Self-custody isn’t for everyone: WisdomTree exec on ‘be your own bank’

[_act_]

According to this news:
https://cointelegraph.com/news/self-custody-isn-t-for-everyone-wisdomtree-exec-on-be-your-own-bank

This news will only encourage new people that just know about bitcoin and crypto to use centralized exchanges and custodial wallet for their coins.

Have you used an exchange before or a custodial wallet? Especially on an exchange, people that do not know much will get confused and will not know what to do until someone explained about exchanges to them.

Only what is most important about using a self-custody wallet is just to protect your seed phrase, know when to use a cold wallet when you have a huge amount of coins, and to use a reputable wallet. Also to protect your passphrase if it is added. A reputable self-custody wallet will give you the proper information to protect your seed phrase and they are newbie friendly.

I am surprised that someone will say self-custody wallets are not for everyone, it is like saying having freedom over your own money is not for everyone.

What is your opinion about this? Is there any good reason not to use a self-custody wallet?

[1714656866]

1714656866

[NeuroticFish]

According to this news:
https://cointelegraph.com/news/self-custody-isn-t-for-everyone-wisdomtree-exec-on-be-your-own-bank

This news will only encourage new people that just know about bitcoin and crypto to use centralized exchanges and custodial wallet for their coins.

Have you used an exchange before or a custodial wallet? Especially on an exchange, people that do not know much will get confused and will not know what to do until someone explained about exchanges to them.

Only what is most important about using a self-custody wallet is just to protect your seed phrase, know when to use a cold wallet when you have a huge amount of coins, and to use a reputable wallet. Also to protect your passphrase if it is added. A reputable self-custody wallet will give you the proper information to protect your seed phrase and they are newbie friendly.

I am surprised that someone will say self-custody wallets are not for everyone, it is like saying having freedom over your own money is not for everyone.

What is your opinion about this? Is there any good reason not to use a self-custody wallet?

So there's a news on a website, the news writer doesn't even know how to correctly write down "Celsius", the central point of the news is a guy working for a centralized (ETF) platform, most likely it's paid news, and you think that this will encourage newbies do this or that? Well.. the news is worthless on the matter, the newbies already keep more than they should on centralized platforms and .. actually the news is somewhat right too:
* some people are incapable to properly take care of their funds, even if they are on a HW! (for example they will lose their backup seed or store it in e-mail)
* ETF and similar products, whether we like it or not, are more suitable for various companies who don't want to hire responsibles for handling safely bitcoin wallets

So the reasons and approach differ from entity to entity. We, on bitcointalk, will most probably keep telling "not your keys, not your coins". Others only see bitcoin as a financial asset/vehicle and won't care what tools (and custody) they use.

[Apocollapse]

“If you’re concerned about "not your keys — not your coins," you should just understand who this firm is, what the reputation is, how they are embracing regulation, or they are not embracing regulation,” Peck said. He added that self-custody has been trending in the community over the past few months as firms like the crypto lender Celcius were pausing withdrawals due to liquidity issues amid the massive crypto winter of 2022.
https://cointelegraph.com/news/self-custody-isn-t-for-everyone-wisdomtree-exec-on-be-your-own-bank

Though custodial wallet is the most convenient and friendly to everyone, but it doesn't mean everyone shouldn't understand self-custodial wallet and have educated first to hold their coins in the safest way. They're just lack of information and learning, I'm disappointed to see those people keep mislead their readers especially newbies to encourage them using custodial wallet.

Satoshi's vision to create Bitcoin is to not trust anyone and verify first, if they're encourage to use custodial wallet by looking from the firm, reputation and regulation, that's would kill the purpose of Bitcoin since it's doesn't have any difference with Banks!

[_act_]

Though custodial wallet is the most convenient and friendly to everyone

Centralized exchanges are not friendly to use unless you are no more a newbie to them. If a withdrawal is suspended, is that convenient? If your account is frozen, is that also convenient? Some inconveniences can come up with what you do not have control over.

[stompix]

Instantly thought of this:

So there's a news on a website, the news writer doesn't even know how to correctly write down "Celsius", the central point of the news is a guy working for a centralized (ETF) platform, most likely it's paid news, and you think that this will encourage newbies do this or that?

We're a bear market, no more ICOs no more NFTs, do you think they can afford to pay more than 5$ on an article?
That's why you will get a lot of Celcius and Frankenheit, thinking about, there are still guys who haven't figured yet how to spell Satoshi 

Centralized exchanges are not friendly to use unless you are no more a newbie to them. If a withdrawal is suspended, is that convenient? If your account is frozen, is that also convenient? Some inconveniences can come up with what you do not have control over.

What you're saying is that they have serious issues if things go wrong, but that doesn't make them less convenient!
If ordering food is more, expensive, you have to wait, you might not get your order right, you might not like the taste at all, and the delivery guy might have flipped it three times before coming but still, ordering is more convenient.

The risks are maximal, but that doesn't change the other things, you have an account, you log in, you exchange shitcoins to USD you withdraw to your bank in one click you deposit in one click, and you don't even know what tx fees are at all or how they work, that's called being convenient.
And you can obviously see the reality around you...

Again, I'm not advising anyone to leave more coins than he is affording to lose without batting an eye, but, it is what it is.

[Upgrade00]

I am surprised that someone will say self-custody wallets are not for everyone, it is like saying having freedom over your own money is not for everyone.

The last two paragraphs of the article talks about the company the interviewee represents, launching a custodian service in the coming months; that is enough reason to bring up an argument as to how self custody is not always the best and one can store their coins more conveniently with a renowed and reputable brand.

And, there is some truth to this, as much as we are enthusiastic about Bitcoin, it's not everyone's thing, neither is the responsibility that comes with being your own bank. Many people would rather someone else handled that task of keeping their fins safe. So, custodian services have to give a sense of trust and safety to attract users.

[Darker45]

A part of me somehow agrees that self-custody is not really for everyone. There seems to be people who simply can't handle as important as information as the seed phrase of the wallet where all their life savings are stored. But I guess it's more of we're not yet prepared or we're not yet built to be our own banks. In a way, it's not in our DNA yet. And it is because we're not used to this kind of responsibility. We're so used to rely on banks and other custodial services. We're so used to have a third party secure our wealth.

But I guess we're already starting to transition, with Bitcoin giving us the opportunity to really function as our own banks. But it implies a lot of awareness and education especially in terms of security. But it's happening.

[Lucius]

After we have with great difficulty suppressed several CT shillers from the forum, I do not want to visit that website at all, considering their aggressive advertising policy and the very low quality of the content found there.


Regarding self-custody and "be your own bank", I can agree with what @stompix wrote. What I can add is that for a long time people will not be able to take such responsibility to be their own bank, so I can agree to some extent that for some people the greater danger comes from trying to keep their Bitcoin themselves, rather than leaving it to someone else on keeping.

Of course, it is not right that people use CEX and various online crypto wallets to store Bitcoin, but they choose simplicity and ease of use in the first place, and they think that a good password and 2FA is all they need to be safe. It works, until at some point it stops working whether it's a phishing, hack or exit scam.

[tranthidung]

So there's a news on a website, the news writer doesn't even know how to correctly write down "Celsius", the central point of the news is a guy working for a centralized (ETF) platform, most likely it's paid news

Cointelegraph has its quality decreases in the last 4 years. Since the 2017 bull run, I see their articles have lower and lower quality. I stopped reading news from Cointelegraph long time ago and later almost stopped reading news too.

In reality, people don't have to read news daily or too often. Reading news bring negative effects on their psychology and they can abandon their initial plan after reading a bad news. A true investors just buy and hold - after making due diligent research on Bitcoin. That is enough.

If we look back, people don't have to read news to get profit from 2017 to 2022. I don't want to say farther in the past, just starting from 2017. If people read news in 2017 before the hardfork, they should sell all their Bitcoin around $3,000 or $4,000 and would have missed the 2017 ATH.

[Cookdata]

The major set back of cold wallets is early awareness and lack of real custody education on what self custody is all about. I was more surprised that CZ was making fun of Celsius the other day when they refused to allow users gain access their bitcoin and other Altcoins and he was furiously making binance as an alternative for people who are victims. Well, I expected that from him, many people regards him as most trusted but an exchange will be the least place I will want to leave my bitcoin on, I will rather opt for a hot wallets instead of doing that kind of mistake, I know is silly knowing that a hot wallet could be compromised but it is more foolish doing for exchange.

Self custody save from many things, you sleep with ease knowing your bitcoin isn't on anyone care but you, you don't have to worry about security because you're your own security, you manage and spend anytime you like without anyone authorizing it and lastly you don't have to worry when there is exchange security bridge on media.

[hatshepsut93]

Maybe being your own bank is not for everyone, but exchanges aren't suitable to be custodial wallets. They keep large amounts of coins in hot wallets, which means if they get hacked, they will have to make a so-called "haircut" and all their customers will lose some money. A dedicated service would need to store much less if any coins in hot wallets. Dedicated services could also focus 100% of their resources on security, while for exchanges this is a secondary concern.

[2stout]

Here's the thing, self-custody may not be for everybody; however, if you can't trust yourself or don't want the responsibility of maintaining your own, you really are taking a risk and inviting potentially huge issues.  I'm sure most of those that were affected by Gox, Cryptopia, Celsius, Voyager, 3AC, etc would strongly disagree and do things differently if they could go back in time- self-custody.

[PrimeNumber7]

What is your opinion about this? Is there any good reason not to use a self-custody wallet?

Holding your own coin is very different than having a password to a bank account. There is no way to "reset your password" if you forget your passphrase, and best practices include keeping multiple backups of your private keys in multiple locations via multiple mediums of storage -- all of this is new for most people.

If you do not fully understand how to implement the above, it is probably best to not hold your own coin, at least not in substantial amounts, as there is a serious risk that you will permanently and irreversibly lose access to your coin.

Some custodial storage "services" (such as exchanges) will turn out to be scams, and although these services (should) employ experts in securing coin, mistakes still happen, and these services are a bigger target for hackers, so there is the risk that coin will be stolen from these services. Storing coin on a centralized service also opens up the potential that your account will get hacked, and your coin be stolen from this service.

It is important for people to fully understand the risks and advantages of storing their coin via various means, that are personalized for them specifically. Once someone understand the risks, they can evaluate how to best store their coin.

[lovesmayfamilis]

The fact that people cannot be their own bank is equivalent to how much today's civilization has become spoiled with various services. A person is lazy by nature. This is more than suitable for this topic. Everyone is used to shifting responsibility to someone else. Children also want to rely on adults. Is there a difference between these? I think no.

Trusting an organization that can change its shoes and changes its rules for a client at any time is much more dangerous than turning on your brain (sometimes at least) and deciding how to keep your money safe.