Many people are excited about banks offering Bitcoin custody services to their clients, but this may not be such a good idea.
Sure, it may seem convenient and safe for newcomers to entrust their Bitcoin to regulated institutions. They don’t have to worry about managing their own keys or wallets.
But this convenience comes at a high cost. In fact, it goes against the whole spirit of Bitcoin and Web3. Isn’t that obvious?
Here are 8 reasons why you should think twice before letting banks hold your Bitcoin:
- Banks charge high fees
- Banks are not innovative
- Banks are not transparent
- Banks will loan out your Bitcoin
- Banks are not immune to hacks
- Banks can be slow and inefficient
- Banks can be forced to confiscate Bitcoin
- Banks can be forced to freeze Bitcoin accounts
Banks will not offer this service for free. You will have to pay hefty fees for them to handle your “risky and volatile” assets. On the other hand, by being your own bank, you only have to pay network fees.
Web3 technologies are fast-moving, but banks are not. They are slow to adopt and adapt to new technology to serve customers. This will limit your Bitcoin experience.
The main business model of banks is loans and interests. Guess whose Bitcoin they will be lending out this time, YOURS! And you won’t even know because they are not transparent about their operations.
Do you know who is the happiest if the Web3 space continues to use bank custody of Bitcoin? The government. This is like handing over our Bitcoin and financial freedom to them.
Credits: Serge Ajamian