An odd thing happened today in the world of mobile bitcoin apps. Coinbase, the prominent venture-backed consumer wallet and merchant processing company endorsed, and thereby implicitly authorized, a third-party developer to release an app under its name.
That developer, Andrew Vilcsak, works at AirBnB and yesterday released a free iOS app called Coinbase – Bitcoin Wallet. The app also features the identical app icon as the original (official) Coinbase app which was removed from the App store by Apple during its anti-bitcoin era.
Vilcsak’s app, which utilizes the Coinbase API, allows users to send and receive bitcoin, check account balances, view transaction history, and change account settings within Coinbase. That is to say, it allows users nearly full control over their accounts.
The official Coinbase Twitter account sent out the following:
Great to see this community contributed app! We reached out to the dev to review the code and believe it is secure. https://t.co/hPZVSr7GOI
— Coinbase (@coinbase) June 20, 2014
Such an endorsement seems like a spectacularly bad idea. And I’m not the only one who thinks so. Twitter responses and subsequent Reddit comments have universally panned the decision as irresponsible and rife with potential negative consequences. Rightly so.
At the core of this issue is the fact that while Coinbase may have reviewed the initial code and deemed it “safe,” the company has no control over future updates or the developers’ use of any data that passes through its servers. Now a single individual has the power to compromise the account credentials of anyone who downloads and installs this app. This is particularly troublesome because many users will likely be unaware that it is not an official Coinbase release.
It’s not as if bitcoin has been a bastion of ethical developers. Quite the opposite. Countless exchanges, wallets, and even price tickers have been infected with malware or outright frauds perpetrated by their creators with the goal of stealing user bitcoin wealth. Not only is Coinbase making a big bet that Vilcsak is none of the above, but it’s also betting that he is a competent enough developer and will remain sufficiently motivated going forward to maintain this free app and thwart any hacking attempts it may attract. This is an all around bad move.
Coinbase’s decision to endorse rather than contest this release could also have serious trademark implications. Companies that don’t police infringement on their trademark risk losing the legal rights to those marks. Rather than passively ignoring such infringement, Coinbase has actively acknowledged and seemingly approved Vilcsak’s use of its mark. This could absolutely make it harder for the company to defend future infringements on its trademark.
Given that Coinbase has now raised nearly $32 million* and is among a handful of the most prominent bitcoin companies this trademark is likely worth millions of dollars. The idea that Bank of America or Wells Fargo would endorse such a confusing third-party app is simply laughable.
Vilcsak is somewhat of a prolific app developer for an apparent one man band. Seven other iOS apps currently appear under his name, including a Golf GPS Yardage Book, a battery life utility, and a JSON explorer. None of the other apps piggy-back on popular brands, so it’s unclear why Vilcsak changed strategies this time or how/why he believed Coinbase would endorse such an action.
Maybe Vilcsak has a close relationship with someone at Coinbase or has reason to believe the company will acquire his app. Maybe this is some veiled partnership or effort at outsourced development. But none of that renders this a wise decision. If Coinbase doesn’t control the code base and isn’t releasing (or at least reviewing) future updates, this is a situation rife for abuse.
At this point, the unofficial Coinbase app is a confusing and potentially financially devastating piece of software for a number of parties, including Coinbase the company, its investors, its users, and the broader bitcoin community as a whole. Hopefully this proves to be an innocuous, albeit confusing development. But to assume that will be the case only invites trouble.
Pando reached out to Coinbase for comment ~1 hour prior to publishing but did not receive a response. We will update this article if and when further information is available.
(* Disclosure: Coinbase is backed by Andreessen Horowitz. Andreessen Horowitz partners Marc Andreessen, Jeff Jordan, and Chris Dixon are individual investors in Pando.)
- CoinbaseMaking Bitcoin accessible to consumers, merchants, and developers.
Coinbase is a bitcoin wallet and platform where merchants and consumers can transact with the new digital currency bitcoin.
Bitcoin is the world's most widely used alternative currency with a total market cap of approximately $7.0 billion. The bitcoin network is made up of thousands of computers run by individuals all over the world.