18 December 2024
One counter-argument against pushing for greater scalability with Bitcoin is that “most people won’t self-custody anyway, so why bother?”
This is a wildly assumptive, arrogant, and outright fallacious argument. It is the same type of logical fallacy that human beings can’t help but make. The current state of the present is an indicator of what the state of the future will be.
“It’s not raining today, so it won’t be raining tomorrow.” It’s exactly the type of thinking that led Bitcoiners during the last market cycle to take for granted we would hit 100-200 thousand dollars as a peak then. That assumption was brutally destroyed by a double top at 69 thousand, a mere ~3.5x from the previous all time high.
The very nature of the digital age we live in, and the numerous radical transformations we have all seen within short periods of time during our lives alone should shake people out of their assumptions that the present is a demonstration of the nature of the future, but for many people it doesn’t.
First off, many people not currently self custodying their own coins do not even understand the distinction between self custody and their coins sitting on Coinbase. To many unsophisticated users, they’re all just apps that hold their bitcoin. I have encountered this misconception more times than I can count in my time in this space interacting with newer users. These users haven’t even been made aware of the possibility yet, discounting them is just absurd and presumptuous.
Secondly, users who choose to not self custody right now generally don’t because of the fear of losing their keys. It’s not a fear of “responsibility.” It’s a fear of them not being capable of properly handling redundancy in their key management, and losing everything they have invested due to incompetence or legitimate mistakes or freak accidents.
This isn’t 2013 anymore. People aren’t making backups of individual private keys in a digital file anymore. Key management schemes have come a long way since then. Mnemonic seeds, multisignature wallets, etc. Basic vaults using pre-signed transactions even exist, although are not widely used. Tools exist to make self custody available in ways that offer safeguards and helping hands in the case of mistakes and the need to recover coins keys have been lost to.
Unchained exists. Casa exists. Nunchuck exists. Bitkey exists. All of these tools will become even better as time goes on. Embracing Schnorr and Taproot, these recovery friendly self custody schemes can blind third party servers so that during signing and normal use these services don’t even learn anything about the coins users hold or transactions they co-sign. Taproot enables wallets to delegate emergency recovery keys to friends or family members without them knowing anything about those coins unless they are needed.
Tooling around self custody is advancing, and people’s attitudes around self custody will change alongside those massive advancements in technology. Discounting the need for scalability because people have reasons not to right now is pure arrogance.
It is nothing more than the “I have mine, so fuck everyone else” attitude. The current state of the world being a certain way does not guarantee it will be that way in the future. Only the arrogant assume so.
This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.