Vitalik Buterin Prefers Coinbase Over Other Exchanges, Analysis Shows

Ethereum (ETH) co-founder Vitalik Buterin deposits almost exclusively at Coinbase, sending orders of lesser magnitude to other crypto exchanges.

According to data from Arkham Intelligence, Buterin deposited $1.08 billion from his wallet to centralized crypto exchanges since the end of 2015. $1.06 billion, or 99% of those transactions, was directed to US-based publicly traded cryptocurrency exchanges coinbase,

Vitalik Buterin Prefers Coinbase Over Other Exchanges, Analysis Shows
Vitalik Buterin’s Cryptocurrency Exchange Preferences | Courtesy of Arkham Intelligence

This data includes all exchange deposits from addresses known to Buterin, but does not subtract withdrawals. In other words, the amount received from Arkham Intelligence is not Buterin’s current exchange balance. On-chain data based on his known addresses shows that his holdings are currently under $326 million, with $322 million worth of them. Ethereum,

Decentralization vs Centralization: Crypto’s Biggest Battle

In 2018, Buterin famous Said Centralized exchanges must “burn in hell.” First, this statement may be inconsistent with his reliance on those services. However, they can become a necessary evil because of their convenience in dealing with fiat currency when ramping on and off.

At the time, Buterin raised the issue of centralization in the crypto space and how many people in the sector were forgetting that decentralization is important. He explained that in 2013 the bitcoin (BTC) mining pool GHash ceased operations for 51% of the coin’s hash rate, and everyone “became nervous.” Later this was happening again with Bitmain’s mining pools and according to Buterin people were not talking about it much.

Discussing crypto user authentication, Buterin suggested some solutions for asset access recovery and multi-key schemes. He added that “if all else fails, we will all use Coinbase – it will be less fun,” concluding:

“I certainly hope centralized exchanges burn in hell as much as possible.”

Vitalik Buterin, Founder of Ethereum

Nevertheless, Buterin highlighted that centralized exchanges serve as an interface to connect the crypto world with traditional finance, as there were only centralized gateways to the fiat world. This leads us to a necessary evil interpretation of their stance on crypto exchanges.

This is further highlighted by Buterin’s multiple transactions on exchanges worth over $10 billion, while transactions are only worth a tiny fraction of that money. The chart below shows the 1,000 highest-value transactions sent to deposit addresses on various crypto exchanges, with a total value of over ten billion.

Vitalik Buterin Prefers Coinbase Over Other Exchanges, Analysis Shows
Transactions of Vitalik Buterin to exchange deposit addresses. Each red line is a transaction from Buterin’s wallet to the exchange. , Courtesy of Arkham Intelligence

When analyzing Buterin’s incoming transactions from crypto exchanges, we can see that the resulting 53 transactions have a combined value of less than $6 billion. This implies that those platforms are primarily used to access fiat money and exchange assets through a decentralized means.

Vitalik Buterin Prefers Coinbase Over Other Exchanges, Analysis Shows
Buterin’s outflow from cryptocurrency exchanges. Each red line is a transaction coming from one exchange to one of Buterin’s wallets. , Courtesy of Arkham Intelligence

The most obvious example is the transaction from Coinbase to Buterin’s wallet. While he deposited billions on this platform through multiple transactions, he received $79 worth of cryptocurrency back from the platform in just 11 transactions.

Vitalik Buterin Prefers Coinbase Over Other Exchanges, Analysis Shows
Buterin’s incoming transaction from Coinbase. Each red line is a transaction from Coinbase to Buterin. , Courtesy of Arkham Intelligence

This further suggests that he used other platforms that support more cryptocurrencies to exchange the less-supported tokens. However, according to Arkham Intelligence, Coinbase acted exclusively as an off-chain gateway. This also explains why other exchanges had more transactions directed to Buterin as they also functioned as exchanges, not just fiat on-ramps. This idea is further strengthened by the fact that Buterin sent a small number of transactions to Coinbase. Nevertheless, they were priced significantly higher than those sent to competitors.

The report follows Changpeng Zhao, CEO of crypto exchange Binance, who recently Has shown Quite the opposite point of view. According to him, self-custody is an inappropriate solution for the totality of crypto users as he believes that 99% of them will lose money and it would be safer to keep coins on crypto exchanges in this case.

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