Wednesday, October 5, 2022

Some thoughts on custodians

The events of Mt. Gox, Voyager, Celsius, etc... are well publicized and should convince many people to self custodian their own coins.

However, I believe user behavior won't change all that much because the product market fit for self custody is rather small.

A representative sample size of people willing to self custody might overlap with the demographic who currently choose to store the majority of their dollar bills at home (in a safe, under their mattress, etc...) instead of in a bank account. It might be tens of millions of people, but probably a small % of total population.

The vast majority of people choose to let custodians secure their cash, so it's safe to assume those same people will probably choose to let custodians secure their bitcoin keys.

I think we should always encourage people to self custody, but we can't force people to. Not everyone shares the same values, needs and priorities as you. Different strokes for different folks. Most people want to trust someone else with their money because they don't trust themselves. Other people just want to tap into the monetary network of bitcoin and don't care about the hassle of custodianing the asset. I see nothing wrong with businesses like Strike building centralized solutions for these people as long as customers understand the risks involved.

Not your keys, not your bitcoin.

But also

What other people do with their bitcoin is not your business.

It's great to educate people on how to properly use bitcoin, but if they make the choice to outsource that to a custodian, we shouldn't berate them for their decision. Their money choices are not our business.


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