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0 sats \ 1 reply \ @faithandcredit 3 Mar 2023 \ parent \ on: How Important are Banks to Bitcoin Today? bitcoin
i am not worried about $100 in the wallet being stolen. it would suck but i would recover.
my savings for retirement if they get stolen that would be problematic. and if people found out you kept your retirement savings under the mattress you are going to have to worry about that. so self custody is not that great. how many crypto billionaires i wonder self custody? and also luke-jr which is a bitcoin dev lost his money and hes supposed to be an expert? self custody is not that great
We have cold storage, we have hot wallets, and we have Luke warm stoarge, for when you thought your internet connected device was cold. Anyway, this is the guide for Bitcoin billionaires
Trusting a custodian has RISK. Major risk. rehypothecation risk, is great depression risk. ALL the money EVERYONE thought they had is GONE risk. Even Luke's loss is better than that. At least with Luke, we know the money is gone and that he can't spend those coins, but imagine if he spent those coins and THEN you found out there was nothing there. That's custodial risk.
Now, even for $100 the risk of rehypothecation is GREATER than theft out of a hot wallet. Take "Wallet of Satoshi" https://1ml.com/node/035e4ff418fc8b5554c5d9eea66396c227bd429a3251c8cbc711002ba215bfc226
191 Bitcoin and yet most people are probably only keeping $100 on there. The $100 increments add up, and being a custodial service might interface with other custodial services and this is where the real risk comes into play. When custodial services, put assets on balance sheets and don't settle the underlying asset, they can effectively print money for a very long time.
It is better that this theft is detected, than to go undetected in a dishonest custodial service's balance books (not to say that I know if WoS is dishonest or not).
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