Coinbase has just declared the official start of their cryptocurrency custody service. Although it’s still in the nascent stage, they've secured their initial customer and processed their first deposit. This custody facility offers a shielded way for large financial entities to store their holdings with insurance backing, potentially sparking wider institutional uptake of crypto assets.
Featured Image: The Coinbase Blog
What is custody?
The doors are open at Coinbase Custody, providing rigorous security for digital holdings of institutions across the United States and Europe. There's also an ambition to expand this safeguard to Asia before the year wraps up. https://t.co/KDtMQ5TT3B
— Coinbase ????️???? (@coinbase) July 2, 2018
While custody might not be top of mind daily, it's integral to most of our lives. In essence, a custody solution is like a fortified vault where you tuck away your assets (think cash or gold) out of reach of thieves. By banking your money, you protect it from theft, disasters, and more, with deposits typically being insured.
Cryptocurrencies present unique safety considerations. While individuals can secure these digital currencies against threats like theft, risks remain if one isn't savvy in crypto security.
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Understanding the special challenges of major investors dealing with vast sums in cryptocurrency is essential. They need a reliable, fortified storage solution for extended periods. For everyday folks, a hardware wallet might suffice. But for giant crypto reserves, a custody breach could spell trouble.
The Benefits of Custody
There are three core advantages to adopting custody services.
Firstly, a top-tier custody service boasts solid infrastructure and rich expertise to safeguard assets effectively. As a bank vault outshines a pocket stash, custody services invest in formidable security measures beyond individual reach. Coinbase, notably, maintains a clean record of asset retention. hack .
A significant perk is that upon accepting deposits, custodians bear the responsibility. So if a security breach occurs, the depositor isn't left in financial ruin.
Picture this scenario: if your bitcoin is stashed on an exchange, and it gets hacked, poof—it’s likely gone. But with a custody service, the institution will shoulder the loss.
Perhaps the standout advantage is insurance; custodians carry coverage to reimburse depositors in case of mishap.
Opening Doors for Institutional Investment
Notable voices like John McAfee have frequently highlighted that as institutional investors dive into crypto, both asset value and resilience will likely see an uptick.
Institutional players are gearing up for an aggressive entry into the crypto domain. As predominantly long-term strategists, they'll inject billions into the ecosystem. Expect leading crypto coins to soar, with altcoins trailing close behind.
— John McAfee (@officialmcafee) May 21, 2018
Currently, the collective worth of global crypto markets lingers under half a trillion dollars—peanuts from a broader financial perspective.
With institutional finance now having a safe entryway into crypto, an upward trajectory in value is anticipated over time.
Coinbase Takes a Cut
Coinbase services come with a price tag. As revealed via Twitter, engaging this service isn't light on the wallet. announcement $100,000 just to set everything up, with a requirement to maintain a hefty $10 million balance is needed initially.
Additionally, there’s a 10 basis points fee monthly, or basically, 0.001% of the deposit. With a $10 million account, expect a $100 monthly charge. Details on whether this fee applies to asset worth or crypto amount were hazy, and rates might shift with market trends.
Robert, Blockonomi’s News Editor, firmly champions digital economy ideals—freedom, privacy, independence—and has long navigated the crypto landscape. Reach out to him at [email protected]
