Nick Szabo  🔑

Investors who leave their cryptocurrency in the custody of an exchange are like people who invest in Starbucks even though they don't drink their coffee. They might make good technical money, but their actual understanding of use cases and value propositions is questionable.

Spot on. 1. Because something is available, it doesn’t mean that one should invest in it. 2. Using products/services of an investment (real skin in the game & practical understanding) is essential. 3. Some legacy entities are “better” security holes than some crypto exchanges. :)

Ps.: If using Bitcoin and one is technically and operationally sophisticated enough, there is no reason no to hold one’s own keys.

Example?

An example would be a sample technology savy engineer or a bank employee who understands BTC wallets and operational security around securing a bearer asset well-enough to store his own coins, but leaves his coins on a crypto exchange for convenience.

In that case they understand the techniques but not the value proposition. If they don't find the main value-add use case actually valuable why would they think it's a good investment? They are probably just confused, or think they are a good technical investor (gambler).

Correct. Many investors don’t understand Bitcoin’s main value proposition well enough, but find other/additional values attractive such as low correlation to traditional asset classes(portfolio diversification), relatively easy access to the asset, transferability, new tech, etc.

I found that there is a group of investors (mostly also gold bugs) who understand Bitcoin’s value proposition, but are afraid to engage before the legal environment around digital assets solidify. Some of this group is also afraid of technology risk at this time.