Mass Adoption of self-custody of crypto; is it a pipe dream?

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(Edited)

Shattered Dreams

  • I look back at this last year of shattered dreams I wonder what have we learned.
  • Terra Luna
  • Three Arrows Capital
  • Blockfi
  • FTX
  • Do Kwon
  • SBF
  • Other platforms
  • Other personas
  • Other cult-like communities

The Lessons

  • CeFi bad
  • Defi good
  • Cults of personality bad
  • Cults of community bad
  • Not your keys, not your crypto.
  • Self Custody is the way

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These are popular ideas, but are they realistic?

  • These are positions many would agree with, but they overlook the historical record, and human nature in my humble opinion.
  • Personally, I think that self custody is a complex process, with real risk of loss of assets from theft or error.
  • I think the majority of people who peer down the rabbit hole of self-custody shudder at the complexity and then when they realize they are totally responsibility for the safety their assets.. and they opt out, hard stop, thanks but no thanks.
  • The path of least resistance and shifting responsibility to someone else seem much more likely to me for the majority of the population.
  • I don't mean to be critical of humanity, but safety and caution are genetically advantageious traits, and I think going from the security of traditional banking to the insecurity of cryptocurrency is a huge leap of faith and not to be taken lightly, so people don't do it.
  • Even going from HIve to Cubfinance DEFI is a leap of faith with complexity in the air for the whole jump.
  • So many people just don't do it, and it's not just the newbies that avoid defi, some OGs do also, it is not worth the risk to them, no matter how high the potential yields are. They won't DEGEN in ...

We need an intermediary in the evolution of our control from TRADFI to SOVEREIGN SELF CUSTODY.

  • I think that it's clear that opaque CEFI is bad, and transparent self-custody is good, but the risk gap is to wide.
  • SELF-FI is scary.
  • I think we need a different option between TRADFI and SELFI, something with a little of each, so people are comfortable dipping their toe in the pool
  • I am sorry, I really wanted to believe that mass adoption of self custody was a possibility, but no longer.
  • But I am interested in hearing what other people think about this topic?
  • Do you think self custody will get adopted by the masses?

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The possibility is slim given some of the reasons you outlined on your posts. Unless there's no way out, self custody would get adopted. But if there are ways out or easier options. Self custody for the masses will be a pipe dream. Maybe, we could come to a compromise between the two, something like partial custody where the user will have the keys but they will also be somewhere else for safe keeping or something along that line.

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Thats what I am thinking. In Japan crypto exchanges aren't allowed to use their customers funds for anything, and are actually required to keep more then the customers deposits on hand in the exchange. FTX Japan was one of the few FTX exchanges to actually have all the customers funds still on the exchange. Unfortunately when FTX International went down, all the echanges lost the ability to move customers funds as the software system was international, and different government juristictions reacted differently, in Japan the government ordered FTX closed and customers funds frozen. But they have filed a plan with the japanese government to create a new software set-up and then return all customers funds.

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FTX Japan are legendary. There customers would eventually get back their funds. Exchanges could operate well with that system but I wonder why they don't choose to implement it. I guess the problem is not with the system but with the people running the system.

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