However, larger cryptocurrency exchanges were always thought to be a safer place to store cryptocurrency and the keys necessary to access it. Particularly, Coinbase enjoyed a reputation as appearing “too big to fail.” And 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 doing so with fiat currencies. In short, because of Coinbase, anyone can easily enter the crypto space.
But Hacking Team would be considered by many to be the opposite of that image — untrustworthy. The firm is purportedly very good at acquiring Bitcoin and Ethereum wallet files, transaction histories, contacts and other account information, but it also provides services that can inspire nightmares. Infiltrating phone/computer cameras and email accounts, password extraction and keystroke logging are just a few of its offerings. It has been directly connected to human rights violations in Sudan, Venezuela and other nations with repressive governments.
Despite this controversy, last month Coinbase aligned itself with Hacking Team by purchasing Neutrino, a firm that provides cryptocurrency transaction tracing services. Neutrino’s founders were previously employed by Hacking Team.
Public Backlash, Massive Problems
The now-infamous #DeleteCoinbase movement started on social media channels in response to this apparent 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 Hacking Team and its disregard for basic human rights like privacy — core tenants of the cryptocurrency philosophy for many.
Coinbase claims, for its part, that because the Neutrino products are the best on the market, it is justified in acquiring the business and has been gradually phasing out the employees in question.
But 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 or how many have actually deleted their accounts. It is also unclear where they will now store their cryptocurrency if they have. However, the far bigger question relates to growing cryptocurrency adoption.
For those just beginning to enter the cryptocurrency market, Coinbase’s easy entry level has long made it the most obvious choice to get started. Because the interface was user friendly, Coinbase naturally attracted the newest members of the cryptocurrency community.
But now, with trust broken and a push against the exchange mounting, adoption may slow dramatically. As trust issues continue to rise 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 nonexistent anonymity. Essentially, these platforms are seeking to move exchanges toward a decentralized model. By decentralizing the exchange concept, users would have substantially more influence on corporate decision making, creating a more 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.
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.