I entirely agree, we have all of the tools to build an entirely p2p circular economy right now and that is the path that I want to take. 

However, I have no doubt that the first scenario that you described will also be a reality there will be many institutions offering bitcoin products and a lot of people will choose that convenience. Some people will have to learn “not your keys not your coin” the hard way. 


But I don’t see that as a bad thing, everything has trade offs and ppl will do what they want. But having more coins trapped in these fiat institutions only makes on chain kyc free coins more valuable.