Introduction to Bitcoin’s Governance Problem
When Bitcoin (BTC) first emerged, it was hailed as a revolutionary monetary system that could function without relying on trust or authority. The ledger could be verified by anyone, and the rules were fixed and transparent. However, beneath this triumph lay a subtle omission that would only become apparent as Bitcoin transitioned from the margins to the institutional sphere. Bitcoin solved the problem of consensus, but it left the problem of governance untouched.
The Limitations of Bitcoin’s Design
For individuals, the lack of governance can feel liberating, as they have complete control over their assets. However, organizations cannot operate in the same way. They require shared responsibility, verifiable processes, and a record of actions that can withstand internal scrutiny. Decisions must be documented, approvals must be justified, and recoverability must be assured. Bitcoin’s design does not provide a native way to explain who approved actions, why they occurred, or how control aligns with institutional policy.
The Role of Custodians in Bitcoin Governance
In the absence of a native governance model, institutions turned to custodians to translate the rigid minimalism of Bitcoin into something more consonant with corporate life. Custodians created policy documents, offered insurance, produced attestation reports, and spoke the language of regulators and risk officers. However, custodial governance remains opaque, and external parties can rarely see how authority is distributed inside these institutions. They must rely on assurances rather than evidence, which can become a source of liability when failures occur.
The Governance Gap in Bitcoin
The deeper problem is not that custodians have erred, but that custodial control cannot fully align with the principles that make Bitcoin distinctive. Custody requires concentration, which produces fragility, and fragility is difficult to ensure and nearly impossible to audit in a manner that satisfies conservative stakeholders. The institution is left with a paradox: it sought Bitcoin to reduce dependence on intermediaries, yet it must depend on them to satisfy governance requirements. This is the governance gap, a structural mismatch between Bitcoin’s design and the operational realities of organizations attempting to adopt it.
The Need for Verifiable Governance
The most significant developments in the Bitcoin ecosystem today are the emergence of frameworks that allow institutions to express control in a way that is legible beyond their own walls. These frameworks attempt to build something that Bitcoin itself does not provide: a method for translating authority into a structure that can be examined, tested, and verified by external parties. They seek to render governance visible, which is essential for institutional adoption. Without verifiable governance, risk cannot be priced, and insurers remain hesitant, making it difficult for institutions to hold bitcoin.
Conclusion and Future Directions
Whether Bitcoin ultimately finds a home inside the world’s largest organizations will depend on whether institutions can reconcile the currency’s uncompromising structure with their own. They will need to show, with a degree of clarity that Bitcoin itself does not natively offer, that they control what they claim to control. This requires an additional layer of explanation, a way to convert the stark simplicity of the private key into a set of provable organizational processes that can withstand audit, scrutiny, and the steady conservatism of traditional finance. The future of Bitcoin’s institutional adoption depends on reconciliation, not reinvention, and the ability to create authority that is decentralized yet still comprehensible.
Read the original article at https://crypto.news/governance-problem-bitcoin-has-never-solved-opinion/
Kevin Loaec is a co-founder of Wizardsardine, the company behind Liana, an open-source Bitcoin wallet and governance platform built for long-term security and verifiable control. He is a Bitcoin engineer with deep experience in protocol-level design, security architecture, and Bitcoin Core–adjacent development. Kevin focuses on helping individuals and organizations hold bitcoin without relying on custodians or opaque systems. His work centers on policy-driven access, recovery design, and failure-resilient infrastructure using native Bitcoin primitives. At Wizard Sardine, he works closely with security teams and auditors to translate Bitcoin’s technical guarantees into systems that stand up to real-world governance and operational scrutiny.
