Many people from the bitcoin community have expressed their concerns about Coinbase. Coinbase is probably one of the biggest bitcoin ventures if not the biggest. Having said that, is Coinbase becoming the bitcoin equivalent of PayPal? How damaging could that be to bitcoin’s infrastructure?
Coinbase does not have the features of a bitcoin wallet
As absurd as this might sound, sending and receiving bitcoin isn’t everything important about a bitcoin wallet. Bitcoin wallets come with a variety of features that everyone can utilize. Being your own bank is an important point to have in mind. Not only for people that use a bitcoin wallet, but for every bitcoin supporter in general. Everyone using Coinbase to store bitcoins isn’t “being his own bank” for the simple reason that he doesn’t own the private keys to the addresses his coins are stored in.
A recent post in /r/bitcoin by user /u/coinuser1111 brings up this issue. More and more bitcoin users are starting to think that Coinbase isn’t treating its wallet user as a neutral service provider but rather as a guarding authority. In the mail exchange that coinuser1111 had with Coinbase’s team, he was asked to provide Coinbase with information about his outgoing transactions using Coinbase as well as the source of his deposited bitcoins.
How important is it to own the private key?
Owning the private key of your address is considered a fundamental importance throughout the bitcoin community. It’s the key to following the Be your own Bank principle. Some of the advantages people using centralized wallets like Coinbase will never enjoy include the following: Not having to abide by any preset limitations when dealing with financial transactions, being free to prove ownership of your money at any time, knowing that your funds are physically and not virtually available to you at any given instance, since no one can practice fractional reserve using them, easy access to complete privacy.
So could Coinbase mutate bitcoin into another Paypal? As one of the biggest bitcoin companies, Coinbase has a big influence on the entire industry. Apparently, no company has the ability to direct the core of the currency, but every industry needs to have standards. Bitcoin wouldn’t have been what it is today if it wasn’t for all the acceptance that it received. Big players in the industry will have to respect and also promote the fundamentals in bitcoin’s infrastructure. Bitcoin has a lot of hidden potential, and if a company like Coinbase was to become the face of this industry all the hidden potential is probably never going to be appreciated by the masses.
Images from Coinbase