Self custody means taking full control of your digital assets by managing your own private keys, offering greater security, privacy, and financial freedom, with hardware wallets like Trezor making the process accessible.
So you’ve finally taken a major step with a recent purchase of bitcoin, ethereum, or another coin or token.
Congrats, you’ve now joined, as some reports estimate, over 420M crypto holders worldwide. But (there's had to be one 😉), there’s only a fraction of these who have full control and ownership of their coins.
This act of personally managing and securing your coins is what is referred to as 'self-custody'. “Self-what?”! If that was your first reaction to this, don’t worry; we’ve got your back!
What’s self-custody all about?
In the traditional banking system, your money and assets are under the control of third parties, making you susceptible to potential security risks, privacy breaches, and even access restrictions. But, can you imagine a system where you have full control and ownership? Welcome to the world of self-custody.
3 clear benefits that it comes with
These include:
Security and Control: You have direct control over your assets, reducing risks related to hacking or third-party failures. Privacy: Transacting under self-custody allows you to maintain privacy as you don’t need to disclose personal information to a third party. Freedom: Think decentralization and individual financial sovereignty. The significance of self-custody becomes apparent when we look at real-world incidents — the Mt. Gox incident in 2014 where users lost approximately 740,000 bitcoins, to the closure of the QuadrigaCX exchange, and more recently, the FTX exchange’s bankruptcy. These incidents underscore the risks associated with leaving your assets on exchanges and the importance of maintaining control of your own digital assets. Self-custody.
OK. So, how do I do 'self-custody'?
In there, in a jiffy. But before that, here are three concepts you need to know,
Private Keys: These are the unique codes that allow you to access and transact your crypto. Think of it as a password granting you access to your coins and tokens. Hardware Wallet: This is your digital safe for storing your crypto. A hardware wallet generates and stores your private keys offline. (More on this here). Wallet backup (Recovery Seed) & Passphrase: Think of these as your safety nets. They’re essential for recovering your crypto if you lose access to your wallet or private keys. With that out of the way, we can come back to the question "How do I do self-custody?". The answer is simple. With a hardware wallet. A hardware wallet like Trezor facilitates self-custody by offering secure offline storage for your private keys. It provides a user-friendly interface for transaction signing, and it guides you through the process of creating backup seeds, adding an extra layer of security.
Any risks of self-custody?
Yes, there is. While self-custody empowers you, it also requires careful management of your private keys and backup seeds. If you lose them, there is no recovery service to help you. And you lose access to your crypto. So, it's essential to educate yourself, stay vigilant, and adopt security best practices when it comes to self-custody.
The Bottom Line
Having self-custody is like having your cake and eating it too (who doesn’t love that? 😉). Self-custody symbolizes a shift towards personal freedom in managing your own assets.
While it comes with increased responsibility, solutions like Trezor make the journey towards self-custody more secure and accessible for everyone. Be your own bank, with self-custody.
