There's no 3P reliance on Bitkey. Customers can always unilaterally exit without Block Servers or the Bitkey App using the Emergency Exit Kit.
https://support.bitkey.world/hc/en-us/sections/37470033273236-Emergency-Exit-Kit
Discussion
IMO, what Block is selling with the BitKey is convenience.
But in the case where block does go down, the funds may not get rugged, but there will still be consequences:
1. Users will need to find another product, device or software to use as their wallet. Back to square 1.
2. Users will lose social recovery and inheritance features.
3. Users may need to study a complex thing when they were under the impression that they had a simpler solution in order to perform the break glass protocol. This is a big security vulnerability as it will often require asking for assistance.
4. Users may end up taking an amount that is large but was secure and putting it somewhere less secure.
Nothing is black and white, but this product merely kicks the can down the road. Ultimately users still need to be educated about the self sovereign method or a better transition mechanism needs to be put in place so a reputable Block copycat can take the leftover customers while preserving the "I can't rug you" issue.
