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Posted on April 7, 2020Coinbase makes sending and receiving crypto even easier
By Paul Katsen, Product Manager
Our mission at Coinbase is to create an open financial system for the world. A key part of achieving this mission is to provide customers with familiar, but better, financial services built on top of cryptocurrencies. That’s why we’re launching improvements to how customers can send and receive crypto. Now, you’re a few quick taps away from paying a friend, making a purchase, or transferring funds across the 100+ countries we support or to any crypto wallet.
Millions of customers already send and receive funds on Coinbase, but with our recent changes we’re making it even easier, especially for those who may be new to sending or receiving crypto with us.
- Discoverability: Customers can now begin a transaction on mobile with the action button regardless of where they are in the app.
- Execution: We’ve made it simple to switch between currencies quickly, and removed a few steps to make it more intuitive for new customers. Customers around the world can more easily send and receive crypto with no fees in most instances.
- Confidence: Cleaned up visual design and added cues to help customers better understand what’s happening as they send and receive crypto.
Along with helping you manage your crypto and earn rewards, we believe sending and receiving will be a critical element of the open financial system. We are excited to make this service accessible to more customers on Coinbase.
Sign up for a Coinbase account or download our iOS or Android app today to get started.
Interested in a career in crypto? If you enjoy working on high-impact, crypto-first challenges, then apply here or check out all open positions. We’d love to hear from you.
The opinions expressed on this website are those of the authors who are associated persons of Coinbase. Information is provided for general educational purposes only and is not intended to constitute investment or other advice on financial products. Unless otherwise noted, all images provided herein are the property of Coinbase.
Coinbase makes sending and receiving crypto even easier was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on April 6, 2020Crypto giveaway scams and how to spot them
By Thomas Hauer, Jr.
Cryptocurrency giveaway scams have been a problem for those involved in the crypto-community since the last major bull run in late 2017. Whether you’re a seasoned investor or just beginning to get your feet wet in the crypto-space, we encourage all of our customers to educate themselves on current cryptocurrency related scams and how to identify them. In this article, we’ll cover an increasingly common technique used by online scammers — the giveaway scam.In a nutshell, giveaway scams are a form of social engineering in which a scammer attempts to deceive a cryptocurrency investor into believing that a major cryptocurrency exchange or celebrity is hosting a giveaway. The catch here is that in order to participate in the giveaway, you must first send a certain amount of cryptocurrency to a giveaway address so that you can verify your wallet address and receive your share of the giveaway. However, because cryptocurrency transactions are irreversible, once a victim sends money to the scammer’s address, there is nothing anyone can do to get it back and the scammer has made a profit.
Now that you understand the gist of what giveaway scams are all about, we’d like to make it extremely clear that Coinbase does not engage in cryptocurrency giveaways of any kind, however you can earn cryptocurrency by learning about them through Coinbase Earn. With that said, let’s move on to some recent trends.
Recent Giveaway Scam Trends
To help you recognize the signs of a giveaway scam, we’ve provided you with some examples of the most common giveaway scam trends being used to target cryptocurrency investors.
Coinbase Twitter Impersonations
In the screenshot below, we have a Twitter account impersonating Coinbase and replying to a legitimate Coinbase tweet with an image promoting a 5,000 BTC giveaway scam.
The link in this image directs to a web page which would ask you to verify your Bitcoin address by sending anywhere from 0.1 to 10 BTC to the scammer’s giveaway address. According to the scammer’s web page, you would get x10 your payment back. This all sounds very good, but it is 100% a scam and you will receive 0 BTC back!
Cryptocurrency giveaway scam webpage with giveaway scam address. Celebrity Twitter Impersonations
In this example, we have a very normal looking Twitter account replying to a tweet made by Senator Bernie Sanders. The response here is thanking Elon Musk and sharing an image that appears to be a tweet from Elon Musk about a Bitcoin and Ethereum giveaway being hosted by Tesla. In actuality, this image was manipulated to appear like Elon Musk made this tweet and is purely manufactured by a scammer.
Navigating to the link in the scammer’s image lands us on a web page that appears to be a Medium blog post. Within the post there are two “official” links leading to “free” Bitcoin and Ethereum. Both of these links lead to scam giveaway addresses that are not to be trusted no matter how great and well designed the web page looks.
Web page created to look like an original Medium blog post with links to giveaway scam. 
YouTube Live Streams
This is a fairly new technique that scammers have been using to perpetuate their cryptocurrency giveaway scams. In this example, the scammer will create a YouTube video using older video streams of cryptocurrency exchange CEOs and overlay the video with some details about an alleged giveaway. They will also set up the video as a live stream so that it appears to be something that is happening NOW, further enticing viewers to participate in the giveaway immediately. In the video description, there is often an “official” giveaway address or a link to a web page containing the giveaway address. Additionally, the scammer will drive fake viewers to the video to make it seem like they have thousands of viewers at that very moment. Don’t fall for this scam, it’s a trap and you will not receive any free BTC!
YouTube account impersonating Coinbase and live streaming a dated ask me anything (AMA) video with Coinbase CEO Brian Armstrong. Giveaway Scam Email
In our final example, we have an attempt to promote a giveaway scam via email. In the email, the scammer is attempting to convince the recipient that Coinbase is hosting a giveaway to celebrate a user sign up milestone. As previously mentioned, Coinbase does not partake in any cryptocurrency giveaways. Therefore, this is a scam!
Giveaway scam lure sent via email. Protecting your investment and fellow investors
Now that you’ve learned about the latest techniques being used by giveaway scammers, there are two simple rules that we’d like you to remember that should help you avoid scams like these in the future:
- If it sounds too good to be true, it almost certainly is.
- Think twice before sending your funds. All cryptocurrency transactions are irreversible and you will not be able to get your money back.
Lastly, if you encounter any giveaway scams like the ones shown above, please take a moment to protect the broader cryptocurrency community by reporting the scam to Coinbase or directly to Twitter, YouTube, or Google. For your reference, we’ve provided information on reporting to each entity below.
Coinbase — Report via email to security@coinbase.com
Twitter — https://help.twitter.com/en/safety-and-security/report-abusive-behavior
YouTube — https://support.google.com/youtube/answer/2802027
Google SafeBrowsing — https://safebrowsing.google.com/safebrowsing/report_general/
Crypto giveaway scams and how to spot them was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on April 1, 2020Coinbase USDC Bootstrap Fund invests in Uniswap and PoolTogether
By Nemil Dalal, Daniel Que, & Pete Kim
2019 has been called The Year of Decentralized Finance (“DeFi”), with the money locked up into decentralized finance protocols skyrocketing. In 2020, these protocols are starting to provide global access to financial services like savings and exchange.
To encourage growth in USDC and DeFi, Coinbase launched the USDC Bootstrap Fund last September with $2MM of initial funding. The USDC Bootstrap Fund invests directly into smart contract protocols, providing important, early liquidity for entrepreneurs and developers looking to grow their protocol.
With USDC, we hope to provide critical infrastructure that will enable DeFi to grow and increasingly compete with existing financial products. In addition to our publicly announced investments in Compound and dYdX, we are proud to announce further investments in Uniswap and PoolTogether.
Uniswap is emerging as one of the most liquid exchanges on Ethereum. Their constant market maker model makes it easy to launch a liquid exchange for any token, and is increasingly becoming critical infrastructure for tokens and applications that need liquidity. In a little over a year, Uniswap has grown from $0 to $31MM of liquidity, and now has exchanges (also known as “pools”) for well over 880 tokens. The USDC Bootstrap Fund has provided $1MM of liquidity to the USDC/ETH pool.
PoolTogether is a savings game built on Compound. Users deposit funds which earn interest, and are paid out to a winner chosen at random. So far, $19K of prizes have been awarded. The USDC Bootstrap Fund has provided $100K USDC as a pool sponsor, increasing the reward for USDC depositors.
We encourage DeFi developers and smart contract projects that want to integrate USDC to apply for the USDC Bootstrap Fund. We look for teams who build innovative products, leverage USDC, and effectively manage risks. To apply, please fill out this form.
This website may contain links to third-party websites or other content for information purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of Coinbase, Inc., and its affiliates (“Coinbase”), and Coinbase is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. Coinbase is not responsible for webcasting or any other form of transmission received from any Third-Party Site. Coinbase is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by Coinbase of the site or any association with its operators.
Coinbase USDC Bootstrap Fund invests in Uniswap and PoolTogether was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on March 30, 2020Migrating our Tezos Bakery across the Atlantic with only 1 minute of downtime
Introduction
Since our launch in 2018, Coinbase Custody has been driving innovation on behalf of our clients, who increasingly want to participate in the networks that they have invested in. These new forms of network participation extend beyond providing the most secure and trusted digital asset custody available, and include activities like voting in governance and staking. We have been actively staking, or participating in the creation of new blocks in the digital ledger, on the Tezos network since early 2019. This is sometimes referred to as “baking.”
@LabosNomades Tezos is the first asset available for @CoinbaseCustody staking services. #Tezos2019 (3/12)
— @tezos
Supporting New Financial Products
In Fall 2019, Amun launched the first Tezos Exchange Traded Product (ETP), on the SIX Swiss Exchange. The Amun Tezos ETP is exposed to the price performance of the Tezos/XTZ token, but also generates a yield due to staking (baking) performed by Amun on behalf of investors. Coinbase Custody not only provides Custody of the underlying Tezos/XTZ tokens for Amun, it also stakes those tokens on their behalf. With the opening of our Ireland-based entity, Coinbase Custody International, we saw an opportunity to move our staking activity closer to our European clients like Amun. This is the story of how we migrated our Tezos Bakery from the US to Ireland with only 1 minute of downtime.
Securing the Tezos Network
Unlike proof of work, in proof of stake networks, security and operational skills take the place of raw compute power and electricity as the central mechanism that secures transactions in the digital ledger. Validators, which are the same as miners in proof of work, provide secure and highly available cryptographic attestations by voting on whether or not transactions in the digital ledger are valid.
Voting and Signature Generation
In order to vote or produce a block that other validators will vote on, a validator must sign the vote or block with their private key. If we simply stored the private key on our validator node, any attacker that was somehow able to compromise our validator node would not only be able to compromise our security deposits, which are required to stake on the Tezos network, they might also be able to attack the network itself by voting on an alternate version of the digital ledger that censors transactions. In proof of work this is called a 51% attack, and in proof of stake the consequences would be similar. The ability to censor transactions could compromise the core tenets of these decentralized networks: censorship resistance and immutability.
Slashing
In order to increase the security of these networks and prevent validators from misbehaving and censoring transactions, validators must put up security deposits, sometimes called a bond, and if any participant on the network discovers that they have voted twice at the same block height, they forfeit these security deposits and rewards. This is known as “slashing” and is an important mechanism that protects proof of stake networks. The Coinbase Custody bond serves as the security deposit that mitigates the risk of potential loss of client funds.
Remote Signing
Prior to the launch of the Tezos betanet in June 2018, early developers in the community such as Blockscale, Nomadic Labs, and Obsidian Systems developed a novel solution to help secure proof of stake networks: the remote signer. Instead of storing private keys on a validator node itself, where they might be compromised by an attacker, private keys could be stored in a remote system, which might include a hardware security module (HSM) to prevent the exfiltration of private key material. In addition, a monotonically increasing counter could be incremented as each vote was signed, which for the first time enabled a critical safety feature: double signing protection. If a vote had already been signed at that height, any attempt to sign another vote at the same height would be rejected, protecting the validator from the risk of slashing.
Coinbase Custody Validator Security
Coinbase Custody deploys our validators in accordance with the best practices in validator security. We leverage a remote signing solution that uses a mutex, or mutually exclusive lock. A mutex is a concept in computer science that is widely used in electronic trading systems and markets where downtime is not an option, but executing a trade twice would also be unacceptable. Multiple computer systems can attempt to execute a trade, for example, but only a single system will be able to acquire the mutex and execute the trade. This ensures that a trade is executed exactly once, and only once. When one of our validators wants to sign a vote, it must first acquire the mutex, at which point it will update the monotonically increasing counter, which represents the block height at which the vote is signed, and finally generate the cryptographic signature necessary to vote. If a validator attempts to sign a vote for a block height that has already been voted on, the monotonically increasing counter will prevent this, and if a validator attempts to update the counter, but another validator has already acquired the mutex, this update will fail, and signature generation will be prevented.
Testing and Safety
When designing and implementing highly secure distributed systems such as the remote signing solution, testing and safety are of paramount importance. For example, early in our development process, we discovered an edge case that might have led to double signing in special circumstances. In order to minimize these risks, we not only write comprehensive unit tests for every portion of the remote signer, we continuously run more than one validator on Tezos testnets, and all of them are attempting to sign messages at all times. This gives us continuous assurance that our double-signing protection is working at all times. We release new software updates to the testnet validators first, and let them operate for a period of time, before releasing updates to mainnet. By testing this critical safety feature continuously, we can minimize the risk of a software defect that leads to slashing.
The Challenge: Migrating to Ireland
Now that you have the background on how our remote signing solution protects against double signing and slashing, migrating our validator from the US to Ireland presented a unique challenge for us: the mutex lock we leverage requires strong consistency, and offers high availability by operating in multiple data centers in close geo-proximity to each other (less than 100 miles). We would need a separate mutex lock in Ireland, because light can’t travel fast enough across the Atlantic Ocean to provide the same strong consistency across such a long distance. Having a separate mutex lock means the two are no longer mutually exclusive, and the double signing risk during a migration is greatly increased.
Another challenge we faced is that Tezos validators require local access to the blockchain storage of a full Tezos node to create blocks. At the time of writing, this required over 300GB of storage that is tightly coupled to the validator. At Coinbase Custody, we leverage an automated deployment tool called Codeflow that rehydrates this data from secondary storage, and starts the node and validator. This process is fully automated to increase security and reduce the chance for human error, but due to the large amount of data it can take about an hour to complete.
Migration Options
Given our constraints, we considered a couple migration options:
- Completely stop the validator in the US, then start a deployment of the Ireland validator. This would result in about an hour of downtime while the Ireland validator rehydrated data from secondary storage, before the validator process was started, but it would ensure that we didn’t risk double-signing.
- Start the validator in Ireland and attempt to stop the US validator around the time that the Ireland validator had completed rehydrating data. This was deemed too risky because if there was any overlapping time where both validators were operating, we could potentially double sign and expose ourselves to slashing risk.
Both of these options seemed sub-optimal to us. In addition, our infrastructure in Ireland was brand new and had not been completely tested in production end-to-end, so the risk of a failed migration was great. We might have to roll back to the US infrastructure, which would require an additional hour of downtime. We began to consider a third, more creative option: decoupling the endorser.
Decoupling the Endorser
A Tezos validator has two main components: the baker, which produces new blocks that include transactions in the digital ledger, and the endorser, which votes on blocks that other validators produce. The baker, unlike the endorser, is tightly coupled to a local Tezos node, and requires access to the local storage to create new blocks. It is a lightweight, stateless client that only needs to communicate with a Tezos node over RPC, and the remote signer to generate signatures. The fundamental insight we gained was that by decoupling the endorser from the full Tezos node required to run a validator, we could perform an almost downtime-free migration. Large Tezos validators typically only produce or bake new blocks every few minutes or hours, but they need to vote or endorse almost every minute. We could find a window where we didn’t have to produce blocks for a couple hours, and migrate the baker during that time period, and we could migrate the endorser separately.
Completing the Migration
First, we decoupled the endorser. We created a new microservice that contained only the Tezos endorser client, and configured it to talk to the same Tezos edge nodes that we use to broadcast transactions to the rest of the Tezos network. These nodes do not run any validator processes, and there are 5 of them in both the US and Ireland to achieve better connectivity and availability. The endorser also needed to get signatures from the remote signer, just like the baker. If you recall the limitations of our mutex lock from earlier, we couldn’t have strong consistency across the Atlantic Ocean, as the distance was too great, so we knew we had to completely shut down the endorser in the US prior to starting it in Ireland. To be completely assured that we would not double sign or vote, we decided to stop the endorser in the US, wait for a single vote to be missed, and only then, start the endorser in Ireland. You can see this 1 minute/block downtime here:
Source: TzStats.com Once we had successfully migrated the endorser, we were still producing new blocks in the US, while voting or endorsing from Ireland. We were then able to find a 2 hour window of time when no blocks needed to be produced to migrate the baker process, and complete the migration to Ireland.
Conclusion
Operating the largest Tezos validator with a significant amount of deposits or bonds at stake is not something Coinbase Custody takes lightly. We’ve invested heavily in the best possible security to minimize the risk of loss. I hope this post has been informative, and helped to educate you on the challenges of operating a large validator. At Coinbase Custody, we not only prioritize the security and protection of client funds, but we also strive to secure and protect the networks that we participate in on behalf of our clients. Investing in best in class security around our proof of stake validators is part of what makes us the most trusted digital asset custodian.
This website may contain links to third-party websites or other content for information purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of Coinbase, Inc., and its affiliates (“Coinbase”), and Coinbase is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. Coinbase is not responsible for webcasting or any other form of transmission received from any Third-Party Site. Coinbase is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by Coinbase of the site or any association with its operators.
Migrating our Tezos Bakery across the Atlantic with only 1 minute of downtime was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on March 30, 2020Around the Block #4: On the Recent Market Crash and Bitcoin’s Value Proposition
Coinbase Around the Block, sheds light on key issues in the crypto space. In this edition, we analyze recent market activity and Bitcoin’s Value Proposition.
BTC and other crypto assets saw a ~50% price decline earlier this month on March 12, marking the single largest one-day drop in Bitcoin’s price since 2013.
These moves coincided with broader financial market disruption amidst worries around the economic impact of COVID-19, with the S&P 500 and DOW Jones dropping nearly 10% in the biggest one-day slide since the Black Monday crash of 1987.
There is a growing belief in Bitcoin as a potential safe-haven amidst broader economic turmoil. But in this moment of validation and despite a widely held belief in Bitcoin as an uncorrelated asset, the Bitcoin market still crashed 50%. What’s going on?
Putting context on the broader markets
We should first look at traditional financial markets for context. Just before March 12th, WHO declared the Coronavirus to be a pandemic, President Trump announced a 30-day travel ban between the United States and Europe, and Italy’s Prime Minister placed the whole country on lockdown. As this growing recognition of the magnitude of COVID-19 sunk in, it became clear our global economy was not in a place to adequately handle the shock, and the markets suddenly reeled downward.
The psychology of this moment is important to understand. When investments sharply fall, investors naturally seek out “safe haven” assets — things that will not lose their value (usually USD). But everyone rushing to the exit at once produces a liquidity crisis, where the number of sellers far surpasses the number of buyers, which further drives prices lower and lower.
To add insult to injury, many large asset allocators held leveraged positions, where only $1 of real value was backing ~$2-$3 of borrowed value. When markets crashed, these leveraged positions were in jeopardy of becoming insolvent and being forced closed, further placing a premium on USD.
The general sell-off combined with a massive deleveraging event resulted in an intense rush for cash. In these moments, investors do not sell what they want to sell, they sell whatever they can. This includes Bitcoin and other cryptocurrencies, but every liquid market saw deep losses on March 12th.
Let’s talk Bitcoin. So what happened here?
The reasons behind the Bitcoin crash were similar. Some short term speculators sold, some institutions required cash for margin calls elsewhere, and some leveraged positions were forced to close. But it dropped harder and faster for Bitcoin than traditional markets for one central reason: the size and scope of leverage in the Bitcoin industry.
Traditional equities markets limit the amount of leverage to ~2–3x. In contrast, Bitcoin has some offshore exchanges that offer 100x+ leverage, where $1 of Bitcoin could be used as collateral to back $100 in purchasing power. To be fair, this is very risky — a position leveraged to 100x would get force-closed if the market moved just ~1% against you. So most traders hold positions at a more sensible 5–30x leverage, but still notably higher than 2–3x.
Leverage also exists in several other products: miners often collateralize loans with Bitcoin, lenders offer cash loans for BTC deposits, and more advanced traders use leverage for futures contracts.
Prior to the crash, the aggregate size of all leveraged contracts on exchange-based products hovered around $4B. Significant enough that any appreciable drop could induce additional shocks to the price. Normally these drops coincide with willing buyers, but the March 12th panic flipped buyers into sellers. As prices drove lower, more leveraged positions were forced to close. Each new sell was met with tepid buying, dragging the price again lower, resulting in more liquidations. A cascading effect.
Cascading liquidations were most prominent on BitMEX, which offers highly leveraged products. Amidst the selloff, a Bitcoin on BitMEX was trading well below that of other exchanges. It wasn’t until BitMEX went down for maintenance at peak volatility (citing a DDoS attack) that the cascading liquidations were paused, and the price promptly rebounded.
When the dust settled, Bitcoin had briefly spiked below $4000 and was trading around the mid $5000s.
Some have argued that exorbitant leverage made accessible to retail investors in unregulated environments may be risky to the crypto asset class if left unabated. While it appears leverage played a role in crypto markets on March 12th, we should expect improvements to these dynamics as crypto matures, both externally from regulators increasing controls and internally from industry led initiatives.
If this was driven by a broad liquidity crisis, exacerbated by extreme leverage in crypto, then how did Coinbase customers react?
In the 48 hours during and immediately following the drop, we saw record-breaking numbers compared to our last 12-month averages:
- 5x increase in cash and crypto deposits, totalling $1.3B
- 2x increase in new-user signups
- 3x increase in trading users
- 6x increase in total traded volume
But beyond just a rush, two things are clear: customers of our retail brokerage were buyers during the drop, and Bitcoin was the clear favorite. Our customers typically buy 60% more than they sell but during the crash this jumped to 67%, taking advantage of market troughs and representing strong demand for crypto assets even during extreme volatility.
Bitcoin was most popular with over half of both total deposits and trades. Other cryptocurrencies also saw increased traction too, with ETH and XRP as #2 and #3 favored assets. Other popular assets included newer cryptocurrencies like Tezos and Chainlink, and older more established cryptocurrencies like Litecoin and Bitcoin Cash.
Closing thoughts
For crypto enthusiasts, it’s harrowing to watch the price ripple downward and shake through the industry. In these moments, it’s only human to second guess our convictions. Perhaps you felt the same.
But with some context, we can recognize there are broader mechanisms at play. Fear drove many investors to cash and induced a deep liquidity crunch (cash became “expensive”), decoupling price from fundamental value and leading to broad deleveraging in nearly all asset classes. Bitcoin was not spared, and in fact was hit hardest due to the size and scope of deployed leverage, leading to a fierce cascade of liquidations.
Since the drop, Bitcoin and the broad cryptocurrency ecosystem has rallied while equities have continued to drop (S&P -6% vs Bitcoin +23% as of March 27th). Coinbase customers in particular exemplified this buy behavior during the drop and thereafter.
This has happened before. In the 2008 financial crisis, gold initially dropped more than 30%. Not because it’s a bad store of value, but because a similar liquidity crisis affected gold just as well. Gold went on to rally 3x over the next three years as it’s value stood out amidst the broader financial turmoil.
Bitcoin was created for a moment like this. Inscribed into its Genesis Block is the phrase “Chancellor on brink of second bailout for banks,” an homage to the government bailouts of 2008 and the last great financial crisis. The call out is a subtle nod to the need for a sovereign form of money without any central intermediary. And as the US government turns to slashing interest rates, passing large stimulus packages, and infinite quantitative easing, Bitcoin will soon do the opposite in the next Bitcoin halving. The contrast could not be more stark.
For many, Bitcoin is the hardest form of currency that exists. Only 21 million will be issued, and the network is collectively owned and controlled by its participants with no central authorities who can affect the supply schedule or adjust interest rates. Ultimately, Bitcoin’s value prop should not be defined by extraneous market dynamics, but rather by its unique properties that make it a potentially attractive store of value.
For more reading:
- Fred Wilson muses about correlation and market meltdowns, with a section on crypto
- Multicoin’s technical analysis of what drove the dip
- Anthony Pompliano of Morgan Creek Digital posts a salient commentary
This website contains links to third-party websites or other content for information purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of Coinbase, Inc., or its affiliates (“Coinbase”), and Coinbase is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. Coinbase is not responsible for webcasting or any other form of transmission received from any Third-Party Site. Coinbase is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by Coinbase of the site or any association with its operators. The opinions expressed on this website are those of the authors who are associated persons of Coinbase. Information is provided for general educational purposes only and is not intended to constitute investment or other advice on financial products.
Unless otherwise noted, all images provided herein are the property of Coinbase.
Around the Block #4: On the Recent Market Crash and Bitcoin’s Value Proposition was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on March 28, 2020The role of crypto during these uncertain times
Watch Coinbase CEO Brian Armstrong speak to how Bitcoin was created for moments like this
On March 26, Coinbase had its first ever fully remote Company All Hands. Watch Coinbase CEO Brian Armstrong kick off the virtual meeting by talking about:
- Why crypto is the money people need in this moment
- Why fiat currency isn’t hygienic or convenient, especially during a pandemic
- How crypto solves many of fiat’s problems
- Why crypto can be an alternative investment during a recession
- The importance of Coinbase’s mission, vision, and values in creating an open financial system for the world
The role of crypto during these uncertain times was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on March 25, 2020Coinbase Wallet makes it easier to earn interest through DeFi apps
By Sid Coelho-Prabhu, Coinbase Wallet lead
Today we’re announcing that you can now lend out your crypto and earn interest on decentralized finance (DeFi) apps through Coinbase Wallet.
Thousands of Coinbase Wallet users have already deposited millions of dollars into DeFi apps like Compound and dYdX, earning interest at rates ranging up to 6% APR. Users currently access these apps through Wallet’s built in decentralized application (dapp) browser or via WalletLink on desktop. However, it isn’t easy to compare rates or view total balances across different providers.
With today’s announcement, we’re making it even easier to use these DeFi apps by integrating them into the Wallet experience. You can now compare different rates from providers, easily deposit your crypto without opening a web browser, and view your balances on a simple, unified dashboard.
The easiest way to earn interest on your crypto
With this new lending experience, you’re just a few taps away from putting your money to work. Pick a coin to lend, pick a smart contract, and enter the amount you wish to lend. Your crypto is then deployed directly to the smart contract to start earning interest.
Once you’ve loaned out your crypto through the DeFi app(s) you can watch your interest grow right from your Wallet app.
And you can cash out by withdrawing the crypto from the smart contract back to your Wallet.
Best of all, this feature is available to users around the world on day one. We’re rolling out on iOS this week, and Android will follow in the coming weeks.
How DeFi loans work
DeFi borrowing and lending apps are “smart contracts” or programs that run on the Ethereum blockchain.
After you deposit your crypto into the DeFi contract, the contract then loans your crypto out to borrowers who pay interest. The contract dynamically manages interest rates based on the supply and demand for loans.
DeFi loans are backed by collateral from the borrower. So, for example, if a borrower wants to borrow $50, they might need to lock up at least $100 of crypto on the blockchain as collateral first (exact requirements vary by contract).
If the borrower does not repay or if the collateral value falls below a certain level, the contract attempts to sell the collateral to recover the debt and repay lenders.
At the time of publication, you can lend out Ethereum and a variety of Ethereum-based tokens such as USDC, DAI, BAT, REP, WBTC and ZRX. Interest rates currently vary from 0.03% to 4.17% APR depending on the coin and contract you choose. Interest rates are floating and can change frequently.
Proceed with caution
Before you get started, please be aware that DeFi lending apps are relatively nascent and come with risks. DeFi apps are programs running on the blockchain, and like any computer code they can potentially have bugs that cause you to lose money. Returns are not guaranteed and your deposits are not insured.
We display basic information and definitions like a contract’s Assets under Custody, Utilization, and Minimum Collateral, to help you choose between contracts. However, we suggest also doing your own research to understand how these apps work and what the risks are. And remember that Coinbase does not control these decentralized apps.
About Coinbase Wallet
The Coinbase Wallet app is Coinbase’s user-controlled cryptocurrency wallet. With Coinbase.com, you can buy crypto and Coinbase stores it (along with your private keys) for you; with Coinbase Wallet, you store your own crypto (safeguarded by a private key that only you know). Coinbase Wallet also offers a dapp browser. To learn more, visit our website.
We hope you enjoy using Coinbase Wallet. Your feedback helps us make Wallet better for everyone. You can reach us at wallet.support@coinbase.com. Please reach out with feedback or if you ever need some troubleshooting.
This website may contain links to third-party websites or other content for information purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of Coinbase, Inc., and its affiliates (“Coinbase”), and Coinbase is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. Coinbase is not responsible for webcasting or any other form of transmission received from any Third-Party Site. Coinbase is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by Coinbase of the site or any association with its operators.
Unless otherwise noted, all images provided herein are by Coinbase and are for illustration purposes only. Actual product may vary, including the dapps available and integrated with Coinbase Wallet.
Coinbase Wallet makes it easier to earn interest through DeFi apps was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on March 24, 2020Coinbase Custody COVID-19 Update
Given “shelter in place” orders issued around the U.S. as a result of COVID-19, we wanted to keep you updated on information about our response to this development as well as the security and accessibility of your assets over the next few weeks. To read about the broader actions being taken by Coinbase, see a recent blog from our founder and CEO, Brian Armstrong.
In summary, the Coinbase Custody pandemic business continuity plans anticipated this scenario and we have plans in place to ensure we continue to meet our withdrawal SLAs. We are actively in contact with Bay Area officials and are closely monitoring the situation as it develops. We will communicate out if we foresee any degradation to SLAs.
We sent out an email a few weeks ago on our continuity of operations plans and Coinbase continues to publish information about both the outbreak and our response here. In review:
Continuity of Operations
Coinbase Custody has extensive business continuity/disaster recovery plans in place, including a pandemic response plan. These plans provide direction to our internal teams and our vendors in the event that a disaster threatens to degrade our operations. Many of the existing design elements of Coinbase Custody’s cold storage operations have resilience features built in.
Coinbase Custody has taken additional steps should a global pandemic outbreak occur at multiple sites. These steps include:
- Establishing a plan to minimize our on-site staff requirement.
- Completing multiple key generation ceremonies in the recent weeks to maintain our commitment in supporting new and existing assets.
- Recently performing a disaster recovery exercise of critical systems to confirm operational effectiveness of the plan and playbooks.
At present, we do not expect any disruption to withdrawal SLAs. As this situation develops we are committed to keeping you informed about how we are responding. Please let us know if you have additional questions or concerns.
Sincerely,
The Coinbase Custody Team
This website may contain links to third-party websites or other content for informational purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of Coinbase Custody Trust Company, LLC or its affiliates (“Coinbase Custody”), and Coinbase Custody is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. Coinbase Custody is not responsible for webcasting or any other form of transmission received from any Third-Party Site. Coinbase Custody is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by Coinbase Custody of the site or any association with its operators.
Coinbase Custody COVID-19 Update was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on March 20, 2020How we’re supporting employees, customers and each other during COVID19
Coinbase is operating important infrastructure for the economy during these trying times. I wanted to share a few updates on how we are keeping employees safe and ensuring that we are serving our customers.
We’ve published our internal planning and comms around COVID19 here in case it is helpful for other companies.
Supporting our employees
My first priority is the health and safety of our employees. That is why we have mandated that everyone globally who can work from home do so. A lot of credit goes to our internal teams who have built the tooling that allow us to flip the switch during a crisis to work almost 100% remotely.
One of the hardest parts of working from home is keeping morale high. Here are some of the ways I’ve been adjusting to working from home, that I shared with the team earlier this week:
- Get outside for sunshine at least once a day (assuming travel restrictions don’t completely block this in your city).
- Make time for (virtual) hugs and conversations with loved ones.
- Try to build exercise, meditation, stretching, or some movement into your day so you don’t stay in one place the whole day.
- Build discipline around your social media diet — don’t let yourself get sucked into a vortex looking at your phone right after waking up, or spiral into fear/anger during the day. Limit your time here.
- If you feel yourself getting irritated, or a colleague seems irritable, reconnect with them by picking up the phone to chat 1:1. It’s incredibly difficult to read tone correctly over written communication channels (email or slack), and even video conferences have their quirks. They need to hear your voice.
- Give everyone the benefit of doubt during these trying times. It’s not personal, they are likely dealing with their own challenges that have nothing to do with you.
- If you have an old laptop or computer, setting up a dedicated machine for video conferences can help avoid the temptation to get distracted on your main computer.
I recognize that my experience is different than many of my colleagues (for instance, with school closures many employees are trying to get work done with children in the home, which can be especially difficult). We are all finding ways to adapt to this new environment, and taking care of ourselves and loved ones should come first.
Supporting our customers and the cryptoeconomy
We have always considered it critically important to use slower periods in crypto markets to invest in our systems, so that we’re prepared when volumes or prices spike like we saw last week. Over the last couple years, we’ve invested heavily in increasing reliability and scalability of our systems. This included increasing the redundancy and throughput of our exchange, expanding the capacity of our core products, and improving our internal processes and responses when things go wrong.
This hard work contributed to our stability last week while many platforms, in both crypto and traditional equities, struggled with the increased volume. We set new peak traffic records–50% higher than our previous peak–across a number of our internal systems. This included processing more than $2 billion in volume on our exchange in a single 24-hour period last Thursday and Friday. Thanks to the hard work of our engineering teams, this all happened with minimal impact to our customers.
As we look toward the future, especially in this uncertain time, we may see further volatility — and we are preparing our systems to handle these increases as best we can. With the speed of customer growth in crypto, we can’t rule out that we may face future challenges. In the event this happens, we’ll clearly communicate with our customers what’s going on and what we’re going to do about it.
Our Customer Experience team has been anticipating a Work From Home (WFH) scenario for weeks and has partnered with our IT and Security teams to build a secure WFH environment. We are now executing on that plan. In addition, we recently revamped the Coinbase Help Center and contact forms so that customers can get the information they need more quickly.
We’re hiring
As a cryptocurrency company, we’re in a unique position. Coinbase has never known a time where we’ve operated without volatility. We have managed through 40x growth in a year, and negative 10x growth. We are full steam ahead executing on our 2020 strategy in service of our Vision and Mission and we will continue hiring in this environment.
In a world where unprecedented stimulus packages are being rolled by governments around the world, and a major expansion of the money supply is likely, I believe there has never been a better time for people around the world to learn about sound money and a more global, fair, financial system powered by cryptocurrency. If you’d like to join us in building this for the world, check out our open roles.
How we’re supporting employees, customers and each other during COVID19 was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on March 19, 2020Bitcoin’s Uncoupling from “Uncorrelated”
By Mike Co and Shawn Dejbakhsh
This piece is one in a series designed to educate Coinbase customers on basic market analysis.
TLDR: Although Bitcoin has recently sold off alongside the S&P 500, based on historical data, recent positive correlation may be temporary.
From an Economist article dated Nov. 18th, 2007, just prior to the Financial Crisis:
“INSTITUTIONAL investors have been looking for ‘uncorrelated’ assets ever since the equity bear market of 2000–2002. They realised that they made too big a bet on the stockmarket and wanted to diversify. But neither government bonds nor cash offered the level of returns they desired.”
Uncorrelated assets move independently of major stock market indices, potentially giving opportunity for savvy investors to “beat the market.” For years, Bitcoin has widely been considered an “uncorrelated” asset. By and large this has been statistically true. As evidence, by using a statistical method called a Correlation Coefficient, Bitcoin’s price has moved independently of the U.S. S&P 500 for much of its history. However, more recently Bitcoin has sold off alongside the S&P 500 in positive correlation.
As a quick primer, a correlation of 1.00 means that two asset prices move in concert, or are positively correlated. A correlation of -1.00 indicates that two asset prices move in opposition, or are negatively correlated (i.e. BTC sells off while the S&P rises or vice versa). Bitcoin’s historical correlation with the S&P 500 swings wildly between 1.00 and -1.00, seemingly positively correlated at times then negatively correlated during others. That means BTC has been largely uncorrelated with major stock market indices throughout its history.
As an example of two positively correlated assets in traditional markets, look to the S&P 500 versus the Dow Jones Industrial Average:
As an example of two positively correlated assets in cryptocurrency markets, look to Bitcoin versus Ethereum:
While there have been brief periods of negative correlation, Ethereum’s price generally moves in concert with Bitcoin.
Last week, global markets buckled and Bitcoin sold off aggressively alongside the S&P 500. Across traditional markets, exchanges around the world halted trading to stem selling. Whereas Bitcoin’s peer-to-peer protocol has operated at 99.98% uptime since its creation on January 3, 2009. Further, Bitcoin’s spot market liquidity is global, decentralized, and runs 24/7.
This year has proven tumultuous for global markets, and BTC’s year-to-date returns are currently -13.2% while the S&P 500 is -25.1%. Notably, Bitcoin is significantly more volatile than the S&P 500. Despite its volatility, Bitcoin’s virtues may become more apparent as the world enters uncharted economic, monetary, and fiscal territory. Bitcoin as a globally accessible, permissionless, and scarce asset may yet prove its worth.
If Bitcoin’s historical chart is a reliable indication, recent bouts of positive correlation with the S&P 500 are likely temporary. On the other hand, if S&P 500 correlation sustains for an extended period hereafter… Bitcoin will enter uncharted territory.
*Updated Note: TradingView’s Correlation Coefficient referenced above calculates according to price as opposed to returns. For a Correlation Coefficient that calculates correlation by returns please reference this chart by CoinMetrics. Notably, recent correlation between the S&P and BTC has not yet reached all-time-highs.
Endnotes
- The Economist: “The New Small Thing” (November 18, 2007)
- Investopedia: “Correlation Coefficient” (February 19, 2020)
- Bitcoin Uptime (Accessed March 19, 2020)
This website contains links to third-party websites or other content for information purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of Coinbase, Inc., or its affiliates (“Coinbase”), and Coinbase is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. Coinbase is not responsible for webcasting or any other form of transmission received from any Third-Party Site. Coinbase is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by Coinbase of the site or any association with its operators. The opinions expressed on this website are those of the authors who are associated persons of Coinbase. Information is provided for general educational purposes only and is not intended to constitute investment or other advice on financial products.
Unless otherwise noted, all images provided herein are the property of Coinbase.
Bitcoin’s Uncoupling from “Uncorrelated” was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
