Vitalik Buterin Says Michael Saylor’s Comments on Bitcoin Custody is  ‘Insane’

Vitalik Buterin, co-founder of Ethereum (ETH), recently voiced his disagreement with Michael Saylor’s remarks on Bitcoin (BTC) self-custody.

In a recent interview, Saylor, a well-known Bitcoin advocate, suggested that storing BTC with large banks and third-party entities might be safer than individuals managing their assets. When questioned whether this approach could lead to centralization and raise the risk of government seizures, he defended the benefits of third-party custody.

According to Saylor, when Bitcoin is managed by “paranoid crypto-anarchists” who do not comply with regulations, taxes, or reporting standards, the risk of seizure rises. 

For context, self-custody allows users to maintain full control over their wallet keys, while third-party custody means users have to trust another entity with their digital assets. The main risk with third-party control is that users don’t fully own their digital assets. If someone else holds the keys to your crypto wallet, they have control over your funds.

Buterin Slams Saylor

Saylor’s remarks drew widespread criticism from the crypto community. Buterin responded by labeling Saylor’s position as “batshit insane,” arguing that his suggestion promotes regulatory capture, a concept that contradicts the fundamental principle of decentralization.

I probably did more than most to spread the "mountain man" trope (btw I consider those remarks of mine outdated; snarks and AA changed the tradeoff space completely), and I'll happily say that I think @saylor's comments are batshit insane.

He seems to be explicitly arguing for a…

— vitalik.eth (@VitalikButerin) October 22, 2024

Buterin emphasized that relying on big, regulated financial firms undermines the vision of a free and open crypto ecosystem.

Advocates’ View on Self-Custody

Jameson Lopp, co-founder of the Bitcoin self-custody platform Casa HODL, shared similar views to Buterin. He emphasized that self-custody is not limited to “paranoid” investors; rather, it is crucial for maintaining the overall health of the Bitcoin network.

Bitcoin self custody isn't just about being a paranoid mountain man. There are many long-term negative ramifications to convincing people to trust third party custodians.

1. Centralizing coins into a few hands increases systemic risk of loss and seizure.
2. Bitcoiners get…

— Jameson Lopp (@lopp) October 22, 2024

Lopp cautioned that advocating for third-party custody could have negative long-term effects. He emphasized that self-custody is essential not only for individual Bitcoin holders but also for reinforcing and enhancing the overall network.

Furthermore, Samson Mow, an advisor on nation-state Bitcoin adoption at JAN3com, noted that third-party custody poses risks, regardless of how cautious users may be.

Saylor’s recent remarks on BTC custody are consistent with his stance on Bitcoin custody, especially concerning large institutions entering the crypto space. In a 2022 interview with Blockware, he advocated for third-party custody for corporations, citing the robust checks and balances these entities can provide. He described this approach as a “blessing and a curse” for the digital asset.