Replying to Avatar ben

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.
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yan 2y ago đź’¬ 1

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.

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ben 2y ago đź’¬ 1

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.

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yan 2y ago đź’¬ 1

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.

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ben 2y ago đź’¬ 1

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.

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yan 2y ago đź’¬ 1

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.

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ben 2y ago

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.