Self custody means you personally control the private keys that secure your Bitcoin. No company, exchange, or third party stands between you and your coins.
If your keys are on your own wallet:
- You can send funds at any time, without asking permission.
- Your balance is not an IOU in someone else’s database.
- You are not exposed to their solvency, ethics, or security practices.
By contrast, when you leave coins on an exchange or custodial service:
- You do not hold the keys.
- You have a claim against the company, not direct control of coins on the chain.
- If they are hacked, go bankrupt, or freeze your account, your access can disappear.
Self custody has responsibilities:
- You must handle backups
That means safely storing seed phrases and making sure trusted heirs or processes exist in case something happens to you. - You must avoid scams and malware
Never type your seed phrase into random websites or apps. Be cautious with links and downloads, especially around crypto. - You must choose good tools
Use reputable wallets and, for larger amounts, consider hardware wallets or multisig setups.
Why it is worth it:
- Bitcoin was designed for direct ownership.
- Self custody aligns with the original purpose, which is to reduce reliance on middlemen and give individuals control over their own money.
- It lowers counterparty risk, which is the risk that someone else fails you.
Exchanges can be useful for trading and conversions, but for long term holding and serious amounts, self custody is usually the safer and more principled option.