Not everyone feels comfortable managing their own security, and that’s okay. But maybe they could start small or look into tools that make self-custody easier, like wallets with backup features.

In any case, every investor should take care of the security of their investments.

For example, the owner of a deposit in a commercial bank should also take care that an intruder does not gain access to his banking application. The owner of real estate should also take care that fraudsters do not forge a general power of attorney and re-register the property rights.

Owning any property requires responsibility.

In the situation with storing Bitcoin, everything is more complicated, since when storing Bitcoin on your own, there is no intermediary (third party) at all to whom claims can later be made. Therefore, Bitcoin owners need additional training. They will need information about hardware wallets, cold wallets, the structure of the blockchain, private and public addresses, miner fees, and other information.

Much of this information can be found on this forum.

I don't think it discourage people on having bitcoin self-custody. For me, I don't trust anyone even trusted exchange or any centralized exchange to hold my assets.

Like other said, most exchanges do not have plans to return their customers' money once they have been hacked or anytime they can freeze your account without ways to unfreeze them.

So I recommend people to don't trust anyone and always make sure to use self-custody wallets to avoid those things.

It doesn't, because they have options.

Based on what we know about the proliferation of broker accounts and apps at places like Coinbase, Binance, PayPal, etc., not to mention the ETFs, it would appear that most consumers don't want self-custody and would instead prefer to keep an account secured by their own identity at a firm they trust.

It's important to understand the phenomenon of the Anon Paradox, which states that consumers like anonymity for "small" money, and their personal identity connected to "big" money.

In other words, if somebody wants to play around with say $50 in Bitcoin or some other digital currency, then they want this to be anonymous like the physical cash in their physical wallet. The reason is that they like the anonymity for spending it--that way they don't impart personal data when they buy something.

But if somebody is keeping a large part of their life savings digital currency investments, they want this to be safe and they tend to want to enlist the services of a firm like Coinbase to guard their money for them because they would otherwise be afraid of losing the keys, or them being stolen, or them being beaten or murdered because of their physical possession of their keys (it's the same reason people don't hold their savings in piles of physical cash in their own home and instead use a bank).

It's easy, and not too hard to start for any newbie. Exceptions are the elderly who have more difficulty in learning new things but if they really want, they can do it.

If they are careless enough to lose money by themselves, they can store bitcoin on centralized exchanges and pray that centralized exchanges will secure bitcoin for them. This practice is another careless one and rather than giving them an advice to continue to be careless, and take with centralized exchanges, I will recommend them to become more careful, and go self custodial.

Reminder: do not keep your money in online accounts
Bitcoin security and resources.
Cryptocurrency security checklist.

Honestly, why jump straight into total self-custody? It’s way better to take it easy and go step by step. Start with the basics, get a solid grip on security, and have some support at the beginning. This way, you can ease into it, build your confidence, and avoid risking everything all at once.

But again, as others here seem to be saying, why not just use a broker or app? That's actually what most holders of Bitcoin do these days.

Self-custody is a niche product in the same way that people using a personal home safe is to hold large amounts of physical cash. Sure, some people like to keep their life savings physically within a few feet of them, but 99% of people just use a bank etc.

Self custody should not be something that can discourage a Bitcoin beginner because the asset is theirs and it's security should be their top priority without being lazy about it. They should know that they can lose their money if they are careless about their security. Anyone that can not handle and protect their own asset by themselves should rather not invest because I can not advice anyone to put their asset under the care of another person.

That's a valid point, that's why there are million of users who have bank accounts for them to let the banks take care of their financial savings while having some perks of having it and some promises of assurance, instead of having their own vault at home and be responsible of making it safe. This is the very reason why bitcoin was created for this main purpose.