Custodian services vs. self custodian

It is no secret that many services in the cryptocurrency world now operate on a custodian service basis. Even the first coin, Bitcoin, tries to implement a custodian approach to solve scalability. It is not entirely custodian, but little by little, the users are choosing custodian services to avoid the headaches of dealing with private keys and security.

I use Lightning Network in a proper way by running my own private node on which I control the channel and my private keys.

Custodian services are those services where a user doesn't control their private keys. Today, most of those standard services are exchange accounts like Coinbase, Binance, Gemini, and many others. You can also add services that give interest yield to users for holding their coins with them, Cobo wallet, Nexo, and many others. Even if they are called wallets, they are not wallets. They are services where the user no longer controls the private keys and must ask for permission whenever the user wants to use his own money.

It is true that custodian services offer some advantages to first-time users, like easy access to their satoshis and even yield paying accounts that are better than regular banks accounts. Still, those services have a counterpart on which users may lose more than what they can get from the convenience of these services. One of the risks of having your assets with custodian services is that the government can order your service to stop and seize your money. You can also lose your money to a hack against the service where you have your money, and you could also lose your money because the service operators decide they have enough money to run for it.

Many people are depositing their satoshis gained from income or tips right into custodian yield services. Still, if a hack happens, or if the developers of that website, wallet service, or custodian get attacked by either a government or group of hackers, those yields won't be enough to justify the losses. It will be again another Mt Gox fiasco and tragedy.

Self custodian services don't offer yield on your holdings. Self custodian services must be secured by the user or users, meaning users must be responsible for their own money. Still, it has the advantage that the user can choose the time and when to spend the funds without explaining or asking for permission from and to third parties. It will also mean that governments will have to talk to the person in control before trying any confiscation attempt. And DeFi will allow for yield earning and self-control of private keys, but not without risks, but that is a topic for another article.

Also, self custodian wallets make crypto secure against banks' money printing and fractional reserve banking. It also means that users can know exactly what they own and can audit not only what they hold, but they can also audit the total supply of coins to guarantee that the money supply in a crypto ecosystem has not been altered by a third party, that applies to any cryptocurrency, with custodian services you can't do that because a third party holds the records of who owes what to whom.

Self custodian wallets make Bitcoin BCH and many other currencies do what they are today. A self custodian takes the power of money control from governments and changes it to the people. A self custodian is the soul of cryptocurrencies as money. Without it, you are just using another bank, and if you use banks, you will have the same problems today with your fiat but now in your cryptocurrency.

Protect the Bitcoin idea use self custodian wallets so that humanity can liberate itself from the banks and governments printing money until your currency becomes worthless and useless. Like many fiat currencies and government has done already.