Buterin labels Saylor’s Bitcoin custody comment as ‘insane’ – Why?

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  • Saylor has faced community backlash after his latest BTC custody comments. 
  • Buterin criticized him for pushing for ‘a regulatory capture approach’ in crypto.

As a seasoned researcher with years of experience observing and analyzing the crypto space, I find myself increasingly intrigued by the ongoing debate surrounding Bitcoin custody. Michael Saylor’s recent comments have sparked a heated discussion, with Vitalik Buterin joining the fray to express his disagreement.

Vitalik Buterin, one of the founders of Ethereum (ETH), has recently spoken out against what he perceives as criticism from Michael Saylor regarding the importance of self-custody in Bitcoin (BTC).

In a recent conversation, Saylor was queried if entrusting Bitcoin custody to big banks and external parties might lead to centralization and the possibility of government confiscation.

He replied,

If Bitcoin is primarily owned by individuals who follow a decentralized, anti-government philosophy (often referred to as ‘crypto-anarchists’), and they don’t adhere to regulatory bodies, tax obligations, or financial reporting standards, this can potentially elevate the chances of confiscation.

Buterin slams Saylor

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His comments attracted wide criticism from the community, with Buterin being the latest to voice his disagreement. Buterin rebutted, 

I’d be more than willing to express my viewpoint that Saylor’s remarks appear to be quite off the mark, or unconventional at least. It appears he is advocating for a strategy where regulatory agencies might inadvertently favor certain entities within the crypto sector, which could be referred to as a ‘regulatory capture approach’.

He added that regulatory capture championed by Saylor doesn’t align with what crypto stands for. 

Jameson Lopp, co-founder of BTC self-custody platform Casa HODL, echoed a similar sentiment. 

He reinforced that self-custody isn’t only for ‘paranoid crypto investors,’ but championing for third-party custody would be net negative in the long run.  

Taking personal control over your own Bitcoin isn’t just beneficial for individual owners; it plays a crucial role in enhancing and refining the overall network as well.

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For perspective, self-custody allows users complete control of the keys to their wallets. On the contrary, third-party custody dilutes user control of their digital assets.

The risky nature of the latter is best captured by a popular quote: ‘Not your keys, not your coins.’ 

Samson Mow, an advisor at JAN3com who specializes in helping countries adopt Bitcoin, emphasized that there’s always a risk associated with using third-party storage for your Bitcoins, regardless of how cautious you are.

“Just because you’re a paranoid crypto-anarchist, don’t mean they’re not after you.”

Large firms prefer third-party custodians

Indeed, it was no shock that Saylor faced intense scrutiny, considering his reputation as a prominent Bitcoin advocate and strong supporter.

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Yet, this is the position he consistently maintains regarding Bitcoin custody, particularly when it comes to larger companies entering the cryptocurrency marketplace.

2022 Interview with Blockware found him expressing his support for external asset storage for major corporations, referencing the strong safeguards and controls they offer.

He termed it a ‘blessing and curse’ for the asset, 

Self-custody is the advantage, while the challenge comes when you wish for major cities like New York City, Chicago, San Francisco, and numerous US-based publicly traded firms, along with thousands more, to adopt Bitcoin. In such a scenario, dealing with the controlling mechanisms of these entities becomes a complex task.

Regarding the discussion, both sides presented compelling points. However, an open question still exists: How might we address potential risks of centralization in the Bitcoin network as more large corporations decide to participate?

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2024-10-23 15:04