Why I recommend not using Coinbase
There are many reasons why I recommend not using Coinbase, besides their business model to hold your cash for 7-14 days until they can run their analytics, and their batch processing where they hold your transaction until it’s convenient for them to send it, The following is another great reason; even though it might be a couple months old, it was just recently brought to my attention:
Coinbase, the largest U.S. bitcoin and cryptocurrency exchange, has had a hard time lately.
Repeated outages at the exchange have left many users locked out of their accounts just as the bitcoin price made major moves.
Now, following reports Coinbase will soon begin selling blockchain analysis software to the U.S. government, its users are withdrawing bitcoin and looking for alternatives, according to Glassnode data.
“If you use Coinbase you should delete your account,” bitcoin and crypto entrepreneur Matt Odell said after The Block reported the U.S. Drug Enforcement Administration (DEA) and the Internal Revenue Service (IRS) intend to buy licenses from Coinbase for an analytics platform called Coinbase Analytics.
Other influential voices in the bitcoin and crypto community echoed Odell, asking if Coinbase customers could trust the exchange to keep their data private.
The San Francisco-based exchange hit back, promising the blockchain analytics tool, built off its acquisition of blockchain data firm Neutrino in late 2019, “does not include any personally-identifiable information for anyone, regardless of whether or not they use Coinbase.”
Coinbase “offers this product to financial institutions and law enforcement agencies to support compliance and investigation use cases,” a company spokesperson said.
“This tool only offers them streamlined access to publicly-available data and at no point do they have access to any Coinbase internal or customer data.”
These security concerns and recent outages have caused Coinbase customers to withdraw a near-record amount of bitcoin from the exchange, according to data from blockchain analytics firm Glassnode that has been disputed by Coinbase.
Coinbase blamed the June 1 outage on a five-fold traffic spike that caused the exchange’s servers to buckle after they were “unable to keep pace with this dramatic increase in traffic.”
The coronavirus pandemic and subsequent lockdowns have caused bitcoin exchange volumes to soar along with traditional markets in recent months.
“The crypto markets have experienced much of the same unprecedented volatility and activity during the outbreak the traditional markets have, which means the underlying tech infrastructure has effectively been stress tested daily,” said Jim Nevotti, president at trading software provider Sterling Trading Tech, adding “even seconds of downtime to switch platforms can have an impact during volatile periods.”
Elsewhere, a Twitter poll of 5,000 people carried out by bitcoin and crypto trader Josh Rager at the end of last week showed two-thirds of people who use Coinbase are willing to leave the platform.
While I have experienced the Coinbase not allowing me to send funds until after X number of days, I used Coinbase to purchase and send with zero issues twice in the past few weeks.
I was using Coinmama but they randomly decided to deny me their services after a year. Same with Paybis, applied and immediately denied. It’s like I’m flagged in some secret database somewhere.
I’ve used localbitcoins, it was OK. I’ve tried using Cash app to buy, but I was never able to send to someone else. So my only option is Coinbase. If anyone knows of another way I can purchase BTC with debit card instantly and send it insantly in the US, please let me know.
There’s currently talks of the DOJ doing something that could potentially turn crypto into a centralised world currency under the jurisdiction of major banks or something. Im not politcially inclined enough to grasp this one, someone else may have better understanding of it. What I’ve gathered is that crypto in general may soon be very unsafe to use for what we do here, which is what most users are worried about tbh. If someone wants to add feel free I’m pretty ignorant on this revelation.
What’s a good alternative to coinbase? I’m trying to figure out this coin shit, I miss the good ole days of western union
@Synergy-Forge I value your opinion, Syn (as well as your products), and would just like to know what an alternative to Coinbase you would recommend. I use Coinbase and just might get out for good now.
@biker811 if you learn how to navigate cashapp it’s the most reliable, and super fuxking easy to send Bitcoin to your dealer of choice! also it’s probably the safest way!
Im a big fan of paxful…once you familiarize yourself with the platform its pretty solid
@lynxpoint The only knock on cash app is how long it takes them to verify information in order to withdrawal(send) your BTC. They let you buy right away and then you’re stuck waiting for their approval hoping the BTC value doesn’t take a steep decline. But once you’re past that you’re golden.
@Methylated I bought instantly on cash app, then tried to send to a wallet. It looked like it sent for a few seconds, my balance got deducted, then the amount showed up in my balance again like it wasn’t able to send or it got rejected or something. This happened over and over so I just gave up
There are many different ways you can buy crypto now . coinbase is way outdated. exodus and crypto.com are 2 very good muti based platforms . Ive been trying to get my customers to switch over to monero . The way monero is structured it is 100% anonymous instead of BTC being pseudo anonymous, they say . It also saves you from having to tumble coins
@Jack78 Thank you sir, I appreciate that. I agree with what one responder said, that there are many ways to get bitcoin now, and my first suggestion is always going to be a bitcoin ATM.
When was the last time you looked in your area for one? This decentralized currency has grown in popularity so much that everyone is trying to cash in on it. So check your local area first: https://coinatmradar.com/ but be careful of the fees. Check them before you go. If you’re getting charged more than 7 or 8% then you might be better off going to the next town to get a better deal. Since bitcoin is so fluid, you can have your buddy pick it up a thousand miles away if he gets a better rate and have it within minutes. Walk in, put cash in the machine, walk out with coin.
Next I would look at Peer to Peer networks that haven’t bowed down to big government. Long gone are the localbitcoins.com and the paxful.com locations that now subscribe to the KYC (know your customer) laws. Look for any P2P that will send you cash in the mail. Then you know you have a P2P that doesn’t hold hands with the government. Examples of that are Agoradesk.com, bitvalve.com, and cryptolocally.com. You can use numerous forms of payment in these, the coin is held by a neutral third party until both parties agree it was a successful transaction. This prevents either party from being taken advantage of. You can use bank transfers, gift cards, paypal, credit cards, etc as payment. Cash in person is the best. meet at a coffee shop and swap cash for coin. It’s common and the fees are super low. Less than 1%.
You can go here https://bitquick.co and enter an agreement to deposit money into a nearby bank that you choose from a list (such as capital one, Chase, many credit unions) and your bitcoin is released to you. You only have 3 hours to get the deposit in but the average transaction time is 90 minutes. It’s anonymous and different.
Ask a Friend
I can refer you to a few people that are professional coin traders, they can do cash in the mail. Just don’t tell a professional trader why you’re buying and they won’t ask.
Finally, you can go get a visa, mastercard, or Amex gift card and go here https://www.cardcoins.co/ to sell it. you would upload 3 pics and they would send you the coin directly for it. Not sure what kind of hit you would take but if you get a visa card for xmas then you know what to do with it.
So there are lots of ways that you can avoid Coinbase, they are a favorite of the IRS so remember that if you didn’t report that you bought coin to the IRS, you can rest assured that they did. Did you see the box on your tax return that asks if you purchased or sold any? it is the first year they have asked. If you said no then you may have a problem on your hands. So my recommendation is help others get out of their comfort zone and explore new ways of doing old things. Friends don’t let friends Coinbase.
Hope that helps,
@lynxpoint You haven’t had any issues YET from the last couple of transactions at Coinbase. Remember that if you received 600 dollars or more in coin from them then they will send you a 1099-MISC which has to be reported on your taxes. I just don’t understand how they are still around.
@SouthernCompounding Thank you for that correction, you are right, it is 1099 -K but I differ from your suggestion that he’s liable if only receiving.
From the IRS.gov website
The sale or other exchange of virtual currencies, or the use of virtual currencies to pay for goods or services, or holding virtual currencies as an investment, generally has tax consequences that could result in tax liability. Notice 2014-21 provides that virtual currency is treated as property for U.S. federal tax purposes. General tax principles that apply to property transactions apply to transactions using virtual currency. Among other things, this means that:
A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property.
Payments using virtual currency made to independent contractors and other service providers are taxable, and self-employment tax rules generally apply. Normally, payers must issue Form 1099-MISC.
Wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer on a Form W-2 and are subject to federal income tax withholding and payroll taxes.
Certain third parties who settle payments made in virtual currency on behalf of merchants that accept virtual currency from their customers are required to report payments to those merchants on Form 1099-K, Payment Card and Third Party Network Transactions.
The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer.
So what’s taxable? In short, a lot: Selling crypto for cash, paying for goods and services, buying one crypto for another, receiving mined crypto, being paid in crypto, or receiving rewards.
What’s not taxable: Donating, buying and holding, as well as transferring between wallets (but you’ll have to reconcile with the other wallet).
But I guess all that isn’t the point. The point is that Coinbase continues to be a popular place to purchase crypto and it shouldn’t be. They have a terrible business model and clearly have a working relationship with the IRS and DEA, which is a complete reversal from 2015 when they fought tooth and nail to prevent their users from being exposed to the IRS. Why the about face? Should we still use them? Is it safe? Is it protected? I guess we can only answer that individually, I merely supplied the additional information. Thank you for adding to that,
@Synergy-Forge you’re a god damn wealth of information! Thank you for this. There’s actually a BTC atm right inside the mall 5 mins from me. Not sure why I never thought of this. I’m assuming you just put cash in, scan QR code of my wallet, and done, yeah? Anyhow, thank you for taking the time. This is why I buy gear from you. Cheers!
Yes sir, that is how I have come to understand it. Well done.
@Synergy-Forge I have found localbitcoins to be a huge pain in the ass and not worth the effort considering the ID req’s. Can you comment on Agoradesk? Is that usually cash in the mail or are there instant options as well?
@DeepFakeRealGains There are instant options as well. Just never release escrow early, no matter what! If they refuse to do business with you cause you’re new and want you to release escrow, that means they are trying to scam you. NEVER FE.
Damn this post scared me. But then I saw that Coinbase analytics only provides public information and that Coinbase wouldn’t sell the private information. Any concern for people like us who only used the crypto for small steroids purchases?
I doubt it, but it is an unsubstantiated opinion.