All posts in “coinbase”

These are the most successful companies to emerge from Y Combinator

Earlier this month, Brex, a credit card provider to startups, announced it had raised $125 million at a $1.1 billion valuation.

The round was impressive for a couple of reasons. 1. The founders are a pair of 22-year-olds that had set out to build a virtual reality company before pivoting to payments. And 2. They had only completed Y Combinator, a well-known Silicon Valley startup accelerator, the year prior.

Y Combinator is responsible for many successes in the startup world, certainly more than its fellow accelerators, which are all known to provide early-stage companies with a seed investment  — in YC’s case, $150,000 — mentorship and educational resources through a short-term program that culminates in a demo day.

Today, YC has released the latest list of its most successful companies since it began backing startups in 2005. Ranked by valuation and/or market cap, Brex, sure enough, is the youngest company to crack the top 20:

  1. Airbnb: An online travel community and room-sharing platform founded by Brian Chesky, Joe Gebbia and Nathan Blecharczyk. Valuation: $31 billion. YC W2009.
  2. Stripe: A provider of an online payment processing system for internet businesses founded by John and Patrick Collison. Valuation: $20 billion. YC S2009.
  3. Cruise: Acquired by GM in 2006, the company is building autonomous vehicles. It was founded by Kyle Vogt and Daniel Kan. Valuation: $14 billion. YC W2014.
  4. Dropbox: A file hosting service and workplace collaboration platform founded by Drew Houston and Arash Ferdowsi that went public in March. Market cap: >$10 billion. YC S2007.
  5. Instacart: A grocery and home essentials delivery service founded by Apoorva Mehta, Max Mullen and Brandon Leonardo. Valuation: $7.6 billion. YC S2012.
  6. Machine Zone: A mobile games company, founded by Mike Sherril, Gabriel Leydon and Halbert Nakagawa, known for “Game of War.” Valuation: >$5 billion. YC W2008.
  7. DoorDash: An app-based food delivery service founded by Tony Xu, Stanley Tang and Andy Fang. Valuation: $4 billion. YC S2013.
  8. Zenefits: The provider of human resources software for small and medium-sized businesses founded by Laks Srini and Parker Conrad. Valuation: $2 billion. YC W2013.
  9. Gusto: The provider of software that automates and simplifies payroll for businesses, founded by Josh Reeves, Tomer London and Edward Kim. Valuation: $2 billion. YC W2012.
  10.  Reddit: An online platform for conversation and thousands of communities founded by Alexis Ohanian and Steve Huffman. Valuation: $1.8 billion. YC S2005.
  11.  Coinbase: An digital cryptocurrency exchange and wallet platform founded by Brian Armstrong and Fred Ehrsam. Valuation ~$1.6 billion. YC S2012.
  12.  PagerDuty: A digital ops management platform for businesses founded by Baskar Puvanathasan, Andrew Miklas and Alex Solomon. Valuation: $1.3 billion. YC S2012.
  13.  Docker: A platform for applications that gives developers the freedom to build, manage and secure business-critical applications, founded by Solomon Hykes and Sebastien Pahl. Valuation: $1.3 billion. YC S2010.
  14.  Ginkgo Bioworks: A biotech company focused on designing custom microbes founded by Reshma Shetty, Jason Kelly, Barry Canton and others. Valuation: >$1 billion. YC S2014.
  15.  Rappi: A Latin American on-demand delivery startup founded by Felipe Villamarin, Simon Borrero and Sebastian Mejia. Valuation: >$1 billion. YC W2016.
  16.  Brex: A B2B financial startup that provides corporate cards to startups. Its founders include Henrique Dubugras and Pedro Franceschi. Valuation: $1.1 billion. YC W2017.
  17.  GitLab: A developer service founded by Sid Sijbrandij and Dmitriy Zaporozhets, that aims to offer a full lifecycle DevOps platform. Valuation: $1.1 billion. YC W2015.
  18.  Twitch: An Amazon-acquired live streaming platform for video games used by millions. Its founders include Emmett Shear, Justin Kan, Michael Seibel and Kyle Vogt. YC W2007.
  19.  Flexport: A logistics company that moves freight globally by air, ocean, rail and truck founded by Ryan Petersen. Valuation: ~$1 billion. YC W2014.
  20.  Mixpanel: A user analytics platform that helps each person at a business understand its users founded by Suhail Doshi and Tim Trefren. Valuation: >$865 million. YC S2009.

The full list of Y Combinator’s 100 most successful companies is available here.

Now any idiot can apply to list their altcoin on Coinbase

Bring on the altcoin spring.

Cryptocurrency exchange Coinbase teased an opening of the shitcoin floodgates today with an announcement that it will allow issuers of obscure altcoins, tokens, and even digital collectables like CryptoKitties to officially apply to be listed on its exchange. 

At present, Coinbase only lists a few cryptocurrencies — bitcoin, bitcoin cash, ether, ethereum classic, and litecoin — that are for the most part generally considered to be not a scam. According to a company blog post, that is all about to change. 

“Today we’re announcing a new process that will allow us to rapidly list most digital assets that are compliant with local law, by satisfying listing requests in a jurisdiction-by-jurisdiction manner,” reads the blog post. “The new process begins with a form for issuers to submit assets for listing at Coinbase, which we will evaluate against our digital asset framework.”

Have an altcoin that’s in desperate need of a pump? How about a digital collectible that needs an aura of credibility? Well then, this handy Coinbase application form is for you.

Hello yes I am a major investor.

Hello yes I am a major investor.

Image: google form / coinbase

Of course, Coinbase may not accept your application. But hey, when has the almost certainty of failure stopped anyone in the cryptocurrency space?

Notably, the application form doesn’t appear to be limited to issuers (“Lead Developer or Founder”). “Major Investor (>$1M invested)” is also an option for your “position with this project” when filling out the form, as is “Executive or Employee.” 

“[There] are now thousands of digital assets of all types, including coins, tokens, forks, stablecoins, and collectibles,” notes Coinbase’s post. “One of our top customer requests is to add support for these new assets, and we have been determining how to do this in a secure and compliant way for those assets meeting our standards.”

As the most popular U.S. cryptocurrency exchange, what Coinbase decides to list or not list can have a huge impact on the market at large. In December of 2017, for example, Coinbase announced it would support bitcoin cash — and the price of the cryptocurrency skyrocketed almost immediately. The price of ethereum classic also went up following the Coinbase announcement that it would soon support the coin.

More questions.

More questions.

Image: Google form / coinbase

We can practically hear altcoin developers licking their lips. And why shouldn’t they be? At present, it’s free to submit an application to the company. 

That may change in the future, however. 

“Depending on the volume of submissions,” Coinbase explains, “we reserve the right to impose an application fee in the future to defray the legal and operational costs associated with evaluating and listing new assets.”

In other words, if you have a coin you’d love to see listed on Coinbase you should get while the getting’s good. If you wait too long, you may end up paying for the pleasure of Coinbase rejecting your application and telling you your project is a worthless and possibly criminal scam.

But hey, nothing’s stopping you from submitting your application today! So go ahead and grab that Google Form by the horns and ride it all the way to the moon. 

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Attorney General blasts cryptocurrency exchanges

It’s not just the hacks and outright scams that make cryptocurrency a risky investment. 

According to a report from the office of the New York state attorney general, the exchanges themselves — the places where would-be investors go to buy and sell cryptocurrencies like bitcoin and ether — are not doing enough to protect their customers. And that should concern you. 

The in-depth look at 13 exchanges, released today, details all the ways in which major exchanges fail to guard their customers against fraud, manipulation, and abuse. It’s not a pretty picture. 

“[Virtual] asset trading platforms now in operation have not registered under state or federal securities or commodities laws,” reads the report. “Nor have they implemented common standards for security, internal controls, market surveillance protocols, disclosures, or other investor and consumer protections. Accordingly, customers of virtual asset trading platforms face significant risks.”

That those risks are varied and wide-ranging was perhaps to be expected. That they are not limited to some of, shall we say, the less scrupulous exchanges was perhaps not.  

The New York State attorney general sent voluntary questionnaires out to 13 exchanges, and nine decided it was in their best interest to respond. The exchanges that did play ball include major names like Bitfinex, Bittrex, Coinbase, and Gemini Trust Company. Binance Limited, Gate.io, Huobi Global Limited, and Kraken all essentially told the AG to buzz off. 

Which didn’t go over so well. 

“Based on the results of our report,” wrote the official Twitter account of New York state attorney general Barbara Underwood’s office, “we have also referred three platforms — Binance, Gate.io, and Kraken — to the New York State Department of Financial Services for possibly operating unlawfully in New York.”

The report looked at the possibility of market manipulation and insider trading at each exchange, in addition to the prevalence of automated and algorithmic trading. Many of the companies running the exchanges, the report shows, buy and sell cryptocurrencies on their own exchange — perhaps in an effort to maintain liquidity. 

Coinbase, for example, told the AG that close to 20 percent of its “executed volume” was its own trading. Why is this a potential problem?

“[When] a significant percentage of the volume in one or more assets on a venue is attributable to one source,” the report explains, “customers face the risk that the availability of liquidity in those assets could change, without notice and at any time, including when liquidity is needed most — namely, in times of market volatility or rapid price movement.”

In other words, if the market suddenly tanks and Coinbase stops buying and selling on its own exchange, those mom and pop investors looking to offload their crypto before it hits rock bottom may not be able to find buyers. And then they’d be left holding some rapidly shrinking bags. 

Coinbase, need we remind you, is one of the better regulated exchanges. 

Kraken, which declined to answer the AG’s questions, appeared to dismiss the very notion that scams even matter at all when it comes to trading cryptocurrency. 

“In announcing the company’s decision not to participate in the Initiative,” notes the report, “Kraken declared that market manipulation ‘doesn’t matter to most crypto traders,’ even while admitting that ‘scams are rampant’ in the industry.”

This should not inspire confidence. But hey, it gets worse. 

In a section titled “Protections for Customer Funds Are Often Limited or Illusory,” the report helpfully informs us that “Generally accepted methods for auditing virtual assets do not exist.” What’s more, it continues that “several [tracking platforms] do not claim to do any independent auditing of their virtual currency holdings at all.”

So, in conclusion, many cryptocurrency exchanges appear to be vulnerable to large-scale price manipulation via bots and fail to appropriately protect investors’ funds.

That’s something to keep in mind the next time your friend passionately attempts to convince you to put your savings into cryptocurrency. 

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It’s the end of crypto as we know it and I feel fine

Watching the current price madness is scary. Bitcoin is falling and rising in $500 increments with regularity and Ethereum and its attendant ICOs are in a seeming freefall with a few “dead cat bounces” to keep things lively. What this signals is not that crypto is dead, however. It signals that the early, elated period of trading whose milestones including the launch of Coinbase and the growth of a vibrant (if often shady) professional ecosystem is over.

Crypto still runs on hype. Gemini announcing a stablecoin, the World Economic Forum saying something hopeful, someone else saying something less hopeful – all of these things and more are helping define the current market. However, something else is happening behind the scenes that is far more important.

As I’ve written before, the socialization and general acceptance of entrepreneurs and entrepreneurial pursuits is a very recent thing. In the old days – circa 2000 – building your own business was considered somehow sordid. Chancers who gave it a go were considered get-rich-quick schemers and worth of little more than derision.

As the dot-com market exploded, however, building your own business wasn’t so wacky. But to do it required the imprimaturs and resources of major corporations – Microsoft, Sun, HP, Sybase, etc. – or a connection to academia – Google, Netscape, Yahoo, etc. You didn’t just quit school, buy a laptop, and start Snapchat.

It took a full decade of steady change to make the revolutionary thought that school wasn’t so great and that money was available for all good ideas to take hold. And take hold it did. We owe the success of TechCrunch and Disrupt to that idea and I’ve always said that TC was career pornography for the cubicle dweller, a guilty pleasure for folks who knew there was something better out there and, with the right prodding, they knew they could achieve it.

So in looking at the crypto markets currently we must look at the dot-com markets circa 1999. Massive infrastructure changes, some brought about by Y2K, had computerized nearly every industry. GenXers born in the late 70s and early 80s were in the marketplace of ideas with an understanding of the Internet the oldsters at the helm of media, research, and banking didn’t have. It was a massive wealth transfer from the middle managers who pushed paper since 1950 to the dot-com CEOs who pushed bits with native ease.

Fast forward to today and we see much of the same thing. Blockchain natives boast about having been interest in bitcoin since 2014. Oldsters at banks realize they should get in on things sooner than later and price manipulation is rampant simply because it is easy. The projects we see now are the Kozmo.com of the blockchain era, pie-in-the-sky dream projects that are sucking up millions in funding and will produce little in real terms. But for every hundred Kozmos there is one Amazon .

And that’s what you have to look for.

Will nearly every ICO launched in the last few years fail? Yes. Does it matter?

Not much.

The market is currently eating its young. Early investors made (and probably lost) millions on early ICOs but the resulting noise has created an environment where the best and brightest technical minds are faced with not only creating a technical product but also maintaining a monetary system. There is no need for a smart founder to have to worry about token price but here we are. Most technical CEOs step aside or call for outside help after their IPO, a fact that points to the complexity of managing shareholder expectations. But what happens when your shareholders are 16-year-olds with a lot of Ethereum in a Discord channel? What happens when little Malta becomes the de facto launching spot for token sales and you’re based in Nebraska? What happens when the SEC, FINRA, and Attorneys General from here to Beijing start investigating your hobby?

Basically your hobby stops becoming a hobby. Crypto and blockchain has weaponized nerds in an unprecedented way. In the past if you were a Linux developer or knew a few things about hardware you could build a business and make a little money. Now you can build an empire and make a lot of money.

Crypto is falling because the people in it for the short term are leaving. Long term players – the Amazons of the space – have yet to be identified. Ultimately we are going to face a compression in the ICO and, for a while, it’s going to be a lot harder to build an ICO. But give it a few years – once the various financial authorities get around to reading the Satoshi white paper – and you’ll see a sea change. Coverage will change. Services will change. And the way you raise money will change.

VC used to be about a team and a dream. Now it’s about a team, $1 million in monthly revenue, and a dream. The risk takers are gone. The dentists from Omaha who once visited accelerator demo days and wrote $25,000 checks for new apps are too shy to leave their offices. The flashy VCs from Sand Hill have to keep Uber and Airbnb’s plates spinning until they can cash out. VC is dead for the small entrepreneur.

Which is why the ICO is so important and this is why the ICO is such a mess right now. Because everybody sees the value but nobody – not the SEC, not the investors, not the founders – can understand how to do it right. There is no SAFE note for crypto. There are no serious accelerators. And all of the big names in crypto are either goldbugs, weirdos, or Redditors. No one has tamed the Wild West.

They will.

And when they do expect a whole new crop of Amazons, Ubers, and Oracles. Because the technology changes quickly when there’s money, talent, and a way to marry the two in which everyone wins.

What happens when hackers steal your SIM? You learn to keep your crypto offline

A year ago I felt a panic that still reverberates in me today. Hackers swapped my T-Mobile SIM card without my approval and methodically shut down access to most of my accounts and began reaching out to my Facebook friends asking to borrow crypto. Their social engineering tactics, to be clear, were laughable but they could have been catastrophic if my friends were less savvy.

Flash forward a year and the same thing happened to me again – my LTE coverage winked out at about 9pm and it appeared that my phone was disconnected from the network. Panicked, I rushed to my computer to try to salvage everything I could before more damaged occurred. It was a false alarm but my pulse went up and I broke out in a cold sweat. I had dealt with this once before and didn’t want to deal with it again.

Sadly, I probably will. And you will, too. The SIM card swap hack is still alive and well and points to one and only one solution: keeping your crypto (and almost your entire life) offline.

Stories about massive SIM-based hacks are all over. Most recently a crypto PR rep and investor, Michael Terpin, lost $24 million to hackers who swapped his AT&T SIM. Terpin is suing the carrier for $224 million. This move, which could set a frightening precedent for carriers, accuses AT&T of “of fraud and gross negligence.”

From Krebs:

Terpin alleges that on January 7, 2018, someone requested an unauthorized SIM swap on his AT&T account, causing his phone to go dead and sending all incoming texts and phone calls to a device the attackers controlled. Armed with that access, the intruders were able to reset credentials tied to his cryptocurrency accounts and siphon nearly $24 million worth of digital currencies.

While we can wonder in disbelief at a crypto investor who keeps his cash in an online wallet secured by text message, how many other servicse do we use that depend on emails or text messages, two vectors easily hackable by SIM spoofing attacks? How many of us would be resistant to the techniques that nabbed Terpin?

Another crypto owner, Namek Zu’bi, lost access to his Coinbase account after hackers swapped his SIM, logged into his account, and changed his email while attempting direct debits to his bank account.

“When the hackers took over my account they attempted direct debits into the account. But because I blocked my bank accounts before they could it seems there are bank chargebacks on that account. So Coinbase is essentially telling me sorry you can’t recover your account and we can’t help you but if you do want to use the account you owe $3K in bank chargebacks,” he said.

Now Zu’bi is facing a different issue: Coinbase is accusing him of being $3,000 in arrears and will not give him access to his account because he cannot reply from the hacker’s email.

“I tried to work with coinbase hotline who is supposed to help with this but they were clueless even after I told them that the hackerchanged email address on my original account and then created a new account with my email address. Since then I’ve been waiting for a ‘specialist’ to email me (was supposed to be 4 business days it’s been 8 days) and I’m still locked out of my account because Coinbase support can’t verify me,” he said.

It has been a frustrating ride.

“As an avid supporter and investor in crypto it baffles me how one of the market leaders who just supposedly launched institutional grade custody solutions can barely deal with a basic account take-over fraud,” Zu’bi said.

I’ve been using Trezor hardware wallets for a while, storing them in safe places outside of my home and maintaining a separate record of the seeds in another location. I have very little crypto but even for a fraction of a few BTC it just makes sense to practice safe storage. Ultimately, if you own crypto you are now your own bank. That you would trust anyone – including a fiat bank – to keep your digital currency safe is deeply delusional. Heck, I barely trust Trezor and they seem like the only solution for safe storage right now.

When I was first hacked I posted recommendations by crypto exchange Kraken. They are still applicable today:

Call your telco and:

  • Set a passcode/PIN on your account

    • Make sure it applies to ALL account changes
    • Make sure it applies to all numbers on the account
    • Ask them what happens if you forget the passcode
      • Ask them what happens if you lose that too
  • Institute a port freeze

  • Institute a SIM lock

  • Add a high-risk flag

  • Close your online web-based management account

  • Block future registration to online management system

  • Hack yo’ self

    • See what information they will leak

    • See what account changes you can make

They also recommend changing your telco email to something wildly inappropriate and using a burner phone or Google Voice number that is completely disconnected from your regular accounts as a sort of blind for your two factor texts and alerts.

Sadly, doing all of these things is quite difficult. Further, carriers don’t make it easy. In May a 27-year-old man named Paul Rosenzweig fell victim to a SIM-swapping hack even though he had SIM lock installed on his account. A rogue T-Mobile employee bypassed the security, resulting in the loss of a unique three character Twitter and Snapchat account.

Ultimately nothing is secure. The bottom line is simple: if you’re in crypto expect to be hacked and expect it to be painful and frustrating. What you do now – setting up real two-factory security, offloading your crypto onto physical hardware, making diligent backups, and protecting your keys – will make things far better for you in the long run. Ultimately, you don’t want to wake up one morning with your phone off and all of your crypto siphoned off into the pocket of a college kid like Joel Ortiz, a hacker who is now facing jail time for “13 counts of identity theft, 13 counts of hacking, and two counts of grand theft.” Sadly, none of the crypto he stole has surfaced after his arrest.