Several new initiatives launching to boost that even further ranging to the easiest to use multisig in the industry to gamification to encourage even more self custody.
Discussion
does swan custody users bitcoin prior to withdrawal, or does swan trust a 3rd party for that?
ultimately I want to trust the least amount of parties as possible. with all due respect, swans move to another 3rd party custodian after the prime trust debacle feels like kicking the can down the road.
First party or third party there is always trust. You don’t know that the “first party” custodians have your coins. You don’t know if their security model is any better than a cold card in someone’s basement. You don’t know the security budget allocated to that. A startup will not have the same level of budget allocated to security as a qualified custodian. We use a framework of qualified custody including on chain observability, state regulation, soc2 audited, etc. We assess the risks of the various models here: https://www.swanbitcoin.com/assessing-risk-in-bitcoin-custody/
Ultimately, wire in and withdraw your bitcoin within 24h. During that 24h period they are in qualified custody with all of the above in place.
the difference between first party and third party custody is another party to trust.
anecdotal but as a humble stacker I prioritize time-to-coldcard and bare minimum parties to trust. I can buy bitcoin on cashapp and have it on a coldcard in 60 seconds, trusting only a single party. I don’t think swan competes with this and maybe I’m not swan’s target audience - that’s ok.
CashApp is great. We tend to serve a lot of high net worth clients and also in some cases clients that require qualified custody for various reasons. Not sure you can go to coldcard with larger amounts on cashapp. I once got a big amount stuck there that took forever to take off.
Just want to point out, as a thought experiment, that if your first party is “bob’s totally trustworthy built in my garage bitcoin store” then maybe that’s not quite as good as a third party custodian with audits and so on. CashApp is trustworthy, because it’s a public company and has a large security budget. Minimizing time in custody is always a goal. If you can get what you need there quickly, that’s awesome.
agreed on the withdrawal and purchase limits on cashapp, that’s a good value prop for swan - thanks for highlighting that.
and I think it goes without saying that a first party of “bob’s totally legit bitcoin warehouse” is obviously a little sus. it all boils down to being educated of the risks and making a personal choice.
anyway, appreciate what you’re doing. *personally* still highly skeptical of putting trust in these Trusts like bitgo and fortress but that’s the beauty of competition - I don’t have to.
Yep exactly why we write a whole article analyzing the different tradeoffs. Pretending that one is “obviously” better than the other is naive and the thought experiment proves it pretty well. As mentioned in the other thread, our clients are first party customers of the qualified custodian. We just have certain custodians we recommend for different use cases.
eh probably going to have to agree to disagree. I previously put trust in swan only to discover that meant I also put trust in prime trust. if I was to trust swan now I’d be trusting fortress or bitgo and/or others.
hope that trust works out for you, I will pass.
River is a 3rd party too bro. Anyone holding my bitcoin other than me is. It's a false comparison. And I would say no one is as good as Swan at education and promoting user taking custody. We're all at risk for the short intervals our bitcoin is with a 3rd party, whether it's Fortress or River.
you’re missing the point bud
Exactly right. If you trust someone you trust someone. By the way our clients sign terms of service agreement directly with a qualified trust company. For them it is a first party agreement, not a third party agreement. So you either trust a bitcoin startup that they’ve done all the right things, or you trust a qualified custodian, which has much more proof of work (soc2, billions in custody, track record, legal
framework for segregation of client funds, etc).
nostr:npub10000000thpep7auj058803nqtymqlf3rw87lzhe6mkfeywnpxg5sjw7nql I simply don't understand your issue here with Swan. As I see it, from the arrival time of a wire to withdrawal to your own storage is 2-24 for a $50k purchase, during most of that either asset is at the custodian. I have seen buyers be in and out in under 2 hrs. Done.
Swans margin is all on the BTC deal price/ paid. They should not handle or touch either asset. Jan's answer above confirms that they don't touch it.
Also: If the custodian f's with the statements and co-mingles funds behind the scenes, I believe all 3 Nevada, SDakota and Delaware trust industry bodies (ie industry itself ) with help to jail those specific staff. They do not want their trust industry to get f'd and break 80+ years of legal precedent in their state (and lose their Trust biz to the other 2), over some pittance (to them) $100m rugpull. These are Walton level jurisdictions.
Ie: I believe there is be the genuine threat of US jail time on staff action/inaction.
We will know if that becomes true as PT plays out in Nevada court.
Alternatively, what other method do you suggest for >$50k deals except an independent custodian. That's worked for bearer assets for a long long time.
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