Quote:
Originally Posted by cstreit
This is where you guys are sort of wrong.
IF you transfer BTC out of a secure wallet, this fee does exist. It is a verification that this Bitcoin is legit because it was essentially taken offline.
However... using other methods you can transfer chunks out of the secure wallet paying that fee, into a less secure provider like coinbase, and pay out of there without additional fees.
The analogy is this. It costs $30 to open your safe regardless of how much you take out and put in your wallet. So the smart man takes out enough to distribute for what he needs, but not so much that if his Wallet is stolen that hes bust.
ATM fees are similar, it costs your $2.50 to take out your cash. ..so you take out more to pay that fee less often.
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So, the "Bitcoin" that users have on "deposit" with Coinbase, is actually held specifically by Coinbase, and not by the individual user? That seems similar to PayPal, where you have a "balance" with PayPal (denominated in USD), but since PayPal is not a real bank, it just shows up as a liability on the PayPal corporation's balance sheet. In the case of PayPal, if something goes wrong with the company (bankruptcy, fraud, etc.), then the "account holders" would become mere creditors at a BK hearing. It's for this reason that I made sure we swept 100% of our PayPal balance into our bank account every night (they have a "secret" unpublicized tool for large customers that will do this automatically).
Seems like Coinbase is the same thing? They hold your crypto themselves, but then give you an "account balance" that you can then easily use and trade within their system (much like PayPal?).
Other than being denominated in dollars versus crypto, what is the main difference then between a company like PayPal and Coinbase?
-Wayne