Please. They probably make that in a few hours from the fees they charge. No one who held BTC with Coinbase lost anything. Frankly I've heard horror stories of people losing their entire wallet balance (tHeIR kEyZ tHo!!!!) from an out of the blue hack whereas if you want to withdraw from an exchange you can whitelist wallets/bank accounts, restrict the daily withdrawal, etc. Most reputable exchanges keep 99% of their digital assets in cold storage with multiple layers of redundancy and protection to move large amounts. If you bought on Coinbase and never moved the BTC out, there's absolutely ZERO reason to think that you couldn't move it or cash out with any friction.
> there's absolutely ZERO reason to think that you couldn't move it or cash out with any friction.
I disagree. Digital assets are not insured on Coinbase as stated here: [https://help.coinbase.com/en/coinbase/other-topics/legal-policies/how-is-coinbase-insured.html](https://help.coinbase.com/en/coinbase/other-topics/legal-policies/how-is-coinbase-insured.html)
> Digital currency is not legal tender, is not backed by the government, and digital currency accounts and value balances on Coinbase are not subject to Federal Deposit Insurance Corporation or Securities Investor Protection Corporation protections.
Therefore, if Coinbase were to be hacked for a higher loss (heaven forbid) and they didn't have the assets to make the account holders whole, the account holders would ultimately suffer the loss.
Saying there is 'absolutely ZERO reason' to think this is not something to consider is a stretch.
Binance lost $40 mil of crypto last year and they ate the loss. These exchanges are making BANK on fees. If they put the loss on users because they failed to secure their holdings then it would essentially be suicide because people would leave and use some other exchange so my point stands: 99% of their crypto is locked up in cold storage with multiple systems of redundancy so a rogue employee can't run off with everything. Whatever's available to be actively hacked ($250k in this instance) they can easily cover. Binance made around a BILLION dollars last year in fees. If you think these exchanges are going to screw over their users and jeopardize hundreds of millions or even billions of dollars of revenue then you don't know the first thing about the cost of doing business.
I’m not saying these exchanges are acting in a manner that’s irresponsible or malicious. I’m just pointing out that there could be a scenario where they can’t make good 100% of the time. Yes, currently they can elegantly handle a 250K loss but no one can really say they’re protected through and through for an unlimited amount of exposure.
The original reaction was that not knowing what I don’t know, I’d rather be in the position where I can control some of the risk.
If everyone in America went to their bank and withdrew their account balances, let me know how making good 100% of the time applies. The truth is there is always risk in everything. An EMP could go off and wipe out every hardware wallet that wasn't in a faraday cage but I'm pretty sure exchanges are well aware of that even if the underlying network would be completely destroyed.
> If everyone in America went to their bank and withdrew their account balances, let me know how making good 100% of the time applies.
Pending on the bank, they'd be covered by the agreement they agreed to.
> The truth is there is always risk in everything.
Which is my point exactly.
The main point of cold storage is that even if they were hacked, the damage would be limited.
That being said, what I fear is the kind of damage a Coinbase insider could potentially do, I wonder how much they lock down their internal systems from their own employees.
I assume they thought through the 'doom & gloom' scenarios in greater detail than I have. Given their prominence in the marketplace, I should hope they have their act together.
My general reaction to this article was that it's just better that I don't have to worry about it.