In a podcast interview with Adam B. Levine, the host of the Let’s Talk Bitcoin podcast, Andreas Antonopoulos, a Bitcoin proponent and author of Mastering Bitcoin, said that Coinbase was a bank.
Levine and Antonopoulos were joined by Jonathan Mohan, a blockchain consultant, to discuss privacy and banks, during which Levine raised a concern about Coinbase, calling it a centralized exchange with no privacy. Levine went on to ask,
“So is there a use case for decentralized exchanges, or do we need to have a different type of centralized exchange? Is there a solution to this problem?”
Antonopoulos said that we were battling for privacy in the 21st century, in every domain. He clarified that banks were obligated to carry all round surveillance of every financial transaction in and out of every bank account, credit card, and payment under the Patriot Act. He added,
“So whenever you do a transaction on your Visa card, or your Paypal transaction, or your bank accounts, you can assume that not only are the Five Eyes agencies of Australia, New Zealand, the UK, Canada, and the United States watching, but you can assume that half of the European intelligence agencies, the Chinese, and Russians are watching that transaction too, and are all doing statistical analysis scoring.”
That is how traditional finance worked, he said. Talking about the role exchanges play, Antonopoulos opined that they were a mere subset of what is happening across the financial world. Due to the lack of visibility in crypto, they can be “thwarted, which means you can obfuscate and build better privacy into these systems.”
He called Coinbase a crypto-friendly bank. However, being a bank, signing up on Coinbase meant “compromising your privacy,” which is completely opposite of what cryptocurrency stands for, he added. He explained two reasons for the exchange’s popularity,
“One is, for people who see cryptocurrency as an investment, which in my opinion has always been the wrong way to look at this. If you’re not earning cryptocurrency you’re buying cryptocurrency, then you need an exchange. You don’t use cryptocurrency, so you keep moving between the two economies of fiat and crypto.”
Security in crypto was another issue, he said. He claimed that this lack of security led people to choose banks for outsourcing, banks who “don’t know how to handle their own custody.” He concluded by urging people in the space to help others with self-custody and security of their crypto, to keep people from outsourcing to a company where problems of privacy emerged.
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Namrata is a full-time journalist and is interested in covering everything under the sun, with a special focus on the crypto market.