Coinbase Shuts Down Multisig Vault Service
Coinbase is still one of the biggest cryptocurrency exchanges in the world. As such, any decision made by the company will be scrutinized. It now seems the company will remove multisig vault support in the next few weeks. It’s a rather controversial decision, although it also makes a lot of sense.
The concept behind Coinbase’s multisig wallet service is simple to explain. It offers an additional layer of security to users of this particular exchange, yet it also costs a lot of money to keep this going. Coinbase invested a lot of money into letting customers manage their own private keys while still reaping the benefits of the exchange’s interface. It seems this service will come to an end fairly soon, which is not the most surprising decision.
The big problem with services like this one is that a lot of people don’t even know they exist. As such, it was only a matter of time until the cost of providing this service outweighed the potential benefits. It seems that time has come, as Coinbase announced it will wind down the multisig wallet service in the next four weeks.
While a lot of people will be sad to see this option go, it is only normal that it will end. The company isn’t reaping any benefits from offering this service, mainly because so many users simply don’t use it as of right now. As such, the existing multisig vaults will no longer receive support as of April 19, 2018. New multisig vault creation was disabled a few days ago. The company also claims that the rising number of Bitcoin forks makes it virtually impossible to provide services on this scale in a secure manner.
For the average cryptocurrency user, nothing will change. Those who have been involved in this industry for more than three weeks will acknowledge it is always better to be in full control of one’s private key without the involvement of a third-party service provider. While Coinbase attempted to be quite innovative in this regard, its approach simply didn’t work for most cryptocurrency holders. It is due time people take control of their money.
It appears existing multisig vault users can move funds around without any problems. After all, these users control the two keys necessary to access funds in the multisig wallet. This means they won’t have to do anything special other than ensure their funds are out of their addresses before the deadline expires. The third key, which will always be in control of the company, will not be shared with these users.
The big question is whether or not this decision will backfire on the company in any way. Once exchanges become less of a custodian of user funds, the switch to decentralized trading platforms will only be a matter of time. These companies are slowly making themselves obsolete, which is a change we can only applaud. Coinbase will not disappear all of a sudden, but it is evident that users will start to explore more options over time.