Bitcoin Basic The Importance of Self-Custody
Heading into this past weekend, I planned to write my next post about the coming, great shootout between Bitcoin-based Web5 and Web3 utilizing other blockchains such as Etherium and Solana. It has to wait since over the weekend we saw the equivalent of a run on the bank or of a stock trading platform such as Robin Hood halting all buy orders on GameStop.
I’ve been hearing for weeks now about how some of the exchanges and DeFi projects have been manipulating markets, playing fast and loose, acting like insider hedge funds with OPC (Other People’s Crypto) with an unfair trading advantage by seeing what leverage traders are up to.
Starting Sunday. things blew up when lender Celsius froze all withdrawals; they have $11 Billion in customer assets. What makes it worse is just a few weeks ago the CEO of Celsius put out a video mocking self-custody. On Monday morning, June 13th, Binance, the world’s largest crypto exchange by trading volume, announced it was freezing some bitcoin withdrawals “due to a stuck transaction causing a backlog.”
I watched an enlightening video of Caitlin Long, CEO of Custodia Bank, explaining that there is a good case to be made that there are already more IOU’s on intermediaries than actual bitcoin in existence. I highly encourage you to take five minutes and watch the video here.
It makes sense to me that this is what’s ultimately going on today with price discovery and true supply and demand. It’ll take a while for this deceit, unfair advantage, and cheating to work its way out of the system. But it will work itself out eventually, as the wheels are already falling off driving the price down today, however ultimately making for a stronger future.
Fortunately, you have options with bitcoin and other cryptocurrencies that you don’t have with stocks and traditional stock trading platforms. Or even your bank for that matter. That option is self-custody. That takes away the IOU’s and makes it more of an “I Own This” — bitcoin!
Imagine if this was Apple stock and you watched as it was being naked shorted or you weren’t allowed to sell the stock for an unspecified period of time or in the case of Robinhood, buy more. Fortunately, with bitcoin you have the option of self-custody, maintaining full control and in the case of a cold, hardware wallet, physical custody of your digital assets.
Self-custody of your bitcoin isn’t complicated. (Full disclosure, fear of self-custody is what kept me out of bitcoin for way too many years.) There is indeed a slight learning curve but think of it as how you learned to use a PC or smartphone for the first time. (Actually, it’s a bit easier.) What’s more, taking the time to learn how to self-custody and using it as a peer-to-peer platform will empower you to truly understand how bitcoin and the blockchain work, while ensuring that your stake is fully in your control.
Though it may be a little daunting at first, once you see how easy it is and take proper precautions to secure your bitcoin with self-custody, you will feel a new freedom and even joy as you move the asset with ease and speed, bypassing a not-always trustworthy 3rd party. Once you master self-custody, you can easily send your self-custodied bitcoin to whomever you want and conduct business peer-to-peer transactions, or back to the exchange for sale or trade.
The best strategy is to buy bitcoin through a reputable exchange or any entity that will sell it to you or exchange it for cash, goods or services for bitcoin, and then quickly move the majority into your own self-custody wallet that you have full control of. You will thank me later.
All the best,
Jim Fox
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