One of the hardest concepts to explain about Bitcoin is the importance of “being your own bank” by self-custodianship. But last month, Justin Trudeau and the Canadian government took action that showed, in days, what my industry has been trying to explain for years.
Full disclosure: My company, Casa, creates software that makes self-custody of Bitcoin safer and easier for the average user. You might think it’s just me “speaking our book” – and maybe you’re right. But it’s because we believe the concepts of self-care and financial freedom are so important that we’ve built a company to help bring them to the world.
Today it is easier than ever for governments to control the population by denying us access to our own money. How did we come here?
We use cash less and less with each passing generation, and in some countries like China, they are actively removing cash from the monetary system in favor of a central bank digital currency (CBDC).
This change is being touted as being practical, and while that may be true, it also gives unprecedented power and financial control to whoever runs the government. Instead of having to go through banks to freeze accounts, they can just do it at the push of a button. It’s a dictator’s dream – and it gets even easier if the world embraces CBDCs.
As Canada shows, living in a mature democracy is no protection against deeply intolerant financial censorship, and the introduction of fully digitized currencies is too tempting a weapon to ignore, even by the most liberal elected governments.
In response to the “trucker protests,” the Canadian government has taken an unprecedented step toward normalizing financial censorship through the Emergency Economic Measures Order, with the government instructions financial institutions such as banks, brokerages, insurance companies and cryptocurrency exchanges to freeze the accounts of anyone who has donated even a small amount to the protesters.
For one of the cornerstones of our democracy – the right to disagree – the prospect couldn’t be scarier. Today, that may seem okay because the victims are people you disagree with. If so, what if Trump had frozen the bank accounts of contributors to BLM causes during the 2020 protests?
Whatever political lens you put on it, financial censorship is where governments cross the Rubicon and start pursuing naked authoritarianism.
Among cryptocurrencies, Bitcoin is the most decentralized and widely adopted currency, giving it the strongest properties of censorship resistance while maintaining its ease of use as a currency. This is at the heart of the Bitcoin philosophy – like the white paper begins, it “allows online payments to be sent directly from one party to another without going through a financial institution”.
In theory, this means that Bitcoin cannot be frozen or stolen by someone else. In practice, the way people use Bitcoin has created a glaring security hole. To be safe from seizure or censorship, you must hold your own private keys, in other words, your bitcoin password. When you have it, only you have control of your money. When you entrust your keys to a third party, you relinquish this control.
And yet, people are giving up this privilege in droves. The amount of bitcoin held on exchanges and custodians is increasing every year. Coinbase alone holds ~13% of the total Bitcoin supply considered accessible today.
Do not expect Trudeau’s tyranny to change people’s perceptions overnight. Some might argue that self-custody, like privacy, is only for those who “do bad things.”
We certainly witness this in the coverage and commentary on the invasion of Ukraine, where much attention was paid to how the oligarchs could use Bitcoin to circumvent sanctions, rather than how self -guard might help. ordinary, decent Russians face capital controls and the falling value of the ruble. Or how it helped Putin’s presidential opposition collect donations for the campaign although it is excluded from the banking system.
The thing is, you never know when disaster will strike, or when the narrative will shift, and you’ll find yourself on the “wrong side of history” (or those in power). Don’t wait for the day when someone you disagree with can gain the power to eradicate your financial freedom. Enjoy the privilege of being your own bank by holding your own Bitcoin keys.
If we don’t fight for our right to financial freedom, then we shouldn’t be surprised if it’s taken away from us without our consent.
Nick Neuman is the CEO of Casa
This story was originally featured on Fortune.com