I was wondering…

With everybody preaching self custody/cold wallets and so on (rightfully), could that be a double edged sword? Meaning, what if institutions or even exchanges force you to keep your assets on an exchange in order to be able to sell later on.
I know the point of crypto is not dealing with middle men, but if, let’s say you buy Bitcoin today and then you move to a ledger ready to cash out in 2025 let’s say, they easily could lock your account asking questions and the usual bullshit. I know can send and receive Bitcoin without relying on cefi but they could easily blacklist your addresses and make you a useless idiot.
What do you think? Paranoid or something to keep in mind? Please let’s discuss because I feel like this matter is overlooked and I know for sure that governments won’t let people transact in a “defi way”

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21 thoughts on “I was wondering…”

  1. I’m hoping we see more social recovery wallet services like: http://argent.xyz

    This makes it super easy for normies to self-custody, but without the security risk of having to generate and secure seed phrases and private keys.

    We need more of this.

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  2. You are exactly correct and that is why the days of rule by centralised exchanges are numbered. Decentralised exchanges are going to own this space. DEXes are in a completely different situation from stablecoins. I don’t see how it is really possible to make a genuinely decentralised ‘stablecoin’ because prices are opinions and those don’t have to be rational nor follow any preplanned incentives, so they can’t be *reliably* controlled by any algorithm. An exchange, on the other hand, isn’t supposed to try to control any prices: it is merely a matchmaker between real people who agree on what the prices should be. This can genuinely be decentralised and has been already. It is only a matter of time before the market gets up to speed on this.

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  3. Governments can try banning self custodial wallets, sure. There is historical precedent for this sort of thing. Executive order 6102. At some point the government might blame bitcoin for their shitty policy decisions.

    Maybe they’ll have deals with all the major miners.

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  4. I’ve read that eToro already does something like this. If you send your stuff from the eToro wallet to your own wallet outside of eToro, you are not allowed to send it back and sell through them.

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  5. Self custody is indeed a Double edged sword.
    Best Feature is cutting Out the middle man.
    Worst Feature is cutting Out the middle man.
    This will lead to billions getting lost over the next years due to noob mistakes.
    I even theorize that 50 Percent of Bitcoin will Be lost and burned before the Last Bitcoin will Be mined.

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  6. Yes, but of course the point of crypto isnt to sell it for fiat.

    Also exchanges get fees from trading, if no-one can sell, no-one can buy.

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  7. A more likely scenario is that exchanges will be competing with large, traditional brokerages for trading and custody services.

    In a few years, once the much-needed regulation gets sorted out, you’ll likely be able to trade and store your BTC in your Schwab account for example. Along with 34 million other Schwab customers. All of the major brokerages are working on it. I think it’s very likely that the next cycle will come with mass, retail adoption from traditional institutions.

    Don’t know about you but I’m hodling and don’t care about what’s happening right now unless BTC collapses below 10k. Then I’m backing up the truck.

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  8. What you are saying is basically: what if 1 BTC =!= 1 BTC. Then it has failed.

    However, from a practical point: You will always find an exchange which will get your coins – they have value after all.

    From a legal perspective: Why wouldn’t you be allowed to sell the coins which you legally acquired? If you bought them at an exchange you can even somehow prove it. And for the exchange where you bought it it will even be more obvious / easy to verify.

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  9. AFAIK the stats seem to say more coins have been lost through self custody recovery key mismanagement than through CEX breach events

    I’m trying to find the source … I’ll edit this post if I find it

    Stay safe everyone

    Personal key management is such a difficult subject re: fire, flood, theft and secure off-site copies being needed

    I’m liking the idea of the Trezor Shamir Protocol

    Good luck !

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  10. Just realized that if I ever want to cash out I will send my coins bit by bit to exchanges

    You unlocked another fear in me

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  11. Which case is more likely/bigger risk in the future?

    1. All exchanges everywhere refuse to allow you to deposit btc

    2. You keep your btc on an exchange, but that exchange locks or closes your account/gets hacked/goes bankrupt/gets banned or blocked by local laws.

    I think 2 is a MUCH bigger risk and am curious what argument can be made that 1 is a bigger risk.

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  12. Won’t let people transact in defi. That is why thier is defi, it is decentralized. Anyone with a wallet can transact and the platforms and dexes to do it are too plentiful to count.

    100s of ways to turn coins into stables back to wallets and chatge cards. Exchanges bread and butter is people selling crypto on thier exchanges. Self-custody is and always will be a given, and exchanges will always accept deposits.

    That is thier role in this space.

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  13. We just won’t use those exchanges, PayPal and robinhood had this 2 months ago. They do this because most exchanges trade bitcoin they don’t have. Most of the bitcoin exchanges that ran off with peoples money did exactly this. That’s why regulation will be good for bitcoin.

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  14. Exchanges would never make this rule on their own, it’d be a death blow for any exchange that did so – they’ll be forced to by governements. Using it as the p2p currency it is takes all of the power away from the governments and exchanges – something the entire crypto community seems to have sacrificed for nothing more than ease of access. Obviously, such freedom comes at a cost – less people may be willing to participate without the ease of access.

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  15. So you mean, if you’re holding onto the keys of your car and your car is getting rekt and pushed into the lake type of situation? Now will that key u holding still be of any use anymore right?

    My guess is no. But i don’t know about the thinking of others.

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  16. Individual exchanges can do whatever they want.

    Individual governments can do whatever they want.

    What they cannot do is change the code of the cryptocurrency.

    But governments could also send out kill-squads to commit genocide of their own population… if they wanted…

    Assuming that the worst thing possible will always happen is a great way to finance a therapists 2nd home…

    Reply

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