Topic: Are Custodial Services Needed? (Read 275 times)

Yeah really...
So your fried has a 10 million balance on Coinbase and has paid the 100 000 $ for it?
Has also your friend understood that this service is not for traders as in trading on exchange but acquiring large sums of crypto, as those are using their funds daily, this is only for businesses that are storing those coins there?

Be honest, in reality you don't have a clue what this service is about, do you?


It's not only that.
In a large corporation or a multinational business it's pretty hard even from legal point of view to entrust the private keys to somebody.
It's like having cash and storing it in the houses of the CEOs. 
So, a service like CC which is more like a bank with a secure vault is the easier way to solve problems.

Many people who are not technology freak finds it tedious to take care of their own coins. They find too geeky to maintain their own wallet. Thus different companies and institutions out there are taking advantage of such people and providing them those services. People start to trust them with their coin not knowing the risks just to keep themselves away from maintaining their own coins.

i have the same question why would someone ant your private keys with someone else? have to be more clear about the game, im gonna research a bit more.

I barely know about this sort of service. But, if it happens it would really be great! BTCBitcoin would be more easy and convenient to use and it will develope the security. 

This kind of custodial service will be much appreciated I guess and will help in the development of bitcoin. I think this will attract investors more. This will work as a media to to help in further development of bitcoin. I am really looking forward to it.

Nowadays every institution is turning into block chain system and they adapt Crypto Currency system because of modernization most of the company thinks and worried about future world like facebook is developing their own crypto system. So Everyone is thinking about bitcoin and its growth because one day this coin will be the future currency.

They also usually handle money in a way that is not straight forward, so some people have control over everything can be a disaster, and having multi multi sig wallets can be a difficult thing to manage. There is also the fact that corporate bank accounts can not be emptied because pretty much every transaction goes through some circles and can be reversed, while Bitcoin transactions can not be a robbery would cripple them and make them unable to get their money back.

This is true that coinbase is offering so many services that are wanted by most traders. Trading bitcoin is one of them. And it will be great if trade can be done with fiat.

That's the problem with all of the hosted wallets. Not just custodial services, even though they are pretty much the same thing.

You are handing over control of all your coins. The entire point of bitcoin is that you hold your own wealth, not an intermediary. By depositing money into any hosted wallet where they hold your private keys for you, there is no point in using bitcoin anymore - you own an IOU issued by the service, not the actual bitcoins on the blockchain, which is what you are supposed to use.

Even with a multisig wallet, you can probably do it yourself instead of having to trust coinbase to do it. Trustlessness is what we use bitcoin for, and this is the exact opposite of that.

Legally speaking the fact is coinbase are custodial services since you are athorizing them to hold your property. It is still a necessity since it is hard from institutions to build their own wallet system that is why they outsource it to the experts.

Indeed the point of cryptocurrencies are to hold your own private keys, but the problem arises when you need some service and usually services are centralized. There are only a few decentralized services. Since bitcoins does not have the ability to handle complex smart contracts decentralized and trust-less transactions is quite impossible. That is why institutions needs some sort of way to hold your coins. For example, what if you are trading at Gemini trading platform, how can the trading platform ensure that you will send the bitcoins if you are holding the bitcoins yourself?

The problem with this is that indeed you entrust your coins with another, but it is a necessity we need to accept to enable use to make use of some services.

If you are pointing out the people making use of coinbase as a wallet only, then it may seem illogical, but it is for those people that don't want the hassle of securing themselves through just trusting coinbase or whatever online wallet. Anyway, these services will for sure have a very tight security that will not allow someone to just simply steal from the wallets of their customers.

Since Cryptocurrency is base on a decentralized technology I feel custodial service will not be needed except otherwise. But what ever have a disadvantage will definitely have advantage

The main theme of the crypto currency market is the decentralized network. This network will ensure that no one can have significant control over the currency and this is the advantage of the block chain technology. Bitcoin came and still following this idea of decentralization. As many institutional investors are coming so there should be some custodian services that will not affect decentralization.

Yeah, the service is not aimed at the regular Joe,  and even if the average Joe would want this there is a little obstacle to it:
https://custody.coinbase.com/pricing


I wonder if they are going to make any of their security features public, of course not in details but just to have an idea of how are those coins protected.
If Coinbase ever gets hacked...that's gonna be one firework show to be remembered.

To be honest, I don't think that we should waste our freedom of keeping the values with us in such way. We can always use the legal options like a registered will to instruct the treatment to our crypto funds after our death so hiring someone to hold it for you doesn't make any sense in my opinion. It will destroy the core purpose of decentralization even if there any legal contract of confidentiality.

I do not think such a service is too or unnecessary, since we ourselves can keep our own private key safely and safely.

There are advantages and disadvantages of this custodial services. The primary advantage is that is easier to use specially fo non techie persons. The disadvantages are you dont have an insurance that you money will get back after a hack and sometimea this services has huge transaction fee.

I'm pretty sure those are aimed towards corporate-level clients, who needs some sort of insurance that their money is safe. They also typically handle money in a non-straight forward way, so a few people having control of everything could be disastrous, and having multiple multi-sig wallets could be a pain to manage. There's also the fact that companies' bank accounts cannot be emptied because pretty much every sizeable transaction goes through multiple hoops and can be reversed, while Bitcoin transactions cannot be -- a single inside robbery would cripple them and leave them unable to get their money back.

That being said, there's no reason the regular person can't want a third party to take care of his money. It goes against Bitcoin's core principles, yes, but if you feel that someone else can protect your money better than yourself, you should probably go for it.

What is a custodial service?

A custodial service is when an entity or individual holds a client’s property or money on their behalf.  The custodian is responsible for the safety of the financial products. If you are a custodial client, you are still the beneficial owner of the financial products but are held on your behalf by the custodian.

And
I think Bitcoin should be Custodial Services needed...

Yes it is true and we should be able to keep our own private key and do not need to share, with our own it will make it more secure from others who want our cryptocurrency.

Coinbase offers several services that people want. such as the ability to buy and sell bitcoin with fiat from different countries, or trade on their other websites (GDAX). It's also an easy-to-use wallet for beginners to get started and learn first before switching to the desktop wallet.