If you have been following the news the last few weeks, you will definitely know that this hasn’t been a few good weeks for Coinbase. It has been story after story of bad news. There’s a famous phrase that goes, “All publicity is good publicity, The only thing worse than being talked about is not being talked about.” But I’m not so sure that even Coinbase would agree with that anymore.
Just this week, it was discovered that Coinbase was trying to put one over on all of its users wanting to sell our data to the government, (the IRS and DEA) and people are angry!
Let’s dig into this topic more.
Before I start into the negative things about Coinbase, I do want to say some positive things about them as well. Coinbase has done an extreme amount to push cryptocurrencies to the point they have reached today. They are one of the oldest exchanges out there, having started in June of 2012 and have become the largest exchange in the USA. They’re website UI/design is great and easy to use, and it is something for all other exchanges to strive towards. One of the most important things in crypto right now is attracting a new user base, and they do a great job with that, while other exchange websites can be pretty intimidating to newcomers.
They have Coinbase Earn, another great step to attracting/educating newcomers and at the same time earning free cryptocurrencies! Who doesn’t like free crypto? Also, for a long time the name Coinbase, generated a large amount of respect or trust. While many other exchanges would list just about any coin out there. Coinbase has been applauded for thoroughly inspecting/researching coins, making sure they can be trusted before being added to the service. This has led to the “Coinbase spike.” Each time a coin is rumored to be soon listed on Coinbase, or is actually listed the value of that Coin skyrockets. A recent example is with OmiseGo, which went up over 120% after being listed on the Coinbase exchange.
But let’s continue onto the bad news, like I mentioned just before, this just hasn’t been a good month for Coinbase and they have really been souring their image with many people, possibly for good. Just a few weeks ago, it was discovered that each time the price of bitcoin in a short time frame would rise or dip $500 or more, they have “allegedly” been unplugging their system. An exchange the size of Coinbase, (and Bitmex), has extreme power in the marketplace, and can actually manipulate the price of coins. When their systems went offline, the dipping or pumping price immediately halted.
(I actually wrote an article about this, earlier in the week. Claiming centralized exchanges like Coinbase and Bitmex could potentially be Bitcoin’s biggest threat! Please check it out! It is the prequel to this article)
Just a few days ago, news broke that Coinbase will soon begin selling blockchain analysis software to the U.S. Government. Specifically the U.S. Drug Enforcement Administration, (DEA) and the Internal Revenue Service (IRS).
Naturally the Coinbase community weren’t happy to learn this news and have been withdrawing their bitcoin at a record pace from the exchange.After just two days of this news being reported, Coinbase users had already withdrawn 22,000 bitcoin, ($214 million) more off of the website, than has been deposited. This is a new record for Coinbase.
At the same time, Coinbase asserts that this sold data only offers streamlined access to publicly-available data, and have no access to any customer personal data. But for many people that doesn’t make this situation any less distasteful. The damage has already been done. Many people entered the crypto scene, to try to step outside “the system,” Escaping the government surveillance, all the while tying to make a profit. I know that’s why I decided to invest. The last percentage of confidence that people seemed to have in Coinbase also seems to have been lost as well. Having the above mentioned effect on Coinbase’s business. People are always told that if they don’t like how a business is being run, that they should vote with their wallets; or in this case their coins. And that is exactly what the Coinbase community has done and it’s a beautiful thing.
If people continue voting with their wallets and abandon Coinbase, they will have no other choice but to change how they operate.
Clearly this week has put fear into the minds of the people at Coinbase, but they quickly tried to put out a different story to try to fool or distract everyone from the real issue of them giving out information to the government.
They put out a press release stating that they are exploding and researching 18 coins to possibly list onto Coinbase. The coins go as follows;
Aave, Aragon, Arweave, Bancor, COMP, DigiByte, Horizen, Livepeer, NuCypher, Numeraire, KEEP Network, Origin Protocol, Ren, Render Token, Siacoin, SKALE Network, Synthetix, and Vechain.
Shockingly this actually brought even more bad feelings towards the exchange. Some people were happy that their preferred coin may be soon listed, and of course with the Coinbase price spike that soon followed.
But a large group of people couldn’t believe the coins that Coinbase was interested in. Many people who have been interested in crypto for quite a while, still hadn’t heard of some of these coins. It just brought more ill feelings towards the exchange.
It truly feels that at this point in the minds of many crypto fans, Coinbase can just do no right. I must say, a lot of this is a result of things they have done to themselves.
As always, I’m longing for days when decentralized exchanges will become the most popular.I know that recently I still did use Coinbase from time to time, but with the recent news I will never go back?
What do you think? Has this convinced you to leave the exchange, and even more importantly, convinced you to take your privacy and personal data more seriously?
Thanks for reading!