In light of current events it's becoming roaringly clear that self-custody needs to become a fundamental cornerstone of our being here on earth.
Self-custody implies that we are taking ownership of our assets. Nobody should have the rights, powers or abilities to hold our assets hostage or weaponize them against us.
What current events would help direct us to those conclusions?
- Trucker protests in Canada (Canadian government froze assets of participants and tried to freeze crypto too (more on this in a bit))
- The collapse of the Terra Luna protocol (even decentralized protocols can be shady and lack transparency)
- Collapse of centralized exchange (CEX) FTX (they used to be the biggest CEX out there)
- Permissioned nature of traditional finance banking systems (TradFi) (have you ever tried to move your investments from one institution to another and they did everything they can to kibosh the transfer? Me too)
These are just a few examples, there are many more world over, just look at China, Europe and other places, or even the hostage situations in banks during 2022 in Lebanon because banks wouldn't release funds.
Let's Extract Some Relevance From These Examples, Shall We?
The world can be a scary and dark enough place as it is, even without these so called trusted institutions (banks, governments) abusing their power to keep us down.
In Canada when people were protesting against the vax mandates to support truckers and the supply chain, the government and banking systems decided to freeze assets of anyone and everyone involved, even remotely or with suspicion. It's clear that in a world full of constant violence and oppression against us from the institutions in power that we must start taking steps to empower ourselves and break away from these traditional molds.
Is crypto, nay, is blockchain the solution? Not just any blockchain, decentralized and trustless blockchains the solution to these issues?
I'd happily suggest yes and scream it from atop the mountains non-stop.
If your hard earned funds are in your own custody on decentralized, trustless platforms there's not much anybody can do to weaponize or hold your assets hostage.This also means not to trust CBDCs (Central Bank Digital Currencies). The institutions have a long-standing history of mismanaging assets and not having anyone's best interests at heart (except their own).
When using a centralized smart contract they have the same (sometimes a lot more opportunity) to abuse the privilege of holding your assets in custody. They can still "flick a switch" to sabatoge your lifestyle, and they have a history of lending out assets held in custody upwards of 20:1. Meaning that for every dollar in their custody they loan it out 20x to other people.
What a way to take advantage of every day people, right? The banks, governments and a lot of other institutions are just glorified dictatorships which demand certain levels of conformity for your "freedoms".
What Options Or Solutions Do We Have To Safeguard Our Livelihoods?
If you take the time to read any centralized establishments TOS (terms of service) you'll find clauses that by storing assets on their platform you have no ownership and give up your rights to those funds. You'll always be begging or asking for permission to take any actions you need for your lifestyle.
It's not right, and it's shady as fuck. History is abundant with stories, both in the TradFi world and blockchain world of people getting rekt for trusting the wrong institutions.
How do we take a stand? What options do we have? Is there any way to truly take self-custody of our assets, or going a step further to become completely self-sovereign individuals? Yes, there are.
- Self-custody platforms such as Trust Wallet, Metamask, and others are a great start along this journey
- Decentralized L1 & L2 (layer 1 and layer 2) Blockchains such as Ethereum, Optimism, Arbitrum, Bitcoin (ETH still has centralization risk, but that's a story for another day)
- Protocols such as Polygon which only want to appear decentralized are not a good call, despite the low fees and other specific use cases
- Decentralized Protocols such as Uniswap, MakerDAO, UMA
Decentralized blockchains are essentially their own Nation States for the 3 reasons:
- Have their own currency (tokens)
- Have their own economies (DApps built on the protocol)
- DAOs operate as transparent businesses with all data being able to be verified on-chain
When data is stored on the blockchain it's immutable and exists forever. There's no fudging the numbers, there's no hiding or lacking transparency.
Sure, to some degree we are giving up our privacy by using these solutions, however, with good privacy and security hygiene every-day people can obfuscate their real identities to prevent themselves from becoming targets to bad actors.
Stablecoins, such as USDT and even USDC, which are centralized, are also known for locking people out of their contracts on the demands of governmental institutions, these are not safe either. Other alternatives such as DAI solve this problem (DYOR always).
It can be quite the rabbit hole to go down. It's important to remember that knowledge is not power. Only APPLIED KNOWLEDGE is power.
Stay tuned, as I'll continue to pump out information, guides, walkthroughs and perhaps even workshops to help you upskill yourself to secure your future and legacy. I'll catch y'all on the flip side for a continuation of this article!