Self-custody of Bitcoin requires users to have unilateral control over their funds, no external parties blocking transactions, and the ability to affordably exercise their ownership. High transaction costs and enforcement mechanisms can undermine the concept of self-custody if they consume the majority of the user's funds. Layer 2 solutions face scaling limitations due to Bitcoin's blocksize limit, leading to increased transaction fees during peak demand. As a result, trustless off-chain scaling mechanisms must be developed to maintain core value propositions of blockchain technology.
Self-custodial systems require that a user has unilateral control over funds, no external restrictions on spending, and the ability to affordably exercise ownership.
The cost of self-custody can be prohibitive. If enforcement mechanisms consume most of the user's funds, this challenges the true concept of self-custody.
Existing Layer 2 designs face scaling limitations due to high transaction fees caused by Bitcoin's blocksize limit and increased competition in the mempool.
Constructing off-chain scaling solutions is essential because current blockchain technologies struggle to scale while maintaining their fundamental value propositions.
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