Coinbase, the leading US crypto-currency exchange, has a problem.
Coinbase has more than 30 million account holders. Almost three times the active account holders than the stock brokerage firm Charles Schwab. Coinbase adds approximately 300,000 accounts each week! So Coinbase is a very big deal!
These millions of account holders rely on Coinbase “having their act together” and running a smooth operation that provides a pleasant exchange experience.
As of late, that has not been the case.
On February 15, many Coinbase account holders reported overcharges on their debit and credit cards linked to Coinbase. See article on The Verge.
Because of this report, I checked my bank account and to my surprise, my account was debited $111.10 from COINBASE TRAV FU CHEAPSIDE. Thousands of Coinbase account holders reported like charges. Some of those account holders reported multiple charges. I also read some disheartening reports of individuals saying that the “Coinbase Glitch” overdrew their accounts and now they are a vicious cycle of checks bouncing and scheduled automatic debits not being paid. As a result, their banks charge them excessive fees.
Coinbase admits the problem exists and says on its blog website the following:
Coinbase will ensure that each affected customer will be refunded in full for any erroneous charge,” the company writes. “Our processor confirmed that any erroneous charges will be refunded over the next few days.” The company further clarifies how the issue arose from the merchant category code, or MCC, change asked of by card issuers and banks and the time period within which transactions could have led to unexpected withdrawals, charges, or refunds:
Card issuers and banks recently requested that the MCC for digital currency purchases be changed by a number of the major credit card networks. As a result, purchases that occurred between January 22nd, 2018 and February 11th, 2018 may have been refunded and reprocessed—resulting in erroneous charges. Some customers might experience a delay between the issuance of the new charge and the offsetting refund, but ultimately customers should only have a single charge on their card statement.
We deeply apologize for any frustration this may cause. We are actively working with banks, processors and networks to improve the digital currency purchasing experience.
While cryptocurrency is exciting and exhilarating, it can also be very frustrating because it seems that every time one turns around, there is always something. This makes it very difficult to relax. I would like to wake up in the morning rest assured that my bank account is intact.
About a week-and-a-half ago, credit card holders from four U.S. banks – JPMorgan Chase, Bank of America, Citi and Capital One – have been barred from purchasing cryptocurrencies using credit cards at Coinbase.
I see more banks the following suit, especially after this latest Coinbase episode.
When putting things in perspective, cryptocurrency is not the problem. Satoshi Nakamoto’s vision of a decentralized transaction system is a wonderful idea. The problem is this: Greedy businessmen and businesswomen who seek to monopolize the system and control it. Coinbase is one such entity.
The centralized banking system that now stands in place has also been monopolized by the rich and powerful men and women who create the banks that hold, control and make money from our money. Because of a bank error and glitches in their system, I have lost thousands of dollars in the past. Happily, I was reimbursed.
Yet, no matter what the system is, it is the people who seek to monopolize and control that system who are the problem. We rely on them to do the right thing.
Cryptocurrency is like a naive virgin. At each turn, some slick talking scheme, scam, or Ponzi awaits to take advantage of her. Some chink in her fragile digital armor is discovered and exploited.
I do believe as the year’s progress, she will mature. But not before the banking system has had its way with her.
This latest Coinbase debacle has given the banking system all of the fodder it needs to build up its army of banks that will jump onboard and bar purchasing cryptocurrencies using credit cards at Coinbase.
Coinbase cannot be the only major game in the crypto space. Just as there are more than one bank individuals can choose from, we need more Coinbase-like exchanges to chose from as well.
I believe ETHOS will be that game-changer and Coinbase killer.
A retired Information Technology Specialist and Foreign Service Officer with a large U.S. Government Federal Agency, Technical Instructor, Blogger, WordPress Instructor, Web Designer, Internet Marketer and Cryptocurrency Investor and Mentor.