When a contract represents an asset, the contract is a claim against the asset's custodian. This claim is often called a security, with the intended implication that the claim is "secured" against custodial failure to exchange the asset under the terms of the contract. The monetary value of the security is that of the underlying asset minus the exchange and claim enforcement costs.

Custodial risk is a central aspect of any money. The usefulness of a money is limited by the reliability of its custodian. Being human, the reliability of a custodian cannot be assured. In the case of state money, the single custodian is the state. As shown in Reservation Principle state money exists for the purpose of accumulating a reserve. This provides a benefit to the state only because its custodial role can be abrogated both through liquidation of the reserve and issuance of fraudulent securities. In other words, custodial default is the reason for state money.

The monetary value of a unit of Bitcoin is strictly a function of what it can acquire in trade. If no merchant accepts it, a unit is not useful to its owner. Bitcoin is non-custodial, but in the interest of establishing a general principle, one may consider the set of all merchants the collective Bitcoin custodian. As such the custodial risk is spread across the economy.

In the case of Bitcoin, merchants offer their own property in exchange for the money. As such their is no implied securitization of the property. A merchant can cease to accept any money, which reduces the utility of the money. This can be considered a custodial risk, but not a default as the merchant has accepted no obligation to trade for the money. As shown in Fragmentation Principle, changing merchant acceptance is the nature of a split.

As shown in Blockchain Fallacy, "blockchain technology" can offer no defense against custodial default. A "tokenized" asset is a security. The opportunity for fraud or theft by the custodian, either directly or as compelled by the state, is not reduced. Just as with commodity monies, such as gold, the custodial risk reduction afforded by Bitcoin is not a consequence of technology or contractual obligation, but the size of its economy. Ironically it is the "security" that is insecure.