Anybody in the DeFi community speaks very highly of the benefits of not being custodians as a banking/financial services provider. The pros are; you are the only true owner of your asset, and for the first time in the history of the world as we know it — nobody can interfere with your ownership.
That’s extremely empowering for people under oppressive governments with an unstable legal structure and other socio-economic problems associated with a jurisdiction. It’s just better for people to be the only owners of their custody.
The advantage of them only being custodians, and any of the financial service firms not being custodians is the fact that they get to completely decide what happens to their money — they have complete control.
The downsides of being custodians are in regards to a trade-off with facilities. For example; MetaMask, a wallet provider that works across lots of DeFi platforms — first, it supports only ERC-20 tokens. Secondly, each of your funds is stored on a particular device. It’s a web3 interface that stores your cryptocurrencies on your laptop. If your hard drive gets corrupted or you end up losing your device, you essentially lose your funds. Third, it’s not mobile-friendly because if you have a laptop and a phone, and you need to make a transaction — you need access to your laptop.
It’s not easy to use, nor is it a convenient solution.
If you look at some of the other DeFi platforms, they let you integrate other web wallets but they are custodians. Web wallets such as the Trusttoken which works with Binance, and Coinbase wallets or Coinbase itself — they are custodians.
If you want to be the true owner of your assets, you have to take a trade-off for user experience. We don’t know how to bridge that user experience gap, because the coins need to be online for them to be used.
Here at the Bank of Hodlers, we’re giving you the option to either be custodians or not. If you want to be the sole custodians — we burn your private keys, we don’t store them. The upside of being a true owner is that you can actually, for the first time, start using the facilities of banking on the blockchain.
The downside of being a sole custodian is that you can’t use certain services that you would otherwise be able to use. We’ve made it convenient for you to use it, but we’re not really improving your experience that much, unless you decide to opt-in for us to be the custodians.
Essentially, you have to take a trade-off between being custodians and not being able to use the tokens, and having the option of being primary custodians while keeping a few tokens online.
Most people keep a few tokens online while storing a bulk of their coins in cold storages. We’re letting you do both in a single unified experience. We’re custodians if you want us to be, and we’re not custodians otherwise.
We’re not one or the other completely. We’re a combination of both and we let you choose the degree of the spectrum that you want to be on. If you don’t mind us being the custodians, you can earn interest and use payments instantly, etc. If you want to be the sole custodians, you can use the ease of use and last mile partnerships that we’ve built, but you can’t earn interest.
Originally published at https://bankofhodlers.com on April 2, 2019.