Why do people use custodial wallet services?

[konovalets]

It may also happen that most people are not that tech-savvy, but wise enough not to trust themselves to store their coins locally, in their own desktop wallet, where the coins will be prone to theft by viruses, trojans, etc. I mean these people are not sure that they can provide the required level of security themselves.

I agree that keeping all coins on desktop wallet especially on Windows it's risky too, maybe even more risky than using Coinbase for unlearned user, but there are a lot of solutions between Coinbase and desktop wallet which mitigate both risks. BitGo, Copay, even Blockchain.Info is better.

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[garmerys]

They are easy to use and many people don’t want to sink more than $100 into something they know nothing about. They are there for beginners and as you grow your bitcoin wealth you learn how to protect it better. They are simply learning sites that are easy to use.

[shinratensei_]

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

you don't need for considering from 1 perspective, in another reason they are using the custodian wallet like coin base because they are not just offering a wallet. they are offering an exchange at the same time. they are considering from a lot of factor before wanna for using a custodian wallet.

[Wong_Djadoel]

If they block our account, maybe we doing violation or rules. I recommend if we don't use custodial wallet service if we have big amount.

[Divinespark]

I think the reason has a lot to do with social conditioning around not wanting to take personal responsibility for your own finances, and just being so used to having other folks take care of your assets. Cryptos make you take responsibility, not for everyone!

[Kakmakr]

Some people are convenience driven and too scared to take responsibility for their own finances. It is also easier for them to link their bank account to these services and then convert fiat to BTC. Some merchants will also only deal with other financial services that adhere to KYC & AML regulations. ^hmmmm^

[blackcod]

I learned a simple lesson early never leave your btc on any exchange wallet. You have no control of your funds as long as you leave it there.

[tee-rex]

I learned a simple lesson early never leave your btc on any exchange wallet. You have no control of your funds as long as you leave it there.

Yes, exchanges are hacked periodically (or just scam on their users like what Cryptsy did), but if you are a day-trader (or close to being that) you may not have any other option apart from keeping your funds in your exchange account. Until distributed decentralized exchanges kick off for real (if ever), you have to either risk your money being stolen by hackers (exchanges themselves) or stay away from Bitcoin trading altogether missing out on a lot of good opportunities to earn decent profits.

[TraderETH]

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

I think people like coinbase because of it is can be trusted and it were run for long time, although it is like paypal they can block our account. And usualy the costumers has be comfortable with its service.

[avikz]

I think the reason behind using the custodial wallets like coinbase is the ease of using. You don't have to download the blockchain to your computer which is close to 300 GB. Also you can access your accounts from anywhere, you don't have to carry your laptop everywhere. These are the main reason I guess.

Also I see no reason to worry if you are holding a small amount of bitcoin in these wallets. But if you are holding some serious amount of bitcoins then it is recommended to use a hardware wallet.