There has been a glut of news regarding trust issues in the cryptocurrency sphere. For example, the recent death of QuadrigaCX CEO Gerry Cotten revealed that he personally held the keys for all reserves for the company, and they were lost. Platform users scrambled to find their coins, but now must wait for Canada’s wheels of justice to provide a solution.
However, for many in the crypto world, there’s been one company that remained trustworthy — Coinbase. The massive cryptocurrency exchange has done a lot for the blockchain community. Notably, it has made the acquisition, depositing, and trading of cryptocurrency as simple as fiat currencies. Because of Coinbase, anyone can easily enter the crypto space.
The Hacking Team would be considered the opposite of that image — untrustworthy. The firm is really good at acquiring Bitcoin and Ethereum wallet files, transaction histories, contacts, and other account information, but they also provide services that can inspire nightmares. Infiltrating phone/computer cameras, email accounts, password extraction, and keystroke logging are just a few of their offerings. They have been directly connected to human rights violations in Sudan, Venezuela, and other nations with repressive governments.
Despite this controversy, last month Coinbase errantly aligned themselves with Hacking Team by purchasing Neutrino, a newer firm that provides cryptocurrency transaction tracing services. Neutrino’s founders were previously employed by Hacking Team.
Public Backlash, Massive Problems
The now-famous #deletecoinbase movement started on social media channels in response to this blatant disregard for the well-known human rights violations of the Neutrino founders. Participants in the #deletecoinbase movement argue that no amount of money or technology is worth supporting anyone associated with Hacker Team and its disregard for basic human rights.
Coinbase claims, for its part, that because the Neutrino products are the best on the market, they are justified in acquiring the business and gradually phasing out the employees in question.
The viral movement uncovered many other issues with Coinbase. Some of these issues were related to mismanagement of user data. For example, one executive revealed that the Neutrino purchase took place in response to a previous vendor’s disreputable decision to sell user data to third parties.
The future at risk
It is unclear exactly how many Coinbase users have joined the viral #deletecoinbase movement. It is also unclear where they will now store their crypto. However, the far bigger question relates to cryptocurrency adoption.
For those just beginning to enter the cryptocurrency market, Coinbase’s easy entry level has always been the most obvious choice. Because the interface was user friendly, Coinbase attracted the newest members of the cryptocurrency community.
But now, with trust broken and a push against the erstwhile exchange, adoption may slow dramatically. As trust issues continue to mount in the cryptocurrency world, the reasons to enter for the first time may drop to zero, eventually driving the industry into obsolescence.
Some solutions appearing
Thankfully, the blockchain industry has been aware of potential issues with exchanges for a while now. True to form, action has been proactively taken. Concerned with the trends facing centralized exchanges like Coinbase, several platforms have already developed solutions.
These solutions address the lack of trust, security risks, high trading fees, and compromised or non-existent anonymity. Essentially, these platforms are seeking to move exchanges toward a decentralized environment. By decentralizing the exchange concept, users would have substantially more influence on corporate decision making, creating a trustworthy environment.
For example, one such solution is Estonia-based CoinCasso. The exchange hopes to combine the best of both worlds, offering advantages from both centralized and decentralized platforms. CoinCasso could be the answer to Coinbase expatriates mostly because the platform is specifically designed to serve the community, rather than make a killing on transaction fees.
For example, CoinCasso is giving its users the authority to add, or list, tokens on the exchange. This ought to make it pretty easy to do business on the platform and protect against insider connections.
The company is achieving this through building a community of sorts. Joining this community incurs numerous benefits, the most popular of which is profit sharing. Because it is decentralized, CoinCasso members will be eligible to receive approximately 80 percent of profits.
And CoinCasso isn’t the only company pushing for decentralization. Other decentralized exchanges are seeking to make the barrier of entry smaller for new cryptocurrency users. For example, OpenLedger DEX is seeking to make onboarding very simple, with just minor KYC requirements. Other companies are moving in a similar direction, seeking to take the place that Coinbase is leaving open. With decentralization comes flexibility, protection, and user control.
Crypto has been seeking widespread adoption for years, and Coinbase was one avenue toward this goal. It’s encouraging to see that where Coinbase has dropped the ball, other exchanges are pursuing solutions that will move the industry forward. While #deleteCoinbase will certainly have its impact, the industry is responding well.