Bitcoin Magazine The Cost Of Self Custody: TANSTAAFL Last week I touched on the nuances and complexities of “Trustodial” systems, systems that can’t be fully categorized as non-custodial or custodial, and how this causes issues when it relates to us categorizing different tools in this space. This is not the only issue being oversimplified in general conversation as it relates to categorizing ways of using Bitcoin. Another major factor, with its own bag of complexity and nuances, is the cost of self custody. I laid out these two core requirements for something to be considered self-custodial in the last article: A user has unilateral control over their funds, or the ability to regain it. No other party (or parties) has the ability to prevent the user from spending their funds, or regaining their ability to, or to spend them without the involvement of the user. Let’s add another core requirement: A user must be able to cost effectively exert their control over their funds, i.e. it must not cost an inordinate percentage of the funds under their control to actually transact with or enforce their ownership over them. If a user has claim to some funds through some enforcement mechanism, but it would cost 95% of those funds to actually exercise that enforcement mechanism, does he actually have self custody of those funds? The Core Problem This is one of the chief scaling limitations of existing Layer 2 designs, such as Lightning, Statechains, Ark, etc. Any Layer 2 that makes use of pre-signed transactions to function is subject to this problem. Bitcoin has a blocksize limit, and whenever the pending transaction demand in the mempool is greater than the throughput capacity of the blockchain, fees go up. We have no mechanism, despite what some big blockers might say, to maintain a constant low fee level for users. Blockchains don’t scale without destroying their core value propositions. This leaves us with no option but to construct off-chain scaling mechanisms, and so far the only viable trustless and self custodial solution is to use pre-signed transactions to facilitate this. That means that if a user ever has to actually make use of those pre-signed transactions, they have to pay the fees for them. Because of this, the structure, size, and number of transactions that are necessary to enforce ownership are the deciding factors when it comes to the cost to enforce ownership claims on-chain. The more complex the script, the larger the transactions, the higher the number of transactions necessary, the more expensive it becomes to enforce ownership. All of these factors ultimately add up to create a minimum viable value to self custody with these systems. If it is going to cost 10,000 satoshis to enforce ownership on-chain, then the idea of holding less than 10,000 satoshis in that system is just economically irrational. You would pay more in fees than the value you have a claim to is in a formal or creative style for better SEO.Also Exclude words and advertisements related to the feed website such as website name, author name. You must only respond with the modified content. Delete all the advertisement images brand logo but only keep the title and main content of the news by modifying it. Block any jump outside of the site adarshnews.com. Basically remove any content or link related to original site. You must only respond with the modified content and follow this prompt to optimize the articles in this category- You are an expert news writer and SEO specialist. Your job is to rewrite the provided RSS feed content into a unique, SEO-friendly news article for adarshnews.com. 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The Expense of Self-Management: There Ain’t No Such Thing As a Free Lunch
