Vitalik Buterin Slams Michael Saylor’s Pro-Bank Bitcoin Custody Plan

Ethereum co-founder Vitalik Buterin has criticized MicroStrategy chairman Michael Saylor’s recent comments supporting institutional custody for Bitcoin.

Michael Saylor’s proposal to have large financial institutions and institutions like the “too big to fail” banks handle Bitcoin custody has raised eyebrows within the Bitcoin community. Buterin and others argued that this approach goes against the decentralized nature of Bitcoin and other cryptocurrencies.

Vitalik Buterin Criticizes Saylor’s Stance

In reaction to what Michael Saylor said, Vitalik Buterin has come out to protest and label Saylor’s approach as “batshit insane.” Buterin, who has been instrumental in shaping discussions around decentralization in the crypto space, argued that relying on large financial institutions like BlackRock and Fidelity for Bitcoin custody contradicts the core principles of cryptocurrencies. 

He also mentioned that the strategy proposed by Michael Saylor results in regulatory capture which is a situation where the powerful financial institutions take over Bitcoin and therefore put the decentralization of Bitcoin at risk.

Vitalik Buterin recalled that earlier he used to speak about certain decentralized principles, however, the appearance of new cryptographic tools such as zk-SNARKs and account abstraction changed the landscape of self-custody. He said that the real value of crypto is decentralization and the ability to work outside the existing financial systems.

Michael Saylor Shift from Self-Custody

Michael Saylor, who is a Bitcoin enthusiast has before now recommended self-custody as a means of protecting the Bitcoin network. In light of the FTX debacle that occurred in 2022, Saylor stressed that self-custody is crucial since without it, there cannot be a decentralized network. 

Nevertheless, in his recent interview with financial reporter Madison Reidy, Saylor changed his position claiming that large institutions should be responsible for Bitcoin custody, not the users.

Saylor also downplayed the risks of government actions, stating that anyone thinking that governments would seize Bitcoins is a “paranoid crypto-anarchist”. According to him, large financial institutions are more suitable for the role of Bitcoin custodian due to their size and experience. This change of position has raised the ire of the Bitcoin community, with many arguing that Saylor is advocating for the control of a decentralized asset by central entities.

Jameson Lopp and Other Critics Respond

Jameson Lopp, co-founder of Casa, and and an avid supporter of Bitcoin self-custody also chimed into the discussion and emphasized on the significance of self-custody for the health of Bitcoin network.

According to Lopp, the danger of having many Bitcoins in the hands of a few big organizations is apparent. He added that this may result to emergence of new systemic risks like seizure or loss of assets. Lopp also pointed out that self-custody enables Bitcoin users to be part of the network’s governance by running their own nodes and making choices about software updates and forks.

Other figures, such as Simon Dixon and John Carvalho, also criticized Saylor’s pro-bank stance aligning with the Ethereum co-founder. Dixon pointed out that Saylor’s new position could be a result of MicroStrategy’s business strategy, as the company might want to become a Bitcoin bank. Carvalho alleged that Saylor was seeking to diminish Bitcoin to merely an investment vehicle instead of a means of exchange, which, according to him, would pose a risk to the potential of Bitcoin as a decentralized financial system.

Despite these remarks, Michael Saylor’s company, MicroStrategy, holds more than 252,000 BTC, making it the largest corporate holder of Bitcoin. Despite the criticism, Saylor remains optimistic about Bitcoin’s future, predicting that the cryptocurrency could reach $13 million per coin by 2045.