Coinbase Warns During Times of High Volatility, Access Could Become 'Unavailable' (cityam.com)

An anonymous reader quotes City AM: A leading bitcoin exchange has warned that customers may be unable to get their money out quickly in the event of a crash in the cryptocurrency's price. Writing in a blog post last week, Coinbase's co-founder and chief executive Brian Armstrong, said despite "sizeable and ongoing" increases in the firm's technical infrastructure and engineering staff, access to Coinbase services could become "degraded or unavailable during times of significant volatility or volume. This could result in the inability to buy or sell for period of time," he said.

Armstrong added that there would be restrictions on how much customers could sell, or sell limits, to "protect client accounts and assets"... Bitcoin's market capitalisation rose above $300 billion for the first time earlier this week when its price rocketed to an all-time high of just over $17,000. Many analysts have warned that bitcoin represents an unsustainable bubble, though no one is quite sure when it will burst.

Comments

Reasonable

[stikves]

I don't find the current Bitcoin valuation rooted in reality. Yes there is a real tangible value in Bitcoin as it can be used to purchase online items from retailers like Newegg, but that is getting more and more difficult. As seen in the Steam example, the success of Bitcoin as an investment instrument is damaging Bitcoin as a payment method. The current transaction times and rates are crazy high, and the dream of buying lattes with is no longer seems viable.

I still have a tiny amount of Bitcoin and a few other crypto coins, but don't plan to buy any more. The price just does not make sense.

used to be known as "bucketshop"

[mbkennel]

This setup, trading private ious on a private unregulated 'exchange' which is really a business of its own has a very long history. Known as a 'bucketshop'. And it is inevitably filled with scammers and fraud, because the company that runs it has a direct financial interest in giving you poor prices and execution slippage.

Been there for equities (now forbidden), retail foreign exchange (lots of ripoffs there), and now bitcoin.

When professionals trade in banks, they ask *multiple* market makers for two-way, buy and sell quotes. Two way is important so that the counterparty doesn't know ahead of time whether you want to buy or sell. Not true when you're on a computer platform which already has your position and clicks---so it can shade prices and spread and blow you away or margin call you during volatility, giving you worse prices than the real market and pocketing the difference.

Re:Circuit Breakers

[gweihir]

The "quality of the exchange" is defined also by their survivability. When Bitcoin crashes, it may well crash to zero and wipe out exchanges that are willing to pay out while the exchange-rate is on free-fall. Hence it is very debatable whether this is a sign of low quality. The other thing is that the BC network itself will likely become extremely slow to do transactions when the crash happens and will get even lower when people stop mining because they cannot recover the electricity cost of mining anymore. The first effect will be immediate, the second one may happen within hours. This is an extreme booster for the speed the crash will happen.

So getting out at 8k was the only sane thing. I would have done the same if I had any bitcoins.