Terrifying, stuff like this makes me think bitcoin will fail nostr:note1q9x4cyeg2xjr9lkfst029wynmc0tcm3fpzp5fpqupnjvgwfmhgjsee98lj
Discussion
Why?
Custodial bitcoin has none of the properties of bitcoin. We're destined to be like gold if not worse. If we're already at 41% custodial when txs are practically free, then it'll be so much worse in the future when fee rates go up.
Not that worried as long as we can exit.
There’s a credible chance people can exit the custodian. Credible - meaning it’s not too difficult for them and some users have proven that they do it.
Custodial bitcoin is worse than custodial gold.
Who determines consensus rules when the majority of activity is with custodians?
Gold doesn't have this consensus problem.
Better sell me your coins now
why?
It is something that genuinely worries me.
I don’t think it’s that bad. With an open ledger, we can audit custodian holdings every 10 minutes. If they try to fractionally reserve, we’ll know immediately. There will always be a market for international final settlement, which can support the miners once new coins dry up.
It took multiple years to figure out ftx was fractional. They coulda done it for much longer if they weren't so stupid
This is a lesson that has to be relearned every generation of new bitcoiners until it sinks in. Bitcoin bank runs will happen and people will get rugged. Same dynamic as gold except we are far more free to hide our wealth from governments and other bad actors, which gives me a tremendous sense of hope.
Onchain holdings can be audited, but issued units cannot. How exactly are you going to find out immediately?
