MicroStrategy, Michael Saylor’s Bitcoin Custody Proposal Met with Brutal Public Uproar

Michael Saylor, the CEO of MicroStrategy, has recently triggered controversy within the cryptocurrency space with his suggestion to hand over Bitcoin custody to large financial institutions like Blackrock and Fidelity.

Vitalik Buterin, co-founder of Ethereum, has criticized this proposal, arguing that it contradicts the core principles of decentralization and self-custody that are fundamental to the crypto space. Buterin believes that Michael Saylor’s strategy, which advocates for regulatory capture through institutional custody, is flawed and ultimately harmful to the long-term health of cryptocurrencies.

He emphasizes that history demonstrates the failure of relying on regulation for the protection of decentralized technologies, citing examples where such measures have ultimately served to stifle innovation and control rather than fostering freedom and security.

Buterin Counter MicroStrategy Proposition on Bitcoin Custodian

Buterin also highlights the inherent conflict of interest in handing over custody of Bitcoin to institutions, arguing that it prioritizes the interests of these entities over the individual rights and freedoms of crypto users.

He contends that this strategy undermines the very foundation of cryptocurrencies, which were designed to empower individuals through decentralized control and ownership.

Further exacerbating the controversy is the long-standing debate surrounding self-custody within the Bitcoin community. While Saylor‘s proposal advocates for relinquishing control to trusted third-party custodians, Buterin and others strongly emphasize the importance of individual ownership and control over digital assets. They argue that self-custody is not merely a matter of paranoia but a crucial safeguard against systemic risk, loss, and potential seizure.

Furthermore, Buterin outlines a series of concerns surrounding the centralization of Bitcoin through institutional custody. Consolidating large amounts of Bitcoin in the hands of a few institutions raises the risk of loss or seizure, making the entire system vulnerable to external factors.

Furthermore, individuals lose their ability to participate in governance activities like running nodes or contributing to protocol upgrades, leading to a concentration of power within institutions.
Institutional actors often prioritize established systems and may be less inclined to embrace more advanced cryptographic features