Adedeji Owonibi, mentioned that lack of regulation in Nigeria’s crypto space permits various practices to go unmonitored.
Following the FTX scandal, there has been a rise in industry leaders pointing towards self-custody and holding crypto tokens in secure hard wallets and off crypto platforms. Binance CEO Changpeng “CZ” Zhao took to advocating self-custody of crypto funds as a human right. Despite leading influential figures in the space advising it, there have been warnings from others that it’s not a viable option for all users and not a sustainable way for crypto storage in the future of digital finances.
Co-founder of Ethereum Vitalik Buterin noted on Twitter that there are still risks involved in self-custody given that smart contracts aren’t entirely proofed against bugs or glitches. He stated:
The “centralized anything is evil by default, use defi and self-custody” ethos did very well this week, but remember that it too has risks: bugs in smart contract code.
Important to guard against it:
* Keep code simple
* Audits, formal verification, etc
* Defense in depth
— vitalik.eth (@VitalikButerin) November 16, 2022
Crypto data platform Messari analyst Tom Dunleavy echoed some of Buterin’s sentiments, noting that the better solution to security is not necessarily in self-storage, but rather in good regulation with safe and transparent centralised storage.
We need to be brutally honest in times like this and get out of our bubble
Self-custody is not desired by 95% of the population and it never will be
If we want to onboard BILLIONS of users we need to make safe, transparent, trustworthy, custody work
That means good regulation
— Tom Dunleavy (@dunleavy89) November 11, 2022
Watchdog Capitals’ Bruce Fenton pointed out the limitations of self-storage from the perspective of inheritance. In a thread of tweets looking at tests to see how next-of-kin could retrieve tokens in the case of familial death, he tweeted:
“Self custody without a plan for inheritance is incomplete. It’s a gift to no one.”
The argument surrounds the idea of mass adoption in cryptocurrency. If the average user relies on an exchange, rather than self-storage, to hold their funds it requires strong protocols of security and even stronger regulation in place to protect funds. If they do rely on self-custody of their tokens, there needs to be an increase in education in the space to ensure users understand the shortcomings of smart contracts and possible risks associated.