Coinbase has made two big announcements in the month of March: full SegWit implementation and the launch of an index fund. Neither have gone entirely as planned. Additionally, integrated tax tools have been developed to allow for streamlined tax calculations.
Coinbase users report lost funds following faulty SegWit implementation
To avoid any confusion, I will preface this by saying it is an entirely Coinbase related issue.
According to a report on Reddit, bitcoin sent via Coinbase.com payment gateways are sent to random legacy addresses as opposed to the designated SegWit address. This is allegedly due Coinbase's payment protocol failing to introduce SegWit addresses for use. As a result, coins are sent to non-designated legacy addresses and are consequently lost in their tracking system.
In layman terms, it appears Coinbase's merchant SegWit implementation is broken, and bitcoins sent through it will end up going to the wrong address.
Coinbase support were quick to respond on Reddit in an attempt to troubleshoot the issue:
Both bitcoin txids provided point to non SegWit addresses. Users may want to avoid sending bitcoin payments to merchants that use Coinbase as a payment processor until this is cleared up.
Bitcoin trader @CarpeNoctum remarks that the faulty implementation is largely as a result of a lack of technical expertise within the Coinbase team
Lead developer of the Samourai Wallet TDevD follows with similar sentiments
For necessary clarification, the coins appear to be lost within Coinbase's internal database, rather than lost in the sense of being gone forever. While not as severe, this is still a significant annoyance and entirely unwarranted considering the level of resources Coinbase has at its disposal.
Update 22h00 GMT, Mar. 13 - A Cointelegraph article states that Coinbase has fixed the issue and reimbursed the customers affected.
Coinbase index fund - mixed reception
We’re excited to announce Coinbase Index Fund.
Coinbase Index Fund will give investors exposure to all digital assets listed on Coinbase’s exchange, GDAX, weighted by market capitalization. If a new asset is listed on the exchange, it will be automatically added to the fund.
The newly launched index fund will have an allocation as follows:
The first point of controversy is that the index fund is limited to accredited investors based in the US. This significantly reduces the number of people who are able to participate, and is somewhat antithetical to the permisionless systems that cryptocurrency represents.
The next issue is that the index fund gives the illusion of a safer investment into cryptocurrencies through a "diversified" cryptocurrency portfolio. The reality is that all cryptocurrency price movements are heavily correlated - hinging entirely on bitcoin's volatility.
Finally, the major point of contention within social media circles is the inclusion of Bcash (Bitcoin Cash) as part of the index fund's portfolio. One user likens the listing of Bcash alongisde Bitcoin as "taking an ounce of 24 karat pure gold [Bitcoin] and melting crayons and rat feces [Bcash] and claiming you made it better". The unannounced listing of Bcash on Coinbase was not without controversy, and its inclusion in the Coinbase index fund is a questionable move.
Regardless of negative points, the Coinbase index fund can be seen as a net positive. It can serve as a gateway into the world of Bitcoin for mainstream audiences, previously overwhelmed with information overload and hesitant to get involved. With some skin in the game, they will be pushed to do their own research and develop more informed views on the space.
In other news, Coinbase have developed tax tools to help streamline the difficulties US-based cryptocurrency investors have been facing with tax filings.
The tax tools are fairly comprehensive, and allow users to do a multitude of things, including:
- Generating a single report which provides a full overview of all transactions made on the Coinbase platform
- Establishing a cost basis for all purchases and proceeds for all sales inclusive of Coinbase fees
- Use of the Coinbase-only gain/loss calculator to allow easy calculation of gains or losses for tax purposes via the first-in-first-out (FIFO) method
Featured image from Shutterstock
Never miss a thing and suscribe to our newsletter.
Editor at Crypto Insider. Likes decentralization, fungibility and BIPs. Dislikes red tape, corporate stuffiness and oxidation