[fallingknife]

This is the fundamental issue with the supposed "trustlessness" of crypto. Unless you are interacting directly with the protocol layer (which is like 0.0001% of users), you actually have to trust a lot of people and software.

And the whole system has been built on anonymity because it is "trustless," so it can never work in its present form. Sure, there is someone, or multiple people, at Wells Fargo who can move your money. But they will never be anonymous, and all of their actions are logged and tracked, and we have laws on the books requiring banks to be liable for such fraud and return the money to the customer. And failing that, if the whole bank goes down from the fraud, your money is FDIC insured, and the government will make you whole. Whereas in crypto, if someone gets your private key, you are instantly and irrevocably fucked. Crypto can never be anything more than a gambling tool unless it drops this "trustless" myth.

[wslh]

First, the trustlessness in crypto, it is just a nice keyword. You trust the protocol and the protocol trust depends on specific nodes (e.g. miners). Would you trust more these actors that hundreds of well known companies using a BFT protocol? Or a mix of both groups?

Second, key(s) custody is paramount beyond the blockchain technology used. And... this was very basic: "Seed generation of Trust Wallet was flawed, the total entropy was only 32 bits. We have created a file containing all possible seeds."

[Al-Khwarizmi]

Yeah, in fact for me the trust in a banking system (or anything else that keeps my money) is not in being in control, but in knowing that if things go wrong (regardless of whether it's someone else's fault or my own) I can complain and have a more or less realistic expectation to get my money back. For example, my main credit card was used fraudulently a couple of times, through no fault of my own (AFAIK), but the bank rolled back the charges, cancelled the card and issued a new one. This makes me trust using the card.

In the last few years, at least in my country, many banks seem to be transitioning from "patchy security, but take responsibility" to "better security, but blame the client". I.e., they add lots of mandatory over-the-top 2FA, etc. but if a client complains of a transfer they didn't make, surely it's the client's fault, because security is really good. This makes me trust such banks much less. Firstly, because even being a tech-savvy user that doesn't typically fall for scams, etc., nobody is perfect and I don't think anyone is 100% free of making a security blunder in a moment of being sleep deprived, ill, drunk, etc. And secondly, because what if they get hacked somehow and they make me responsible? No, I very much prefer worse security but listening to clients.

Similarly, in crypto, "your keys, your coins" doesn't give me trust. What if I lose my keys somehow? In the bank, they know who I am, as long as I have a means of ID I can get my money. And as you mention, even if the bank fails, the government has my back.

For all these reasons, while I do hold some crypto, I'd never keep a significant portion of my assets in that form.