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173 sats \ 4 replies \ @justin_shocknet 29 Jul \ on: Institutional Bitcoin Custody bitcoin
In both scenarios you're trusting process.
As an individual, your process is as fragile as your ability to design/remember/document it, and the discipline of following it once implemented.
End result is a single point of failure, you.
Institutional processes are more complex as a trade-off of redundancy and continuity.
Institutions may be relatively new to Bitcoin, though the likes of Fidelity have been building their custody set-up longer than most of you have been in Bitcoin. (First Lightning meetup I went to was at Fidelity HQ in 2018 and they were already balls-deep for years prior to that)
Institutions have also generally managed to maintain systems for things far more valuable than Bitcoin operational for decades (there are countless SCADA systems that could evaporate trillions in value if compromised).
There's a place for both, eggs in multiple baskets and all that, particularly when you consider them as tools for speculative attack.
I can't knock the coldcard specifically as I haven't studied it, but this is something technical incompetence leads people to purchase purely on vibes and marketing. HWW's are the Bitcoin equivalent of a weight-loss pill, they don't obviate the work required to use them correctly or even to determine if they're in fact the right process for you.
This same company also has another product they can easily sweep funds from, by using a combination of their private + public entropy. How many people buying that understand this?
The only correct way to use a HWW is in a multi-vendor set-up, almost no one does this, because now you're replicating the complexity of an institution.
TLDR, most of us are screwed unless we're very technologically competent and are willing to deal with a complex setup?
I like the idea of breaking up your stack into different pieces secured in different ways. I guest that gets complex too, though.
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different pieces secured in different ways
Yep, but also personal conditions bring their own complexity you have to respond to. Heirs for example.
A self-custody set-up designed for recovery by others, while also not being vulnerable to others, is always going to be more complex than a beneficiary record at a large institution.
Borrowing against an ETF is less tax-complex than hedging/tax-avoidance strategies when you have yet another problem being liquid solves.
I hate the word nuance, most of the time it's cover for pussy-footing around inconvenient truths, but if we're being prescriptive on solutions there's no way around it.
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Screwed? Depends on your framing.
Sovereign optionality is one of the most important aspects of Bitcoins incentive structure, that doesn't mean most people can or should exercise that option.
The option of not using the central banks unit of account is the more important option.
There'd be a lot less sad hipsters if they had their priorities straight and weren't so hung up on other peoples choices.
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Nice. Stack sats and be of no interest to the State.
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