The transition from barter to money-based economies marked the beginning of modern banking and fundamentally altered the concept of self-custody. With the introduction of currency (circa 1600 CE – Present), wealth became more abstract, shifting from tangible items like livestock or grain to coins and paper money. As this abstraction grew, so did the need for secure storage, leading to the rise of formal banking institutions. However, unlike the previous era where individuals held direct responsibility for their wealth, modern banking institutions promised to take over this role, effectively removing the practice of self-custody from society.

In the early stages of modern banking, self-custody was still a common practice. Wealthy individuals and merchants often kept their coins, precious metals, and valuables in private vaults or secure safes. Banks initially existed to facilitate trade and lending, not to store wealth on behalf of the masses. But as commerce expanded and economies grew more complex, the need for centralized and secure storage solutions became apparent.

With the establishment of early banks such as the Medici Bank in Florence (established in 1397) and the Bank of Amsterdam (established in 1609), a seismic shift occurred in the custody of wealth. These institutions offered not only deposit and lending services but also security in the form of centralized custody. Clients would deposit their wealth into these institutions, receiving a note or ledger entry as proof of their deposit. This marked a significant transition: self-custody was no longer the norm, as individuals increasingly trusted these banks to safeguard their wealth.

As banking systems developed, the idea of self-custody faded. The rise of safety deposit boxes, custodial services for securities, and financial management accounts signaled a societal shift where individuals relinquished control of their assets to institutions. With the emergence of stock markets and new investment opportunities, the role of banks as custodians only expanded. People began to rely entirely on financial institutions not just to hold their wealth, but to grow and manage it. The abstract nature of financial wealth further entrenched this system, as banks became the gatekeepers of security and prosperity.

In this new paradigm, self-custody became virtually obsolete. Trust in institutions took precedence over the direct management of one’s assets, with banks, insurance companies, and central governments holding the keys to personal and societal wealth. The removal of self-custody reflected the trade-off between security and control. While banks promised safety and efficiency, they also centralized power and required individuals to trust that their assets were being well-managed in distant vaults or ledgers they never saw.

As we move further into the digital age, the story of self-custody in banking serves as a cautionary tale. What began as a solution to secure wealth eventually led to a system where individuals handed over control of their assets entirely. The rise of digital banking, cryptocurrencies, and decentralized finance may represent the reintroduction of self-custody in a new form, but the legacy of modern banking shows how easily self-custody can be removed from society when centralization becomes the default mode of securing wealth. From barter to digital finance, the evolution of custody reminds us that the protection of wealth is not just about security—it’s about control.