Advanced Crypto
January 31, 2024

Introduction to Self Custody

The Twitter trend #selfcustody is gaining traction, encouraging cryptocurrency owners to take full control of their assets. Today, we delve into what self-custody means, the risks associated with leaving your crypto on an exchange, and how to ensure your assets remain secure.

The Essence of Self-Custody

Self-custody means having exclusive control over your assets. Cryptocurrency's original design was to offer a censorship-resistant way of managing financial assets, independent of traditional institutions like banks or governments. A key disclosure by the SEC (Securities and Exchange Commission) highlights the critical nature of self-custody in the crypto world. In case of bankruptcy, crypto-assets held by an exchange on behalf of its customers may become entangled in bankruptcy proceedings, leaving customers as potential unsecured creditors.

The Custody Conundrum

If cryptocurrencies were designed for individual financial empowerment, how do issues of lost control arise? It all boils down to custody. The adage “not your keys, not your crypto” rings true here. Custody of the private keys equates to control over the assets. Many centralized exchanges operate custodial wallets, holding the private keys on behalf of users, which can lead to loss of control and potential risks if the exchange faces bankruptcy or security breaches.

Self-Custody Solutions

To maintain complete control of your crypto without relying on third parties:

1 - Acquire Your Own Crypto Wallet: Choose a wallet that fits your needs, providing you with the private keys.

2 - Use Non-Custodial Exchanges: Platforms like Elbaite, which do not hold your crypto at any stage, ensure that your assets remain securely with you.

Understanding Crypto Exchanges

Centralized Exchanges: These common platforms manage and secure crypto transactions, but control over the assets lies with the exchange, not the user. Historical security breaches, like the infamous 2014 Mt. Gox hack, underscore the risks involved.

Decentralized Exchanges (DEXs): Operating solely on the blockchain, DEXs offer global access but come with complexities, limited recovery options, and unregulated environments.

Peer-to-Peer (P2P) Exchanges: Elbaite falls into this category, operating similarly to platforms like eBay or Uber. It connects buyers and sellers directly, with crypto moving from one personal wallet to another, bypassing the need for holding assets on the exchange.

Making the Right Choice

The choice between using a custodial or non-custodial wallet, and the type of exchange, depends on your individual needs and circumstances. This article aims to shed light on the #selfcustody movement and educate users on the various wallet and exchange options available.

Elbaite empowers you to buy and sell crypto directly from your wallet, offering a secure and user-centric trading experience. Create your account today to begin your journey in the dynamic world of cryptocurrency investment.

Disclaimer: This content is for informational purposes only. Elbaite is not a financial adviser. Always seek independent legal, financial, taxation, or other relevant advice before making investment decisions.

Self Custody crypto is made easy with Elbaite. Start your journey today.