Are Custodial Services Needed?

[Tzadik]

Why are institutions jumping for joy at Coinbase Custody and other custodial services? The whole point of Bitcoin is that you OWN your private keys. Why would you want your private keys with someone else? Anything Coinbase can do, you can do. You can make your own multi-sig wallet, constantly track your balance with a Master Pub-Key, and be rest assured that your cold storage isn't touched by work-starved account managers tempted to steal your cryptocurrency.

Honestly, what am I missing out on?

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[Caelanpelley]

Serving bitcoin? I do not know about this service. But I think it would be nice to have this service. Bitcoin also needs to be nourished if we continue to over-exploit the bitcoin source will be exhausted. Exhausted bitcoins will have a bitcoin boom that falls into the bitcoin scarce condition.

[MintDice]

The average, passive holders of crypto typically prefer convenience over more responsibility. There's no doubt it takes a little more effort to move your funds out of an exchange platform to a hardware wallet and backup your seed and store it, etc. Kudos to you for being more safety-conscious, though.

[franky1]

i see things like coinbase custodian service not as a bitcoin bank account. but as a trading account, holding just the play funds i want to risk day trading through fiat and back..
separetly id still hoard my main coins privately under my own privkey control.

anyway give it a couple years and coinbase will run a LN hub. with channels for both btc (bc1q addresses) and USD (us1q addresses) thus you will get your multisig desires.. aswell as ability to trade fiat/btc.. but yea expect AMLKYC if you want to have a channel with a hub thats owned by fiat custodial services like coinbase

but due to schnorr and segwit you wont know how many 'managers' have co-signing authority over the channels master public key funds because it wont reveal that info on the blockchain prior to it being spent. and by the time a counter party spends it without needing your authorisation its too late

so thats why im still gonna stick to legacy keypairs and not play around with segwit/LN with my main stash.  
but im pretty sure too many people are salivating about letting regulation in and KYC customers of custodian hubs. and also allow those custodians to have control of funds. purely for the greedy benefit of having FIAT trading available via LN

so im also not gonna put my main funds on LN and not treat LN as a end goal/solution to btc issues. and just treat LN as a side custodian service for niche uses of small amounts

(about as unbiased as i can make my comment)

[pooya87]

the services such as Coinbase offer some services that people want. for example the ability to buy and sell bitcoin with fiat from many different countries, or trading in their other website (GDAX). it is also an easy to use wallet for newbies to possibly start things and learn first before moving on to a desktop wallet.
there is also the services they are offering merchants  as a payment processor (similar to BitPay) where a merchant can ask their customer to go through Coinbase and make the payment there and Coinbase then pays the merchant in bitcoin or  fiat automatically.

[lautantepi]

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.

[pocket_lck]

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.

[anisuzzaman99apu]

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...

[jseverson]

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.

[Ilegendph]

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...

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.

[Bervelukan]

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

[Dudeperfect]

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.

[stompix]

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.

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

Pricing
SETUP FEE   $100,000 USD
AUM FEE 10 bps per month
MINIMUM BALANCE  $10,000,000 USD

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.

[JacobLiam12]

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.

[elachious123]

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

[Qartersa]

Why are institutions jumping for joy at Coinbase Custody and other custodial services? The whole point of Bitcoin is that you OWN your private keys. Why would you want your private keys with someone else? Anything Coinbase can do, you can do. You can make your own multi-sig wallet, constantly track your balance with a Master Pub-Key, and be rest assured that your cold storage isn't touched by work-starved account managers tempted to steal your cryptocurrency.

Honestly, what am I missing out on?

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.

[timerland]

Why are institutions jumping for joy at Coinbase Custody and other custodial services? The whole point of Bitcoin is that you OWN your private keys. Why would you want your private keys with someone else? Anything Coinbase can do, you can do. You can make your own multi-sig wallet, constantly track your balance with a Master Pub-Key, and be rest assured that your cold storage isn't touched by work-starved account managers tempted to steal your cryptocurrency.

Honestly, what am I missing out on?

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.

[jonloner011]

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.

[sungaiyangderas]

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.

[farhiamunni]

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.