I think my most controversial opinion on #bitcoin is that we wrongly conflate Self Custody and Decentralisation of the network as the same thing.
I did try and convince people of this at Cairns Bush Bash, but didn't find a good way in.
If anyone wants to argue this it may help me sharpen my sword.
can you say a little more ?
2 different things.
- Self Custody is a personal risk adjusted preference.
- Decentralisation is a system level property that deals with the balance of power.
- As money is a network the level of decentralisation is determined by how much of the network you can trade with.
- Large custodians are bad because they capture a lot of people in 1 closed network
- Small self custody is bad from a power PoV as you have no economic weight within the network
- If the individuals only self custody and don't work together you have a coordination problem to act with others.
- if the two options are large self custody (you literally can't stop this) and individual custody then the majority of daily trade and MoE will flow into the custodial system
- trade volumes from self custody will each be insignificant (even from large holders) in where trade occurs.
- the correct answer in my view is custody at a meaningful level with local custodians aggregating funds, tx volumes, trade etc at an economically relevant level for the network (think the amount of funds you might transact as a town vs. one person - even a rich one)
- limits growth of large custodians as there are smaller competitors
- forces larger custodians to remain on open networks and standards as majority of customers are in the network no tin their node.
- balance with excessive self custody also of long term SoV and savings.
How do ‘we’ conflate the two ?
We would be a general bitcoin industry framing from my PoV that states that anything "custodial" is "centralised".
This is pretty common from my point of view, but would be glad if it turns out people don't really think this.
I think I figured out the difference fairly soon in my time on Bitcoin.
Decentralisation is about making the network antifragile, by hosting multiple copies of the blockchain; as a node runner I get some personal benefits around privacy of my transactions and services I run and use. But, mainly is a thing I do to be involved in this protocol and protect the info we all need.
On the other hand self custody, is 99% a selfish approach towards saving your secret and the Bitcoin attached to it… and I don’t mean selfish in a negative way.
IDK, I’m a goose. 🪿
Protecting your Bitcoin.
VS
Protecting your bitcoin.
Decentralization is a direction, not an end state.
If targeting an end state, ask, "decentralised enough for what?"
E.g. If 200 central banks were the only parties to self-custody, is it decentralised enough to avoid capture by a single state? Probably. Is it decentralised enough to separate money and state? Probably not.
What goals do we have for decentralization? Check-in with those to see how much self custody is required.
