The Defiant recently revealed that Coinbase controls 11% or approximately 2.275 Million BTC, worth $129 Billion.
As the fourth-largest cryptocurrency exchange globally, Coinbase commands significant trading volume—$1.5 billion in 24-hour transactions and 34 million monthly users—and acts as a custodian for major corporations, including BlackRock, Tesla, and MicroStrategy.
Nevertheless, the concentration of Bitcoin in a single company has prompted important questions regarding potential risks.
A potential Coinbase disaster and its aftermath
The Persuader reportCritics claim that the concentration of assets in a particular exchange can create systemic risks. This is especially true if there are security problems, legal issues or any other crisis.
Read Related Articles
Jameson Lopp of Casa Multi-Sig Custodian, a multi-sigcustodian, stresses that Coinbase may be considered more stable, but it is still not the most secure. exchangesIt is still vulnerable to national-state pressures. The US Government’s seizure in the 1930s of gold was a historical example.
The implications of a Coinbase disaster—such as a hack resulting in the loss of customer funds—could reverberate throughout the cryptocurrency market. This would undermine the public’s confidence in cryptocurrency and could lead to significant declines in market pricesThis could trigger a long-term bear market.
According to the report, the fears are heightened by the fact more than 72 million Americans own accounts on this platform. The fallout from the incident could impact a large number of investors.
Is a Bitcoin Fork on the Horizon?
Some experts like Steven Lubka of Swan Private believe that a loss catastrophic is unlikely because Coinbase’s “advanced security measures,” Risks of centralization remain a major concern.
The idea of a Bitcoin fork to recover lost assets—similar to the Ethereum situation following the DAO hack in 2016—has been suggested. Experts believe, however, that while Bitcoin is influential stakeholders Some might want to roll back the legislation. “recover” The decentralized nature Bitcoin’s system would most likely not accept such proposals.
Lisa Neigut explains, as the founder of Base58, that Bitcoin’s Unspent Transaction Output Model (UTXO) creates a shield against centralized risks. This model ensures that a bug that affects the keys of a specific entity will only impact the entity in question, maintaining the integrity of the entire network.
The separation of these concerns is essential for the continued health of Bitcoin, particularly in light of possible centralization risks. However, there are still concerns about the influence that large custodians could have on the ecosystem.
Read Related Articles
Armin Sabouri warns Botanix Labs’ CTO that major holders may coerce the public by threatening their assets. This could crash the market and force the network This will lead to the ossification of Bitcoin in response to demands. This scenario is a direct threat to the decentralization ethos that underpins Bitcoin.
The future of the cryptocurrency market will continue to debate the risk associated with the increasing amount of assets that are held by the exchange. Due to the increasing number of ways to possibly hack or try to hack exchanges such as Coinbase, monitoring and preventing these scenarios is essential to prevent another Mt. Gox disaster.
Bitcoin’s price was $57,650 at the time this article was written. It had failed for the second day in a row to surpass the $58,000 level of resistance.
Featured Image from DALL E, Chart by TradingView.com
“This article is not financial advice.”
“Always do your own research before making any type of investment.”
“ItsDailyCrypto is not responsible for any activities you perform outside ItsDailyCrypto.”
Source: www.newsbtc.com
