised 30-40% of their holdings.

Add that to BitGo's supposed 20% of all Bitcoin tx (their own claim in 2019)

I believe most of that is not technically in BitGo's custody. They provide non-custodial hot wallet solutions for lots of major exchanges, so that volume is spread out among many different entities who control their own private keys. The Bitfinex hack of 2016 infamously exploited a poorly implemented BitGo wallet where Bitfinex controlled all the keys.

[hello_good_sir]

This is NOT good news.

This is no different than having 1 million bitcoins under the control of a bank, which can be very easily be surrendered to the government as assets of a regulated financial entity.

Also, this just increases the risk of a potential hack within Coinbase's systems as it raises the stakes to a much higher level - a hack, even though it is a remote possibility, can bring about severe systemic damage to the BTC markets in the short term and to BTC's reputation as well.

[bbc.reporter]

Hey,at least it's voluntary. For now.

Interested to know how much is institutional money and how much is minnows.

Maybe some day soon Brian coinbase will actually admit that bitcoin isn't shit since he is responsible for 5% of all of it. He's even managed to write the word a couple of times recently.

I am certain he knows that it is not shit. However, similar to the rest of us bagholders, he must pump the altcoins that he and his people have bought and sometimes involved in as part of the board of advisors hehehe.

[gentlemand]

It goes deeper than that.

I think they know they'll be nothing without bitcoin but also know it's forever beyond their control.

That must stick in his corporate craw.

[1Referee]

Speculation: Without doing a deep dive into their wallets, I would assume there was an exodus when they prohibited US signups last June and officially kicked out US customers in September. I wouldn't be surprised if Americans previously comprised 30-40% of their holdings.

That's certainly possible, but the odd part is that Binance in the last 12ish months has been moving all its cold wallet holdings back and forth like a dozen of times, which not one single other exchange does.

Another odd part is that despite US traders no longer being able to use that platform, the volume on the BTC/USDT pair hasn't gone down much at all. One would expect the volumes to see a very firm decline if US traders compromised 30-40% of their holdings.

Bitfinex's past exodus was not only evident from their cold wallet holdings that were shrinking month after month, but also from their much lower volumes, which makes sense if fewer traders are left on the platform. Binance either artificially inflates its volumes, or some other shady stuff is going on there.

[squatter]

Another odd part is that despite US traders no longer being able to use that platform, the volume on the BTC/USDT pair hasn't gone down much at all. One would expect the volumes to see a very firm decline if US traders compromised 30-40% of their holdings.

Bitfinex's past exodus was not only evident from their cold wallet holdings that were shrinking month after month, but also from their much lower volumes, which makes sense if fewer traders are left on the platform. Binance either artificially inflates its volumes, or some other shady stuff is going on there.

Binance can't fake their cold wallets, but volume is easy enough. I'm certainly suspicious. We all know Changpeng Zhao is no stranger to faking volume, and the lack of drop-off post-US exodus just doesn't add up.