When I was young, I had a piggy bank. A piggy bank is incredibly secure. It's fairly big - so it is hard to lose. It is brightly coloured - so you can find it easily. No one else can see how much money there is in there. The only way to get money out is to smash it - providing visible evidence if someone has robbed you. And smashing makes a noise - deterring would-be thieves.
A piggy bank is close to perfect security. If you are seven and your adversary is a younger sibling.
Storing your own money is a mug's game. Having a fiver on you for emergencies might be sensible - but stuffing cash under your mattress is not advisable. Loss, theft, and fire are all real concerns.
The world is moving away from cash. Just before the pandemic, I went a year without using cash. Since then, I haven't withdrawn any notes.
Holding on to cash is like running your own bank. You have to check that the money you're given isn't counterfeit, store it safely, insure against loss, protect against theft, project future needs, etc. It is a massive faff.
So people use banks. In the UK, they're mostly free. I give an institution my money and, due to a combination of their size, insurance, and regulators, I'm confident that my money will still be there tomorrow. They are unlikely to give me fake notes, and they can refund me if I've been defrauded. I trust them.
Enter the crypto-dudes with their plaintive cry "But I shouldn't have to trust anyone!"
Sure. I fully support your right to get paid in cash and to store all of it in a lockable box guarded by your dog.
But don't come running to me when the dog eats all over your notes and shits them out in the middle of nowhere.
As Moxie wrote a few weeks ago that most people don't want to run their own servers. I'm a massive nerd and run a few servers. And it is a pain in the arse! This website runs on someone else's cloud infrastructure so it doesn't break too often. I don't have the time, energy, or skill to securely run important servers all by my self.
Do people want to manage their own cryptographic keys? I doubt it. It's complicated and fragile.
The complexity can be magically managed away with better technology and usability. Up to a point. You no longer need a degree in electronics to tune in to a radio station. But look at the number of people who don't know how to re-tune their car radio's presets.
So people will gather around big institutions. Those which have the funds, insurance, and regulatory oversight to provide a reasonable degree of trust.
Sure, some people will hold on to their own cryptokeys - just like some people only want to be paid in cash. But, just as now, they'll be the minority.
There's an inherent fragility built into cryptocurrencies. If your physical bank notes are damaged, the bank will replace them. If you are defrauded, the bank will reimburse you. If your loved one dies, and you inherit their assets, the bank is legally obliged to give you access.
Cryptocurrency has none of that.
- If your hardware wallet or keys are destroyed, you've lost everything.
- If you are defrauded, you've lost everything.
- If your loved one dies and didn't give you access, you've lost everything.
Would you carry around your life savings in your wallet? Would you store everything of value in your home in a safe? Would you want to run your own banking infrastructure?
I doubt it.
The "not-your-keys-not-your-crypto" folk want us to return to an almost prehistoric means of storing and transporting money. Thankfully, most people realise how backwards that is.