Self–custody of cryptocurrency assets is quickly becoming a popular choice due to recent events such as the FTX exchange blow up. By using self–custody, users can store their funds in wallets that they solely control. This is beneficial as it helps protect users against third parties stealing their money. However, it is important to note that self–custody is not without responsibility. Users must keep a seed phrase, which is the equivalent of a password, in order to backup the wallet. If the seed phrase is lost, the crypto tied to it is gone forever. If you‘re comfortable with the responsibility, there are many wallets to choose from for self–custody.
Electrum is one of the most popular desktop wallets available for those who want to store their cryptocurrency securely. After downloading the wallet software, users are prompted to create a seed phrase, which is the most important step since it is the password used to access the wallet. It is important to keep the seed phrase safe and offline so that it cannot be accessed by anyone else. There are also other wallets available, however the setup and flow is generally the same – download the wallet and create a secure seed phrase. For added security, users can also use a hardware wallet such as Ledger or ColdCard which stores the keys in an offline environment. Once the wallet is set up, users can move their funds off the exchange and into their wallet. They will need to create a new address in their wallet to which they can send their cryptocurrency.
Self–custody is a great way to take control of your cryptocurrency and keep it secure. It involves creating a wallet, typically with a seed phrase, and transferring your crypto from an exchange to the wallet. This process can be done with a few clicks, depending on the exchange you‘re using. Once the funds are in your wallet, you have full control over them and can access them anytime. For those looking for an even higher level of security, there are more complex options such as multi–sig wallets. These wallets require multiple private keys to access the funds, so if one key is lost, the funds are still safe. Additionally, some users carve their seed phrase into metal plates for added security. The user experience of self–custody is also improving all the time. Companies like Casa are making it easier for anyone to hold their own keys safely. With the right tools and knowledge, anyone can take control of their cryptocurrency and keep it secure.
