As chaos engulfed the crypto market in the wake of the FTX collapse, Qredo’s Ben Whitby and Sweat Economy's Oleg Fomenko hosted a webinar to discuss how self custody can create a more resilient digital asset industry — which could eventually be worth $300 trillion!
Sweat Wallet is a non-custodial wallet built on NEAR Protocol that gives users sole control of their private keys and assets.
Here are 5 key takeaways from the discussion:
When we put other people in control of our financial destiny, things can easily start to go wrong.
That's why the traditional financial industry has regulations — to provide checks and balances against human fallibility.
And yet, regulation can fail. Institutions can 'limp over the line' by making minimal efforts at compliance, and authorities can be fooled. (Just think of the scandals perpetrated by supposedly regulated organizations such as Enron.)
In the global crypto market, where exchanges set up offshore and are often subject to unclear rules from a patchwork of different jurisdictions, regulation can be even more ineffective.
Self-regulation offers some hope, and could help prevent disastrous events — like the collapse of FTX — that hinder the mainstreaming of the industry.
No regulation, however, can offer the same assurance as self-custody.
Decentralized and non-custodial wallets offer an immediate solution to the need to trust corruptible centralized custodians.
This is only becoming more evident as time goes on, and a broader range of market participants — from individuals to investment funds and DAOs — wake up to the importance of self-custody.
Qredo's core value proposition of replacing the vulnerable private key with flexible governance enables these individuals and organizations to protect their digital assets in a self-custodial way.
Unless we can simplify self-custody, it will be just another powerful idea — like space travel or holidaying on the moon — that has massive potential but is largely inaccessible to most people.
This is reflected in research carried out by Sweat Economy, which found that the majority of people are interested in crypto but not exploring it due to three key obstacles:
Having to carefully write down a seed phrase, and being bombarded with harsh warnings about the possibility of losses, makes self-custody too onerous and scary for many people.
Barely a day passes without a crypto security incident of some kind, which hasn't gone unnoticed among those on the sidelines.
High blockchain fees can be prohibitive for those who want to experiment with the technology but don't have five figures in play money.
In traditional finance, taking self custody might involve stashing cash under the mattress, or locking away gold bullion in a secret vault. In other words: it is wildly impractical for anyone other than Bond villains.
As such, the average Joe typically keeps funds in the bank, and only takes self custody when they withdraw small amounts from the cash machine.
These habits have firmly ingrained the idea of trusting third-party custodians in the modern psyche, which is one of the key reasons why self custody is not more popular.
The way to overcome this is two-fold:
Fixing the technical issues of user experience, security, and scalability.
Popularizing the idea of self custody through events and conversation.
For example, one way that the Sweat Economy app reduces friction for newcomers is by adjusting the terminology for non-crypto-natives — such as replacing the word "staking" with "grow jars''. Sweat Economy also streamlines the entry process by enabling users to earn cryptoassets directly through physical activity, which as Oleg says — is literally "walking users into web3''.
Eventually, this adoption could lead to an entire spectrum of self-custody solutions that cater to different scenarios, just like we have checking accounts, credit accounts, airline miles and many other ways to store and transmit value in traditional finance.
Next generation Layer 1 chains (and Layer 2 networks such as Qredo) are now introducing another level of scalability and ease of use to digital assets.
Combined with the proliferation of mobile devices, this enhanced scalability could help spread crypto to a broader audience and make self-custody accessible to everyone. For example, Sweat Economy, built on NEAR, has already gained 120m+ users.
Ultimately, web3 could become bigger than the existing regulated financial sphere, and bigger than derivatives, stocks, bonds, or any other market. In fact, everything that we see around us in physical or digital form could be a digital asset — from cars and clothes to supermarket loyalty points!
This tokenization, suggests Ben Whitby, will eventually unlock a $300 trillion dollar crypto market.
Ready to experience Qredo decentralized custody?