Is Bitcoin "insurance" or a speculative asset? Szabo's answer may be surprising

Question

[Crypto World] How should we view Bitcoin? Smart contract pioneer Nick Szabo offers a unique perspective—“trust-minimized insurance.”

At first glance, this sounds pretty abstract, but if you think about it, it makes sense. His logic is: When extreme situations arise—like a country’s monetary system collapsing or hyperinflation breaking out—the BTC you’re holding could become your lifeline. It doesn’t rely on any centralized institution for its value; it’s sustained purely by math and consensus. That’s the essence of “trust minimization.”

Interestingly, Szabo isn’t against Bitcoin entering the banking system. Custody services, lending products, and other traditional financial practices—he thinks those are fine, since most people want convenience. But! He emphasizes a crucial prerequisite: individuals must not lose the right to hold their own BTC.

Why? Because once fiat currency devalues or systemic risk hits, whether you can withdraw your coins from an exchange becomes uncertain. Only by holding your own private keys do you have true “ultimate protection.” This mindset is actually quite practical: use custody for everyday transactions to save hassle, but keep your core assets yourself—don’t all in on any single platform.

Simply put, Bitcoin can serve both as a daily payment tool and as a crisis hedge. It all depends on how you allocate it.

CodeZeroBasis · Accepted Answer

Saab is right, the key is to hold the private key, is there still a lot of exchange explosions?

Frontrunner · Answer

What this guy Sabo said is absolutely right, the insurance analogy is spot on... The key is you still have to hodl your own private keys; you can't rely on those exchange setups.

Degentleman · Answer

Sabo is absolutely right—BTC is the ultimate "trust no one" insurance policy. But to be honest, most people still keep their coins on exchanges for convenience, and only start crying when something actually goes wrong.

UncleWhale · Answer

Sabo is still pretty rational, and that insurance analogy is spot on... But honestly, I only feel secure holding my own private keys. The more I think about the coins on exchanges, the more anxious I get.

AllInAlice · Answer

Sabo's point sounds good, but when it really matters, who can guarantee they can hold on? As for me, I'm prepared on both fronts: keep some liquidity on exchanges, but cold wallets are the real solution.

MelonField · Answer

Sabo's comment is really spot on. I honestly never thought about it from the insurance angle before. To put it bluntly, it’s basically betting on the collapse of the system.