Why do people use custodial wallet services? - page 2.

konovalets

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Quote from: BTCLovingDude on August 18, 2016, 11:44:04 AM

Quote from: konovalets on August 18, 2016, 09:39:38 AM

Like Coinbase. It's like paypal for bitcoin, they can block your account at any time or just vanish into thin air.

it is simple: coinbase or any other service like it is newbie friendly.

you just sign up there and you can buy/sell/hold/spend/receive bitcoin all in one place without even knowing what bitcoin is, and how it works.

and since people are lazy, they choose these wallets. in comparison bitcoin core is a big pain in the ass for them because you have to download the whole blockchain (70-80GB) and it takes a very long time and you need to understand what bitcoin is how to send a transaction, how to secure your wallet.

besides not everybody is aware of the dangers of using these web wallets, they see a pretty website and pretty promises of security and they believe them until they get hacked like bitfinex and poof all the money is gone.

There are a lot of newbie friendly SPV wallets or API wallets which at least don't control your keys. For example Blockchain.Info wallet, MyCelium or Jaxx. It's very stupid to use custodial services like Coinbase.

The Sceptical Chymist

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Quote from: franky1 on August 18, 2016, 12:34:10 PM

reasons:
noobs dont know better (still have the fiat mindset that banks are easier)
people dont trust themselves (worry of accidently getting a virus or house fire/floods wrecking their computer)
running a full client is not the same as a two tap smart phone app
backing up the privkeys is not as simple as 'File -> save as'
re-backing up the privkeys after every 'change address' is not an 'autosave' function

though there are alot of people consider running a full bitcoin client as being straight forward (i do as do many others) but we atleast have to admit it to ourselves that to average joe, its not actually straight forward.

even if these custodian wallets put on disclaimers such as
"we manage the funds for you meaning the funds are stored using our private keys, but we follow your requests as to what you want to do with your balance. but please be aware we do not insure your balance against loss, theft or accidents"
or less subtle
"we own the funds on our private keys, we can follow your requests as to what you want to do with the balance. but we are not insured in any way"
people would still use custodian services, for a mixture of reasons

I agree, I think it's a noob mistake mostly. Coinbase is in the U.S. and is regulated, so it might be a little safer than other places. They can freeze your account but it's more likely they'd close it. I don't think we've had any real horror stories from them yet. Still no excuse to keep coins there or on any exchange.

michelle1845

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wow There are people who actually go into high risk areas in the cryptospace. But I also believe that some people are not fully aware of such risks.

onlinedragon

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Quote from: OmegaStarScream on August 18, 2016, 09:44:47 AM

I will tell you why . It's pretty simple , people like to lose their coins (It took me some time to get this but It's confirmed). Not only , they can freeze your funds but there is a chance of getting hacked as well since they are "online" .
The rule is simple and exists since the creation of Bitcoin "You control your keys , you control your bitcoins - you don't control your keys , you don't control your bitcoins" , now If people wants to continue using these wallets then they should take responsibility in the future for whatever happens to their BTC.

Don't think that peole like to lose there coins but only are ignorant, negligent and complacent. I also started with an online wallet (XAPO)because it was required by some websites and it was easily accessible from you mobile device. Ordered also a debitcard and did already some successful transactions. If you keep the amount low in your online wallet the damage will be low when they will run or get hacked.

Yakamoto

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Quote from: konovalets on August 18, 2016, 09:39:38 AM

Like Coinbase. It's like paypal for bitcoin, they can block your account at any time or just vanish into thin air.

They can freeze your account or disappear, but the question becomes whether or not they want to. As long as they're generating money from the exchange they have which has increased volume due to people using their wallet, they are happy. Closing an account is something I've only ever heard of a few times from people, and while unsavoury, it might have been justified in some cases. And they won't vanish because they want to generate as much revenue as they can before they vanish. There's no point cutting your profits early.

amacar2

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Quote from: konovalets on August 18, 2016, 09:39:38 AM

Like Coinbase. It's like paypal for bitcoin, they can block your account at any time or just vanish into thin air.

Some get attracted due to 0 fee internal bitcoin transfer, someone with no knowledge about how bitcoin actually works find coinbase to be easy to use with just signing up as other epayment sites, they support most of the bank deposits so it has become easier for many americans/europeans to buy bitcoin easily with their bank account etc.

But all of them will come to know at one end that coinbase is just like paypal which keep blocking accounts without any real reason. I have heard even they don't respond to support tickets as well as they moniter bitcoin transactions which don't comply with real meaning of anonymous bitcoin transaction.

Piladeer

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Well that is a good question that many of the people who use it must ask themselves.
Why do they trust in these services with their bitcoins?
I am dammed sure that I will not ever trust paypal with my money. Angry

franky1

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reasons:
noobs dont know better (still have the fiat mindset that banks are easier)
people dont trust themselves (worry of accidently getting a virus or house fire/floods wrecking their computer)
running a full client is not the same as a two tap smart phone app
backing up the privkeys is not as simple as 'File -> save as'
re-backing up the privkeys after every 'change address' is not an 'autosave' function

though there are alot of people consider running a full bitcoin client as being straight forward (i do as do many others) but we atleast have to admit it to ourselves that to average joe, its not actually straight forward.

even if these custodian wallets put on disclaimers such as
"we manage the funds for you meaning the funds are stored using our private keys, but we follow your requests as to what you want to do with your balance. but please be aware we do not insure your balance against loss, theft or accidents"
or less subtle
"we own the funds on our private keys, we can follow your requests as to what you want to do with the balance. but we are not insured in any way"
people would still use custodian services, for a mixture of reasons

BTCLovingDude

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Quote from: konovalets on August 18, 2016, 09:39:38 AM

Like Coinbase. It's like paypal for bitcoin, they can block your account at any time or just vanish into thin air.

it is simple: coinbase or any other service like it is newbie friendly.

you just sign up there and you can buy/sell/hold/spend/receive bitcoin all in one place without even knowing what bitcoin is, and how it works.

and since people are lazy, they choose these wallets. in comparison bitcoin core is a big pain in the ass for them because you have to download the whole blockchain (70-80GB) and it takes a very long time and you need to understand what bitcoin is how to send a transaction, how to secure your wallet.

besides not everybody is aware of the dangers of using these web wallets, they see a pretty website and pretty promises of security and they believe them until they get hacked like bitfinex and poof all the money is gone.

OmegaStarScream

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I will tell you why . It's pretty simple , people like to lose their coins (It took me some time to get this but It's confirmed). Not only , they can freeze your funds but there is a chance of getting hacked as well since they are "online" .
The rule is simple and exists since the creation of Bitcoin "You control your keys , you control your bitcoins - you don't control your keys , you don't control your bitcoins" , now If people wants to continue using these wallets then they should take responsibility in the future for whatever happens to their BTC.

konovalets

sr. member

Activity: 248

Merit: 250

Like Coinbase. It's like paypal for bitcoin, they can block your account at any time or just vanish into thin air.

Topic: Why do people use custodial wallet services? - page 2. (Read 1910 times)