For a long time, ownership wasn’t a word. It was barely a concept. Pre-agriculture tribal humans behaved like most other pack animals– roving from place to place having only what they ought carry. Jewelry and trinkets probably set us apart from some other species, but other creatures are known to collect in similar fashions, so this behavior isn’t all that unique to us.
Now that there are lots more peoples on the planet and a global finance system to facilitate the individual goings-on of each person, it’s become increasingly important that we identify each unique person and keep track of what’s “theirs”. In the case of developed nations and money, we usually don’t touch physical cash. We’re paid by jobs and clients in numbers that move from institution to institution, and very little of the process has anything to do with us other than delegating where we’d like to keep it or spend it. The current system requires that we trust these third-party entities to give us the money we think is ours to also think it’s ours, and to hand it over when requested.
So far so good, right? Times have been reasonably stable in the last several dozen years, and the money I think I own has proven to be what the bank is willing to allow me to spend. Often more, actually. But what would happen if everyone withdrew their money all at the same time, or if the bank ironically went bankrupt? It could be unable to give you what you have, and this possibility leads me to believe that we don’t really know what we have.
Installing a mobile, desktop, or browser extension cryptocurrency wallet on a computer or phone of yours and storing your seed phrase somewhere(s) safe can allow you to partake in full custody over your assets. This means that the balance you see is the balance you have access to– whenever and wherever you need it. Instead of the banks playing middleman, a blockchain is now doing so, and since it’s robots, code, security, and truth-incentivized, you can act person to person in a trustless manner. You win, right?
Unfortunately, when you take full control over your own assets, you’re also fully responsible for losing them to theft or misplaced seed phrases. If someone gains access to your wallet, or you lose your manner of recovery, no third party is there to refund you or help you find your password. This is not to say that full custody is bad, but it does mean that it comes with a fully different set of risks. Cryptocurrency functions a bit like cash in that if you drop your wallet into the ocean, no one will replace your loss quite likely. The upside, though, is that you have the option to buy currencies that no group or government can control.
Banks can withhold your funds but provide safety and security from general loss or theft, while cryptocurrency allows you full control and ownership over your assets but your problems are now your problems. I’m operating using a hybrid of both systems, as I currently see the value in each. Do you?
Thanks to our sponsor Goshen Network, a layer two solution building for Bitcoin, and to Bankless DAO for the ongoing support.
