Custodial Services

about 2 years ago

Let's be honest.

Most people that read this blog already know more about crypto than the average person will in their entire lifetime. That is a fact, and we should stop pretending otherwise. The early adopters who got in on the ground floor of this thing are obviously going to show way more interest and put way more time/effort into learning this stuff. This is our job now, and I plan on getting paid handsomely for it.

Expectations vs Reality

Anyone who expects that everyone is going to be running their own node in the future, or that everyone will secure their own keys, or that everyone will create quality content, or that everyone will XYZ via altruism/idealism ... is going to be sorely mistaken. Those who actually make bets to this effect and put their money in places that rely on utopian philosophy are going to have a bad time.

The average person will always be average.

This was something that blew my mind back when I was playing poker for a living. No matter how good I got, the average person at my tables never got any better. Mindblowing! How is that even possible? Are they not even trying? Are they action junkies that just do it for the rush of the risk?

What's going on here?

For the most part this is a surprisingly simple equation. For every good player that burns out and leaves the grind, two more newbies are going to take his place. There's a sucker born every minute. Haven't you ever wondered why the economy suffers every time population goes down and demographics morph into a different shape other than a pyramid? The entire economy is a pyramid scheme that DEPENDS on taking candy from the baby.

AH! FRESH MEAT.

Like it or not, this is the world we live in.
A meat grinder unsurprisingly grinds meat.
That is its function.

Yeah, but what is the point though?

The point is that people don't care about security until they get hacked. People don't care about game-theory or the underlying technology or "disruption" or "innovation" or anything else.

What people actually care about is convenience.

That's it.
Was it quick?
Was it easy?
Did I get the most value out of my effort for the least work possible?
These are the questions people ask.
Not: is it decentralized?

That's reality.

And we must pivot to supply that demand.

Again, let's be honest.

Someone creates a Hive account.
That account is worth $0.
But we expect them to spend hours figuring it all out?
On the off-chance they might get rewarded later?
Maybe?
That's dumb.

That's projection.

We expect other people to claw and scrape just like we did when we first started out. But again, we are the grizzled early adopters. It would be downright foolish to project early adopter mentality onto mainstream adoption mentality. No no no: that's not going to work.

So yeah, there will be a lot of backsliding and compromises. We have to create centralized solutions if we expect to get users to transition from a centralized web 2.0 to a decentralized WEB3, and that's fine.

Again, it doesn't matter if one trustworthy counterparty has access to 100k accounts if all those accounts are worth very little in terms of value stored on them. This is especially true with Graphene's ability to recover accounts.

What is the worst that could happen?

Thousands of dollars get stolen in a hack? That is an acceptable loss when paired against the gain of everyone perfectly understanding how to interact with the platform right from the beginning. Convenience wins. User experience wins.

So what do we have to do?

Nothing really... it's already happening. Splinterlands will be a major custodian. So will LeoFinance and 3Speak. These are all extremely trustworthy entities that we can trust to store the newbie's private keys on their servers.

There's certainly still a lot more work to do rather than just setting up email/password accounts in place of securing private keys. In addition to that we must also gamify the experience of learning about how all this works. Frontends must be created that provided focused baby-step instruction as to how this all works. Each frontend will clearly be a little different, because each frontend serves a different purpose. Someone who learns about Hive from Splinterlands isn't going to be learning about it in exactly the same way as someone from LeoFinance would. This makes perfect sense, as one platform is a game and the other is an investment forum.

Even a hack is a hard & valuable lesson.

Remember the dreaded @belemo hack?

https://peakd.com/hive-167922/@edicted/crowdfund-belemo

One person loses $10k, the community secures millions.

So many people on Hive got a hardware wallet because of this news.
This also shows the importance of communication and community.
Stuff like this doesn't happen elsewhere.
Hive is where it's at.

Conclusion

Own your own account.
Own your data.

Unless you're new, in which case provide your email/password like everyone else. We already see what happens to networks who ignore reality. Reality swoops in and punishes them for it. How many mining pools does Bitcoin have? That's centralized. How many wallets on Ethereum control 90% of the coins? That's centralized.

Rather than rage about how things are supposed to be, we need to lean into how they actually are, or we will be swept away by the truth that we are refusing to acknowledge. This is one of those few cases where perception is not reality. Sooner or later the real-world comes along and slashes game-theory to ribbons. We would do well to remember this fact.