Insurance primarily protects the custodian, with users benefiting indirectly. Individuals can still lose their money in so many ways including forcing them to send their funds out after a kidnap or at gun point.. yet all of this can be largely avoided by staying quiet.

The thing is just like announcing you kept “ hundreds to millions in cash inside your home”, i don’t what they want to happen after that though.  
Does that mean people aren’t keeping such big amount in their homes ? No but no body is gonna know if they don’t announce it..

This is one thing that many people have filed to understand the insurance mostly do not cover for everything rather it actually does cover just for certain amount and this was what I read under the SAFU insurance by binance that 100% can not be covered all. Although most people are deceived by all this exchanges and they think that the government will even help them get back their funds back off this exchanges if anything happens but it’s clearly not and the very first case to understand this is the Mt Gox hack which until now most people could only get back fractions of their coins back instead of everything

Everyday, we keep seeing more encouragements to draw closer to centralisation than take responsibility for the safety of our bitcoins ourselves. When exchanges first came into the picture, people loved it because it was more convenient for them to have their bitcoins with them. But then, came the risks of having third parties control your keys. Hackers targeted them more and people who trusted them have lost their bitcoins as well.

Now we are introducing insurance as a better substitute to self custody. Remember that, once insurance companies become fully involved, scammers and hackers will target them too. Bitcoiners who trust them will face thesame fears they had with exchanges.

Nothing beats self custody. People should learn how to be their own bank and protect their privacy at all cost, instead of trusting another third party company with their bitcoins again.

I don't care how well this idea is decorated, I won't buy such idea.

While I believe custodians would never lose relevance, let's just say there are people who prefer to be their own custodians. Some trust third-parties, some don't. And things are likely to remain like this until the unforeseeable future.

What's funny with insurance is that sometimes the providers themselves are the earliest ones to crumble. So, rather than providing some kind of assurance, peace of mind, or a good night's sleep, insurance providers themselves may be the cause of great emotional distress.

In the end, this debate will continue indefinitely because as you said, there's no perfect solution. Some custodians fail, some insurance claims unpaid, some of those who self-custody lose their funds.

Maybe it can be a short term solution while you are still in the process of mastering self-custody but it will never be a permanent solution. CEX insurance still have limitations compared to the highly safety and security that you can gained out from having full custody over your coins.

The bottom line, CEX cannot compete with decentralized hardware wallets no matter how highly insured it is. But the outcome also depends how the owner of the wallet execute self-custody, if he has mastered it or not really.

Doing things legally is safer than doing things illegally but let's widen our view beyond that.

Bitcoin years ago did not need to be considered as legally in different activities like Bitcoin mining, buying, selling, holding, investing, and as a payment method to be used and to give people completely freedom, full control of their bitcoins, and absolutely security of their funds with private keys.

No matter what governments consider Bitcoin as either legal or illegal, with Bitcoin private keys, Bitcoin users can secure and control their bitcoins. There is no power and tool for governments to stay at their offices and freeze bitcoins of their citizens.

It's different than digital money in banks, gold in bank vaults, stocks in accounts.

Even with a very old industry like bank, customers will not always receive full compensations, get all their money back if a bank collapses, has a bankruptcy. It's helpful to mention about bank before talking about Bitcoin, cryptocurrency and exchanges in this young industry. With less regulations on this industry, there are more risks to lose money if you store your cryptocurrency on centralized exchanges.

Because of a very high volatility of cryptocurrencies, centralized exchanges or companies if have bad treasury management will have more risk of bankruptcy, even in more faster ways than banks face with.

Having business insurance is better than don't have it, but insurance does not guarantee that you will always get 100% money back.

This is misleading.
Most of the money lose throug self custody are due to the direct action, or inaction, of the person. Only a few of them have been a result of the self custody product, like the ColdCard case.


I wish I was making this up, but just yesterday, my dad called me, and he was with my younger sister. They complained about how $500 was withdrawn from my sister's account as far back as March of this year, and she had no idea that kind of transaction took place. She wouldn't have known this if she had not requested the statement of account. The bank is claiming she made the transaction and has refused to show further proof.
Now there is going to be a lot of back and forth with the bank if that money is to be recovered.

Now imagine this was a large sum. This will lead to lawsuits, and that costs money.
This is why there are so many lawsuits. The mere fact that the funds are insured in a centralised institution doesn't mean you will easily get the money back if something bad happens to the money or the company. Financial companies don't like incurring losses. There are thousands of lawsuits on matters like this.

My point is, don't make it seem like once your funds are insured, you have nothing to worry about.
A business or company is not owned or operated by one person, so it's normal for that company not to practise self custody. So that is why you find companies giving their funds to centralised custody to manage.
But individuals can hold their money by themselves.
Self custody has its downside. It has always been talked about, but so does centralised custody.