Amidst rising institutional adoption of Bitcoin, Trezor has highlighted the importance of self-custody as protection against potential centralized institutional failures.
Risks of Institutional Adoption
Institutional adoption contributes to Bitcoin's recognition and price growth, but it also carries certain risks according to Trezor's analyst Lucien Bourdon. Institutional involvement leads to centralization, with single entities holding large amounts of Bitcoin, which can result in volatility and negative sentiment if issues arise.
Prevalence of Individual Holders
While institutions and governments are accumulating Bitcoin, the majority of its supply is still held by individuals. According to CoinGecko's 2024 report, governments collectively held around 471,000 BTC, accounting for just about 2.2% of Bitcoin's total supply.
Self-Custody and Bitcoin Independence
Self-custody allows users to independently manage their Bitcoin, but it requires them to fully assume responsibility for safeguarding their private keys. The rise in self-custody is part of a broader cultural movement towards personal responsibility and empowerment in the digital age.
Thus, self-custody is a crucial element in protecting Bitcoin holders from risks associated with centralized institutions. It also reinforces the principles of decentralization and personal responsibility, which are especially important in the modern era.
