According to software developer Jameson Lopp, Bitcoin’s widespread adoption relies on enhancing the user experience and usability of self-custody solutions as well as providing more avenues to acquire the cryptocurrency.
Lopp, who is a prominent figure in the cryptocurrency industry and co-founder of Casahodl, outlined the challenges of building self-custody solutions in an interview with Cointelegraph journalist Joseph Hall before Miami Bitcoin Week.
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With years of experience building services and products in the cryptocurrency sector, Lopp’s recent focus has been on self-custody of digital assets. Casahodl provides various self-custody solutions for Bitcoin and will soon include support for Ethereum by 2023.
“The default path for most people to get into Bitcoin is through centralized exchanges that are surveilling their customers generally because they are legally required to do so.”
Lopp’s observation is that users typically purchase an entry-level amount of Bitcoin on an exchange and leave their holdings in the respective wallet. He wonders if some users even know that they can manage their own BTC holdings in a self-custodial wallet:
“Even those who do understand that self-custody is a thing are afraid to take on the responsibility that is associated with that.”
However, Lopp points out that cryptocurrency custodian service providers like exchanges offer a level of convenience and usability through web applications that is more user-friendly towards industry newcomers. The only friction point being Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements that many web users are becoming accustomed to.
“We simultaneously need to make self-custody both easier and make it so that people are comfortable and confident that they can do it without screwing up.”
Lopp mentions that the industry needs to create more on-ramps for people to acquire Bitcoin and drive economic activity with the cryptocurrency. He looks at Nostr, a decentralized social media platform that integrated Bitcoin’s layer-2 Lightning Network protocol, as an example of an ecosystem driving the use of BTC:
“People can basically sign up there just by generating a public key and by creating a Lightning wallet, and they can just start receiving and sending with no AML or KYC required.”
Furthermore, in April 2023, Bitcoin proponents and industry leaders in the United Kingdom established a policy group to foster education, investment, business, and job creation in the ecosystem. Layer-2 infrastructure providers like Lightning have experienced organic growth in the previous year, with a steady increase in the amount of BTC locked up in Lightning channels.
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