The Hidden Psychological Burden of Self-Custody.

[bitbollo]

You are living in the era of self-custody. I would say you're living in an era where "self-made" has become essential!
You can't cope without. You had to take part on it.

Self-custody with bitcoin is essential. I have seen this as the first lesson you can get (including there is no customer service).
absolutely isn't difficult. maybe its boring. maybe requires attention. But in any case, the advantages are too big and numerious...

[Die_empty]

These problems sounds like a problem that has been solved by anyone doing self custody by going extra miles to secure their stuff.
To counter, this what about these problems that you frequently encounter with custodial service?

• Custodial service black swan e.g FTX collapse.
• Bank freezes your account because not key not your coin.
• The billions lost due to difficulty in asset discovery and lost accounts. US government hold around $70b unclaimed property because of this.

I find the self custody problem to be less severe.

No single system is perfect. Custodial and non-custodial services have their merits and demerits. FTX collapsed, but the majority of FTX creditors and customers were fortunate enough to recover their funds. I guess many people's funds have never been frozen by banks. Those who are not psychologically prepared to be their own bank still have the option to use centralized platforms. But they should also be prepared to accept the consequences of their actions. Being your own bank is the best but it also comes with risks and responsibilities.

[m2017]

Do you think most people are psychologically prepared to be their own bank?

I think that most people are not ready to be their own bank (because most are irresponsible, unable to properly organize their financial lives, not ready to prevent potential problems in advance and solve them when they arise) and it is easier for them to use the services of intermediaries (banks, custodial wallets, exchanges), shifting responsibility (fears and worries) to others (even overpaying for their services).

2. The Responsibility Problem.

I would not call this a problem, but a transfer of the solution to emerging problems from the owner to the financial services provider. For some users, this is the best solution.

But bitcoin self custody is totally different
A single mistake can be irreversible.
This level of responsibility may be overwhelming for some people.

Double-check any actions before confirming and make backups.

I agree, because owning bitcoin means more than just clicking a button to send a transaction; it involves a complex set of actions that ensure ownership, storage, and security.

[Livingleged]

1. [The Fear of Losing Access.[/b]

A lot of holders always worry and think about a lot of things and they keep asking questions like
What if I lose my seed phrase?
What if my house catches fire?
What if someone steals my backup?
What if I forget where I stored it?

While all this questions are possible don't you think it also applies to the banks also? What if the banks catches fire? What if one of the staff in the institution comprises your wallet and be stealing from it? What if there is database formatting leading to losing of  costumers records? If I can not trust my self with all this questions then I can’t trust someone else’s

2. The Responsibility Problem.
Traditional banking allows and can help you correct some mistakes.
For example if you forget password you can Reset it.
Lost card can be replaced.
Unauthorized transaction? Call support.

The conversation should be bitcoin, it is decentralised and do not need card or call support system, you sign your transaction your self and that the best of ownership. While it’s still possible for you to still make mistakes why using the traditional banking system and you won’t be able to recover your money of instance sendings money to a wrong account number the bank has no right to debit the receiver.

But bitcoin self custody is totally different
A single mistake can be irreversible.
This level of responsibility may be overwhelming for some people.

You're now making it sound as it it’s a problem to do things accordingly, transactional with the self custody is just a p2p transaction it won’t take anything from you to check properly before confirming every transaction. If you really want to be part of the bitcoin then you’ll be ready to take responsibility.

3. The Inheritance Problem Nobody Talks About Enough.

Let’s just imagine that someone accumulated a very huge amount of bitcoin and then suddenly he or she dies.
If nobody knows where the person’s seed phrase is stored or kept, those bitcoins are lost forever.
A lot of Bitcoin holders prepare for theft but ignore inheritance planning.

This is the most challenging part of self custody and it has always being on my mind how you plan your inheritance while using self custody, I just think it need a level of trust cope with this it will be very foolish of person to have his holding in a self custody wallet and not have a plan of how his immediate family cant get to the asset in the case of death or even serious illness, having a trusted spouse can actually work with documents seal legally.

Do you think most people are psychologically prepared to be their own bank?
Let’s discuss.

I don’t know about others but I’m psychologically prepared for managing my own wealth. i like to take responsibilities  and not blame anyone or being in and had I known situation.

[purple_sparkles]

The arguments made by the author of the topic are definitely valid and they really make every bitcoin holder think. But in reality, we are not fully protected from anything in this world. Even the options that seem the most reliable to us can eventually fail. The same applies to banks.We are living in a time when everything can change very quickly and dramatically. Wars are starting, and no one knows whether they will continue or whether global peace and agreement will come sooner. There is also a major shift in world power happening right now, and it directly affects all institutions. That is why we cannot be completely confident in any investment. It is better to diversify risks, because in that case we will always have a backup plan if something goes wrong. As for the concern that our relatives may not be able to access bitcoin savings after someone’s death because they do not know the seed phrase, the seed phrase can be passed on somehow, but this is something that should be planned in advance. And the same situation can happen with bank accounts. If relatives do not know that a person has an account in a certain bank, there is also a chance that they may never find out about it after the person’s death.

[Danica22]

The arguments made by the author of the topic are definitely valid and they really make every bitcoin holder think. But in reality, we are not fully protected from anything in this world. Even the options that seem the most reliable to us can eventually fail. The same applies to banks.

In crypto world everyone just simply say not your keys, not your coin. However actual fear and panic that come with taking on this huge responsibility is ignored. The constant fear of losing those seed phrase, the tension of crashing your hardware wallet or how your family will access your fund in your absence! These impose huge psychological pain. But for fiat money bank usually handle all of those worries

I personally have been through this hectic feeling in the crypto market. Sometimes waking up in the middle of the night and wondering, What if I make a tiny mistake and my entire fortune is gone? I don't know if there is a way to escape this worry, maybe those who have more money also have more worries.

[Otaibayomi]

A lot of people talk about the technical aspect of self custody but little attention is given to the mental and emotional side of it, but as someone who is into bitcoin investment I know it’s important to talk about.
When someone holds Bitcoin in self custody they immediately become responsible for things banks normally handle for example Security, Backup systems, Recovery plans, Theft prevention, Inheritance planning.
And this creates a kind of pressure on bitcoin holders that a lot of people underestimate.
For example:

1. The Fear of Losing Access.

A lot of holders always worry and think about a lot of things and they keep asking questions like
What if I lose my seed phrase?
What if my house catches fire?
What if someone steals my backup?
What if I forget where I stored it?

Some people becomes so anxious especially newbies that they check their wallet regularly like 10 times a day some even end up moving their bitcoin from one wallet to another unnecessarily, their by increasing the chance of making mistakes.

2. The Responsibility Problem.

Traditional banking allows and can help you correct some mistakes.
For example if you forget password you can Reset it.
Lost card can be replaced.
Unauthorized transaction? Call support.

But bitcoin self custody is totally different
A single mistake can be irreversible.
This level of responsibility may be overwhelming for some people.

3. The Inheritance Problem Nobody Talks About Enough.

Let’s just imagine that someone accumulated a very huge amount of bitcoin and then suddenly he or she dies.
If nobody knows where the person’s seed phrase is stored or kept, those bitcoins are lost forever.
A lot of Bitcoin holders prepare for theft but ignore inheritance planning.
Now the question that gives some people sleepless night is how can they remain sovereign while also ensuring their family can recover their Bitcoin if something happens to them for example if they die?


Do you think most people are psychologically prepared to be their own bank?

Let’s discuss.

I love and appreciate your post about the fears of self custody and the challenges. It points to the facts that nothing good comes easy. It also points to the facts that there is need for intentionality in what we do as people. Self custody is good, but on has to prepare consciously for it. Just like the bank keeps the cash. My question thus would be that, what should newbie in the world of bitcoin do differently to make sure that even if you are doing self custody, you know exactly what you are doing and not fall pre of all the pitfalls there is?