Mass adoption ≠ Non Custodial

I’ve been thinking about the custodial vs non-custodial question for cryptocurrency in terms of best outcomes vs. likely outcomes alot for the past few months.

If you’re not familiar with these terms, custodial wallets are like COINBASE, a third party holds the private keys to your wallet and you don’t have control of your coins. In short, that company holds your coins on your behalf and has total control over them.

A non custodial wallet is typified by the user holding the private keys to the wallet. This could be just you downloading the Bitcoin or other crypto client software and running it on your computer or something like the JAXX wallet, which while it is software from a company, you hold the private keys, JAXX can’t access or recover your funds.

In traditional finance, unless you hold the Cash or Gold on your person you are trusting your money to a 3rd party custodian. We all grew up (until we discovered Bitcoin) with this being the norm. Outside of small niche prepper/survivalist communities, no one, especially in the mid/late 2000’s carried much cash or owned physical gold. The majority if not ALL of our transactions, big and small were done via 3rd party custodians (e.g. Banks, Credit Cards, etc.). It’s important to note that this was not all because of convenience there is also a large element or NECESSARY in this system. You could choose to live out in the woods, hold all your own money, but if you wanted to buy anything that wasn’t located nearby, or pay your mortgage to a bank that wasn’t in the town you lived you HAD to interact with 3rd party custodians.

Bitcoin destroyed that model, it was no longer NECESSARY to trust 3rd party custodians. You COULD if you CHOSE to operate totally independent of that system. However, I have been thinking more and more about human nature and realistic expectations for how our Bitcoin based monetary system of the future will look like.


Bitcoin Purists would denounce this as heresy, but I don’t believe that we will (in our lifetimes) see adoption without custodial solutions. Humans inherently seek the path of least resistance in all things. We are relentless in seeking efficiencies and will, en masse, choose those with less friction when presented. Uber is a grand example of this.

Nobody liked riding in Cabs, they often smelled, the drivers apparently did not understand basic traffic law or the social niceties of driver etiquette, and quite often just talked on their phone the whole time you were in the cab (which is preferable to being roped into a political/conspiracy conversation).

All those negative things aside, it wasn’t those that led people to choose Uber over Taxi’s, although the ability to rate and the incentivization of higher quality experiences DOES HELP.

No.

What truly made Uber a game changer is that it saved time. It was more efficient. You can sit on your couch binge watching Netflix, press a button and have a car sent to you. You can still sit there watching your show until the car arrives and then you head down.

Uber doesn’t waste your time. No call, no talking, no walking outside to search for a ride. It makes it as simple as possible for Point B to arrive at your Point A.

There are numerous other examples such as Amazon, Butcher Box, etc. all finding success because they understand a VERY important aspect of the modern human experience. WE DONT WANT FRICTION IN OUR LIVES.

Like it or not but Non-Custodial wallets are FRICTION HEAVY. You have to download, set up, write down private key/recovery seeds, keep them in a safe, maybe split them into multiple parts in multiple safe deposit box so, engrave them on CryptoSteel, etc. etc. etc.

This is not simple, this is not easy and it’s not something you are going to get the vast majority of people in the world to do. The world is rapidly moving from more to less.

writing down phone numbers and memorizing them→ “Call Dean”

Passwords→ face unlock

Buy multiple ingredients based on recipe→Box with measured ingredients on your porch

If you’re moving in the simplified direction you win. If you’re moving the other direction… you will lose.


To me the important aspect of Bitcoin is that if you want to possess an exceptionally independent and secure form of money, you can. No one can stop you from running your own full node, securing your own private keys and operating totally outside the custodial wallet system. The current Fiat system does not allow you this, but Bitcoin does.

We will not see mass adoption of Bitcoin without 90%+ of those people using a UX/UI heavy custodial wallet solution(s). If you think it’s just a matter of education, you need to leave your tech enclave bubbles you live in and drive a few hours, go to the nearest supermarket and just watch people. If you interact with the average person you will see that these are not people who are going to run their own full node, use airgapped computers to set up paper wallets and have multiple storage locations for split sections of their private keys. It’s not happening, It’s not a matter of education; Its not even that most people COULDN’T, most people just don’t care enough to do so.


The point of this article isn’t too crap on purists or the public. It’s too bring a better understanding of how people work based on current trends and an understanding of human psychology. I would rather that everyone ran their own full node, secured their own private keys, had full control of their wealth and Independence from all systems that could cut them off from it. It would be better for the cause of Liberty in the world, but it’s not going to happen. As I mentioned already, an important and miraculous aspect of Bitcoin is that even if you don’t want it, You can at any moment take full control of your money. That is a monumental leap forward in the history of financial sovereignty.