What Is Self-Custody? - Crypto Whiteboard 101

Cryptocurrency can either be stored with a third party custodian for safekeeping or stored in a wallet that you take sole responsibility for. Each method of storing cryptocurrency has its advantages and disadvantages, so in today's post, I'll explain the differences between keeping your cryptocurrency with a third party custodian vs keeping it yourself. As always, nothing is financial advice and the content in this post is solely my own opinion.

Although the full details are discussed in the video, there are a few points to keep in mind when discussing the difference between storing your crypto on an exchange vs taking self custody and storing your crypto in a wallet that only you have access to. 

  • Self-custody generally requires YOU to take more responsibility for your funds. If you loose your device without backing it up, that crypto is gone forever. On the flip side, self-custody is more private, comes with less restrictions, and gives you true ownership of your crypto


  • Storing your crypto with a custodian generally comes with more safeguards and insurance policies but is also associated with less control of your assets. Although the assets still belong to you, the institution will usually require documentation to establish an account, and there may be restrictions regarding how much crypto you can withdraw at a time. Exchanges are big targets for hackers, and major hacks certainly aren't unheard of. That being said, most leading exchanges do provide insurance for their customers. Because custodians safeguard your funds for you, loosing your phone or computer doesn't necessarily mean that you will lose your crypto, and resetting a password to gain access to you funds with a crypto custodian is MUCH easier than trying to recover crypto from a lost wallet (which is exceedingly difficult if not impossible).


As always its important to make the decision that best meets your needs and specific circumstances. Thanks for reading!




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The Part Time Economist
The Part Time Economist

Hi everyone. I'm just a simple man trying to make my way in the universe. I am passionate about cryptocurrency and hope that I can make at least some small contribution towards promoting wider crypto adoption and understanding.

The Part Time Economist
The Part Time Economist

Hi everyone. This is just a place for me to post some of my thoughts and analysis. I hope that someone finds them useful.

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