ShapeShift Challenging Coinbase With New Self-Custody Platform

Michael LaVere
  • ShapeShift launching new non-custodial platform today.
  • Users will be able to buy, sell and track crypto while retaining control over their private keys.

ShapeShift, the global crypto trading platform founded by Erik Voorhees in 2014 is launching its self-custody platform. 

ShapeShift Launching Self-Custody Platform

According to the release, ShapeShift is establishing a user-friendly, non-custodial platform that will rival Coinbase in terms of simplicity, all while allowing users to retain their private keys.

US-based exchange Coinbase has positioned itself as the industry leader for mainstream crypto audiences through its convenient smartphone application. ShapeShift is vying to offer a similar experience, one that targets more causal crypto investors while providing a comprehensive service. 

ShapeShift self-custody trading platform July 2019ShapeShift's new self-custody trading platform | Source: ShapeShift

The new platform will allow clients the ability to buy, sell and track multiple cryptocurrencies, with a reported 50 crypto-assets already supported. Users will first be required to connect a hardware wallet, such as Trezor, in order to participate on the exchange. 

ShapeShift CEO Erik Voorhees told CoinDesk he was motivated to create a platform that would be user-friendly enough for his grandparents to operate, 

“There needed to be a platform that had great UX that my grandparents could use with limited instruction but that was built on a foundation of being non-custodial.”

User-Friendly, Non-Custodial Services

Voorhees was also dismayed by the growing trend among large companies towards custodial services, which limit the amount of control clients have over their crypto-assets.  

He continued, 

“Largely this came from my dissatisfaction with the reality that most of the large companies are custodial. It offers many services that a company like Coinbase would provide but on ShapeShift it’s done in a much more secure and self-sovereign way.”

Custodial wallets are operated by a third party--typically a cryptocurrency exchange or brokerage--that have control over the coins in a client's wallet. While users trust that the exchange will keep their coins secure, they surrender the private keys and therefore ultimate control.

In contrast, noncustodial wallets allow the user 100 percent control over their individual coins by retaining the private key. 

In the now-famous words of Andreas Antonopoulos,

“Your keys, your Bitcoin. Not your keys, not your Bitcoin.”

Promoting Decentralization

Voorhees views custodial services as the next battelground for maintaining decentralization in cryptocurrency, 

“There’s a general sense within the industry is that if all that happens from the crypto revolution is that you just have a new set of custodians, then nothing really changed."

ShapeShift’s new platform was previously in its beta phase, but will officially launch to users on July 8. Voorhees claims the service has been in development for over a year and will continue the company’s mission of promoting decentralization while offering clients additional functionality.