From 2014-2017 I ran a bitcoin exchange. AMA

Dec 16, 2020 26 Comments

Hello,

With bitcoin in the news I thought I'd make a thread about my experience in the space. I bought my first 10 bitcoin in 2011 and my first coinbase purchase was 2013, buying 20 for $99 each.

I ran a small side business in several underground forums. It sounds trivial and it was trivial until I got up to about 100 regular customers. I ran the business like a gold and silver exchange, PayPal or any electronic transfer for immediate exchange into bitcoin. My cut was a 8-12% spread which is consistent with the gold and silver trade.

I got up to about $20k in volume per month and maintained that for 6 months. Then I got a call from PayPal and google pay asking questions about the business and requesting certification and documentation. They seized both accounts with a good amount of money in them.

I was only about 24 at the time. I paid all relevant taxes. To maintain what I was doing I would have needed to register myself like an ATM or money exchange and would be liable for all proper contact vetting.

Anyways, I've been obsessed with bitcoin and just about everything crypto and if anyone wants to ask something to somewhat of a subject matter expert on the bitcoin protocol, applications of blockchain, and the crypto markets... Fire at will.

#tech #bitcoin #crypto #blockchain

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TOP 26 Comments
  • Uber
    CjXz22

    Go to company page Uber

    CjXz22
    Whatโ€™s your take on the future of crypto companies like Coinbase?
    Dec 16, 2020 1
    • OP
      Coinbase is a monster. I don't really have a take other than it's imperative that they maintain their reputation for being well-vetted and secure. They can be expensive if you don't know how to purchase on Coinbase Pro e.g. buy USD coin with a debit card and convert vs the $3 buy button. Solid company and it will be fun to watch their growth.
      Dec 16, 2020
  • It's almost a cliche at this point to call BTC as "Gold 2.0". You do that yourself in one of your answers. But isn't the point of Gold that it's a metal and we can never get newer, better Gold.
    What if somebody creates a new crypto that's better than BTC in every way and people start moving to it? Wouldn't BTC lose all its value?
    Dec 17, 2020 1
    • OP
      Many have tried. Bitcoin has a lot going for it in that the creator is anonymous and a hash rate of ~175 trillion hashes per second. Litecoin for example has a faster confirmation time. Other coins like Monero are ASIC-resistant using memory-dependant Scrypt algorithms. Bitcoin for whatever reason has staying power. It's a very real possibility something takes on bitcoins crown for #1 market cap, but right now it's dominant.

      As for the Gold analogy, I respect that, but also wouldn't it be possible for other metals to gain value? Granted the biblical references and history of gold give it prominence as well, that's not to say another metal couldn't be coveted one day. I realize this is a stretch, but it's another "what if?"
      Dec 17, 2020
  • Radiant Logic
    SPvI30

    Radiant Logic

    SPvI30
    Do you think we would be able to adopt crypto/btc in this century?
    I donโ€™t think so, but Iโ€™m still hopeful ๐Ÿคž๐Ÿผ
    Dec 16, 2020 1
    • OP
      It's already adopted. Mass Mutual this week bought $100m in bitcoin and there's a lot of significant institutional development in the space. Bitcoin won't be the currency of choice for buying a casual coffee or Uber eats. There's better crypto for that. It's tacky, but bitcoin is becoming somewhat of a gold 2.0. It improves upon it in several fundamental ways. Recently JPMorgan said an allocation of just 1% of pension and insurance funds means an additional $600b of funds moving into cryptocurrency. So, it's adopted and many are betting it will evolve over the century of course, but as far as charging your tesla in bitcoin it just doesn't make sense. There will be better crypto for that.
      Dec 16, 2020
  • Cisco
    YAaF61

    Go to company page Cisco

    YAaF61
    Do you think it is best to keep your coins with coin base or on a personal thumb drive ?
    Dec 16, 2020 1
    • OP
      Within those options there is a wide spectrum of operational security measures. On Coinbase they have a vault feature that's fairly well-vetted, keeps your coins in cold storage, and allows for m-of-n approval mechanism. For personal thumb drives there are ways to back this up, such as in the cloud or multiple thumb drives, and also configure your own m-of-n approval scheme. To change the question to what is better, cold/offline storage or hot/cloud wallet/exchange storage that's a no-brainer. Cold storage is the gold standard. I use a hardware wallet called Coldcard, which is a pretty cool product allowing me to conduct air-gapped transactions.

      The long and short of it is that consider the amount of bitcoin your keypair controls to be like a suitcase of cash. Trusting someone to carry it, that better be a high degree of trust. Carrying it yourself, you better know where you're going and what to do when you get there.
      Dec 16, 2020
  • New
    DYjs10

    New

    DYjs10
    Do you feel yourself important?
    Dec 17, 2020 1