The following is a direct excerpt from Marty’s Bent Issue #1207: “Reminder to get your bitcoins from the exchange” Sign up for the newsletter here.
(via Marty Bent)
Coinbase released an earnings report today, adding new language to their 10-Q about the legal claims retail users have in the event of a bankruptcy event. In response to new SEC regulations, Coinbase was forced to add wording saying that retail users of its platform could have their exchange-held assets returned as property of the bankruptcy estate in the event of bankruptcy.
Brian Armstrong, the CEO of Coinbase, Just hit the Twittersphere with a long soothing thread To the world that this clause was added due to the new SEC disclosure rule, they hope to give retail customers the same assurances their Prime and Custody customers enjoy and that nothing of the sort has been attempted in court and that it is It is unlikely that the government would consider user property as Coinbase property. Maybe your Uncle Marty is a little crazy, but I don’t find the argument very convincing. Especially considering the government has a history of confiscating assets from American citizens. “Member Executive Order 6102?
Needless to say, your bitcoin is not safe as it is today and since the first bitcoin exchange was launched on exchanges. Bitcoin exchanges present third parties that are single points of failure that can succumb to human error, hacks, and government coercion. You should eliminate this third party risk by taking control of your assets by holding your own keys. Sure, there are some risks involved. You must be able to back up those keys, but there are ways to mitigate single points of failure while keeping your keys. Multi-signature wallets are a good way to eliminate single points of failure in self-custody.
At the very least, you should take possession of your own keys and risk being your own single point of failure, because at some point, when bitcoin becomes extremely popular and more widely used, governments will act as they always have, becoming totalitarian. The first thing they target is exchange. You should work with this assumption as the base case.
Also, take possession of your keys, which is what Bitcoin was created for in the first place: to allow individuals to own their own wealth and send and receive it without depending on trusted third parties. You’re doing the network a disservice by being lazy. Especially if you subscribe to the theory that bitcoin held on exchanges is re-pledged and loaned out to traders who are actively shorting bitcoin. suppress the price. Holding your keys makes less of this activity harder to do.
