- Ethereum’s Vitalik Buterin criticized Michael Saylor for advocating Bitcoin custody through banks, warning it undermines cryptocurrency’s decentralized purpose.
- Buterin stressed the importance of self-custody for Bitcoin holders, arguing that third-party custodians increase risks and stifle governance.
- He proposed inclusion lists and BRAID to prevent centralization in Ethereum’s PoS system, urging limits on staking to protect decentralization.
Ethereum co-founder Vitalik Buterin has come down heavily on Bitcoin maxi Michael Saylor for his recent suggestion that BTC holders entrust their holdings to large banks. Buterin also criticized Saylor’s stance on regulation, warning that the latter’s strategy could undermine the very purpose of cryptocurrencies.
The Crypto Twitter was abuzz with heated discussions relating to Bitcoin’s custody. Buterin responded to a post by James Loop, who highlighted the risks associated with using third-party custodians for Bitcoin. Loop pointed out that centralizing coins in a few hands increases the risk of loss or seizure, disenfranchises Bitcoin holders from governance activities, and can hinder the development of more advanced cryptographic features.
Echoing similar sentiment, Buterin emphasizes that self-custody is crucial not only for individual Bitcoin holders but also for the overall health and development of the BTC network. He also criticized Saylor’s approach of seeking regulatory protection for cryptocurrencies, arguing that it’s a flawed strategy that has failed in the past and goes against the decentralized ethics of cryptocurrencies.
The Centralization Debate: Bitcoin and Ethereum
The co-founder has been a vocal advocate for decentralization. Not long ago, Buterin highlighted the centralization risks in Ethereum’s proof-of-stake (PoS) system, namely block construction centralization and staking capital provision. Here, big players could apply sophisticated algorithms to extract the maximum value per block, merging the small stakers with the large pools, fueling centralization risks.
He then proposed several solutions like inclusion lists and BRAID. Inclusion lists would allow validators to vet transactions while builders may still reorder them. BRAID, on the other hand, distributes block production among a set of participants, limiting the sophistication needed to be profitable. He also suggested introducing upper limits on staking at some sort of threshold to prevent over-incentivized stakers .
Buterin’s comments come in stark contrast to Saylor’s recent statements, which have positioned Bitcoin as a safe haven asset for large financial institutions. The disagreement between these two prominent figures in the cryptocurrency space highlights the ongoing debate about the best approach to safeguarding digital assets
