_Good Morning_ ☕ 📖 🌞

`Custodial Risk Principle`

- **Contract as Claim**: A contract representing an asset is a claim against its custodian, often termed as a security.

- **Value of Security**: The value is the underlying asset's value minus costs of exchange and enforcement.

- **Custodial Risk**: Central to any money system; reliability of the custodian limits money's usefulness.

- **State Money**: The state acts as the single custodian, with potential for default through reserve liquidation or fraud.

- **Bitcoin's Non-Custodial Nature**: Bitcoin's value is based on its trade utility; if no merchant accepts it, it's not useful. Merchants collectively act as custodians.

- **Merchant Role**: Merchants exchange their property for Bitcoin, not securitizing it. They can stop accepting Bitcoin, reducing its utility, but this isn't a default as there's no obligation.

- **Economy Size**: Bitcoin reduces custodial risk through the size of its economy, not through technology or contracts.

- **Blockchain and Custodial Risk**: Blockchain technology doesn't protect against custodial default; tokenized assets remain securities with inherent custodial risks.

- **Insecurity of Security**: Ironically, the "security" in traditional terms is the element that introduces insecurity due to custodial risk.

**Cryptoeconomics by [Erik Voskuil](https://github.com/evoskuil).**

*The book can be found on [GitHub](https://github.com/libbitcoin/libbitcoin-system/wiki/Cryptoeconomics).*

The rest of the summarized chapters are at https://expatriotic.me