I don't think they are doing it 100% intentionally, I think they have lost coins/money in hacks and dicking around with shitcoins. Now they are just crossing their fingers that not everyone comes for their Bitcoin at once.
But who knows, "paper Bitcoin" is probably just cope, the same thing goldbugs complained about for decades before their asset became irrelevant
The good news is, nearly everyone who has played the paper Bitcoin game has been eventually found out. If Coinbase are fractionally reserving Bitcoin, they will be too at some stage.
However, in this example there’s a huge difference between Coinbase doing this elsewhere, and Coinbase doing it with MSTR funds. Just because Saylor/MSTR don’t publish their public addresses, do you really believe that they don’t/can’t monitor their own addresses behind closed doors? I doubt it.
The truth in the MSTR case is likely simpler. Coinbase probably offers the most professional service / lowest risk in terms of institutional custody. Saylor is not stupid, and one day this may change to someone else. I have no time for Coinbase personally, but the ETFs have also cast their vote in this.
The reality is simply that the op sec benefits of not revealing wallets outweigh the proof that MSTR provide to the market that they hold the Bitcoin. Agree that shareholders could pressure this if they feel it necessary.
Anyone reading this - would love to hear thoughts
#mstr
#coinbase
Paper bitcoin will eventually get short squeezed unless you end up with an FTX type scenario where paper bitcoin suppressed price then when they blew up they were bankrupt so couldn’t pay back the coins. MSTR and Coinbase would have to bankrupt and then we could see ppl facing criminal charges. So it is doubtful but possible. Otherwise when settlement comes and there isn’t enough coins then the Coinbase would have to buy coins to settle there debt and the added demand would squeeze the price up, kind of like the naked shorts in GameStop scenario, different but similar.
I agree with most of this in terms of what happens in the end when you issue paper Bitcoin, but it’s not quite addressing my point.
MSTR aren’t retail. They are likely using institutional grade multisig in segregated wallets that they can monitor, surely?! They can see their own Bitcoin and know it’s not being lent or rehypothecated elsewhere. But that doesn’t mean they’re going to reveal those addresses to the wider world, or indeed reveal any element is how they custody. If I was in Saylor’s shoes I’d do the same, and give our as little info on it as possible, unless my shareholders started overwhelmingly demanding it.
Sure entirely possible, they keep 1:1 for institutional bitcoin and just have a float to cover withdrawals for their million other users and only keep a fractional reserve for those. Just speculating of course but would not surprise me. They just manage it as risk.
Yes this combination is possible. If you hold billions with anyone you’d expect some pretty high assurances, wouldn’t you. But I accept this is speculation, and admittedly as an MSTR shareholder I am trusting them to custody it safely.
I don’t “like” coinbase but that said they have been around a long time without blowing up so they have been either keeping 1:1 or they have been managing their reserves conservatively enough to not blow up. Paper bitcoin at the end of the day is just unsecured debt.
