TL;DR: A few outraged bitcoiners have taken to social media, furthering a #deletecoinbase movement in protest against the crypto exchange bank’s acquisition of Neutrino, a notorious blockchain security firm. At first glance, it does appear principled enthusiasts are taking-on The Man, fighting back against regulatory kowtowing and surveillance encroachment. Hardly. While some participating are no doubt doing so for those very reasons, the backlash is really a combination of haterism so rampant in the space along with an opportunity for saltier bitcoin core (BTC) supremacists to pile-on a business they’ve long targeted for destruction. Deleting Coinbase is a really stupid idea.
Deleting Coinbase is a Really Stupid Idea
Disclosures: 1, I hate nearly everything about traditional, legacy finance, and find it an offense against the gods of free and unfettered markets such institutions claim any association with either while sucking up to government agencies for favor; 2, I have never had a Coinbase account; 3, I am not paid by or associated with Coinbase in any manner.
Imagine thinking #DeleteCoinbase is a good idea to promote
* Provides the best UX
* Provides a fiat gateway
* Provides institutional grade services
* Has ~25M+ users
* Onboards ~25K new people a day
Want a bull run?
Let’s not prematurely hinder our best bet
— Tom 🌀 (@ThomasSchuIz) March 1, 2019
I’d been working in the space for a while, skeptical always about its immediate prospects but just crazy enough to hope it’d amount to something like a financial revolution of a kind I could finally support. When 2017 hit, and my holdings in bitcoin core (BTC) shot up many fold, friends thought I was a genius.
For a while, I began to agree. Various projects were paying me in BTC, and my cold wallet was exploding with numbers I’d never seen. My wife, normally oblivious to her husband’s goofy gasbaggery and rantings, suddenly took interest as I piled fat stacks. I onboarded curious mates, and was a crypto celebrity in my circles. You know, the financial sage, Kelso.
I Ain’t No Trader
Uh, no. I was panicking. I have all the macho of a nebbish Woody Allen when it comes to speculation. I dislike the madness of crowds, and I tend to be insanely contrarian by nature. Even in high school, while everyone wanted to get sweaty at prom and grind near one another, I’d pull my best gal away from the orgy, and dance with her off to the side. At punk shows, I stood in the back. You get the idea.
#DeleteCoinbase is a bit of a misnomer. Yes, you're boycotting for a cause.
However, Coinbase is required to keep record of everything involving your account for 5-7 years.
Your account isn't deleted. It's archived.
You can thank the government.
— Zachary Owens (@zaowens) March 2, 2019
My nerves reached fever pitch around December of 2017, and I exited crypto financially altogether. No way, Jose. These people were nuts. Friends and colleagues were suggesting BTC was under-valued, sure to hit $40,000 right around the corner. Maybe. But watching my own balances rocket triggered an inner coward, and I retreated to the loving arms of filthy fiat, ashamed as if betraying all I loved. Nocoiner, I.
And though I have since continued to earn my living paid in crypto, hold crypto, and spend crypto, the story of late 2017 through now is familiar: market plummets, people get rekt, etcetera. While I didn’t, that’s not the point. I benefitted by the bubble handsomely, we all did. The enthusiasm brought waves of investment and eyeballs and press, and in many ways we’re still enjoying that infrastructure, thinned as it for sure is.
You can read everywhere about the boom’s horrors. I’d rather focus a bit on the benefits of speculation. It’s often called unproductive, lazy, gambling, casino capitalism. Those are true in some respects, however often lost in the moral indignation is the vital function speculation plays in a freer market, onboarding.
Coinbase out of San Francisco caught the wave early, and established its reputation for a secure environment, relatively frictionless user-experience, adding an air of legitimacy. Furthermore, they found a way to bridge divides between traditional finance, all its ills, and this new, incredible technological innovation, bitcoin.
Brian Armstrong gets a lot of credit and blame, and it’s always dangerous to posit Great Men of History arguments. I won’t, beyond lauding him for, at least rhetorically, understanding the market’s needs. In that critical year of 2017, at its halfway point-ish, BTC forked, and the community split into digital gold and digital cash (bitcoin cash, BCH). Armstrong seemed to get that immediately, and embraced BCH as a legitimate alternative, for example.
That brought him and Coinbase massive grief from BTC partisans. They used every excuse after to down both he and the exchange bank, one of the most successful of its kind in our niche world, in hopes of crashing the business altogether. It didn’t work, at all, and in fact the company has continued to do very well even in an historically awful downturn.
Newer folks to crypto aren’t woke to polemics, our debate. Most appear to be just interested in the phenomenon for whatever reason, and a Coinbase account allows them access to it with relative ease. For those who’d rather not bother with wallets and passphrases, so much the better. Here’s some fiat, let’s try this thing out.
The hatred of Coinbase remained, festering, however, and continues to the present. To be clear, it doesn’t matter what Armstrong or Coinbase does, they’re an ongoing target by BTC supremacists, and so trashing both is a way to advance themselves by fomenting hysteria.
When Coinbase announced its gobbling up of Neutrino last month, the usual suspects became unhinged, again. Key executives in the Neutrino deck worked on Hacking Team, a uniquely odious outfit well-known for its spyware being used by governments in conjunction with actively suppressing journalists and political dissidents. Dudes like Valleri, Ornaghi, and Russo have been fingered in helping regimes from the UAE to Ethiopia and Saudi Arabia accomplish hideous ends.
What’s worse is to pretend Coinbase didn’t know about the problematic past of its new partners. They did. The company recently responded to a request for comment by one of its media investments, The Block. “Coinbase states that it is ‘aware that Neutrino’s co-founders previously worked at Hacking Team, which we reviewed as part of our security, technical, and hiring diligence,’ adding that ‘Coinbase does not condone nor will it defend the actions of Hacking Team,’ but ‘it was important for Coinbase to bring this function in-house to fully control and protect our customers’ data and Neutrino’s technology was the best we encountered in the space to achieve this goal,'” they were quoted as distinguishing.
There are, of course, other companies who do what Neutrino does and without Hacking Team’s baggage. However, as the Coinbase statement explained, they picked it up for the tech, and not for its Hacking Team affiliation. That’s an important difference increasingly muddied by pearl clutchers and couch fainters. Agreed, there’s still a lot to be pissed about, but at least make sure the facts are evident before throwing out an entire project.
Distrust BTC Supremacists, Useful Idiots
Coinbase is an interesting experiment, and I remember their fighting the IRS over tax information in court. I remember how much they’ve done to advance legitimacy and professionalism in the space while keeping an eye toward their cypherpunk intellectual genealogy.
I also do not personally like their business model, and prefer, for example, the spunk and feist of Kraken or, perish the thought, bisq (they’ve a pathological hatred for BCH). But, again, I don’t have the stomach to trade with any kind of frequency, and I must, must, must, control my crypto by way of keys.
However, mob mentality led by the likes of BTC supremes leaves me instantly distrustful. Their arguments are emotional and cherry-picked, standards they’re not applying to other, similar associations around the space. It’s all too opportunistic, too on the nose for me to believe this is more than a silly campaign to further distract and divide our goofy, tribal ecosystem. In the real world, Coinbase has a place to occupy, and they’re, so far as I can determine, doing a lot of good, mostly good, even though I have my criticisms. Encouraging the destruction of a good actor, misguided though I believe much of their operations to be, is a really stupid idea, and those who do wind up as Core useful idiots, ignoring much more important issues worthy of our limited time and attention.
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