Coinbase Crypto Company’s Centralization Clash With The Coin Community Is Coming To Light
Will Coinbase Survive It's Current Bad Press And Seeming Liquidation?
Coinbase is currently facing a bit of a hard time and it looks like things might not get any better any time soon. The current issues could be traced to a number of things but regardless, many people think that Coinbase’s liquidation, if it eventually does happen, might hit the cryptocurrency market a lot harder than most people might expect.
Some Specifics About The Coinbase Problem
There are a few decisions made by the Coinbase management that many think is the root cause of their problems. These decisions also seem to have made their investors extremely uneasy. Some of these include the decision to raise the charges for the firm’s Coinbase Pro and also the employment of some individuals who used to be a part of the Hacking Team.
Currently, things seem to have degenerated so much that a hashtag was started on Twitter called #DeleteCoinbase and seemed to be aimed at running the firm into the ground.
Investors are reportedly unhappy about the way things are going and seem to be continuously losing trust in their investment. News of these issues is gaining a lot of traction and many fear that since Coinbase is regarded as the go-to exchange especially regarding non-crypto firms considering adoption, the current problems and possible eventual dissolution of the firm could heavily affect adoption so much that people become scared about the future of crypto and consequently avoid any integration with the crypto market.
Will Coinbase Affect Bitcoin?
Just as many people believe Coinbase may affect Bitcoin quite significantly, many others believe that Coinbase is just one fish in a large sea whose power and importance might be a little overrated. In the past, significant problems that have affected major exchanges and crypto firms did not affect Bitcoin negatively even though at the time, it was assumed that would happen.
In 2015, for example, Bitstamp had issues and lost about $5 million. This is a considerably small number compared to the $72 million Bitfinex lost just a year after. Both events had little or no effect on the health of the crypto.
Another fine example of Bitcoin’s resilience is the Mt. Gox episode. Mt. Gox was a Bitcoin exchange firm based in Tokyo, Japan and founded in 2010. By 2013 it had established itself so firmly that it successfully handled at least 70% of all Bitcoin transactions all over the world.
However, by February 2014, the company announced that it had supposedly lost at least 850,000 Bitcoins, an amount worth at least $450 million at the time. It subsequently filed for bankruptcy and eventually liquidated. When this happened, it was assumed that it would be the end of Bitcoin but the crypto still continued to perform considerably well.
Possible Reason For Bitcoin’s Tenacity
The major reason most people think Bitcoin has survived this long is its decentralization. Bitcoin is essentially peer-to-peer and doesn't have much of an official governance structure. This means that it is well insulated against the failure of related firms.
Centralization As A Framework For Crypto Exchanges
Coinbase is an entirely centralized business. It is a profit-oriented business and just like others, will make whatever moves it deems necessary to make sure the money keeps rolling.
The problem with this system is that bad moves tend to be made when businesses like this have their backs against the wall.
The Coinbase problem has now raised awareness for the decentralization of the entire crypto market, most especially the exchange firms. It would seem like the only way these problems can be completely avoided is for decentralization to be entirely adopted.
Some exchanges currently intend to use decentralization to handle all their transactions, ultimately giving better security to their stakeholders and customers. CoinCasso and OpenLedger DEX are two notable examples.
Finally, the conclusion can probably be made that Coinbase’s problems or eventual demise will not affect the Bitcoin market but only affect themselves and their customers.