Self-custody 101: if you do not hold the keys, you do not hold the coins
Leaving coins on an exchange means trusting it with everything. Here is how to hold your own crypto safely, without making it complicated.
When your coins sit on an exchange, what you really own is a promise. The exchange holds the keys. If it is hacked, freezes your account or shuts down, the promise is all you have.
Self-custody means holding the keys yourself. It is the foundation of using crypto privately, because no one can freeze what they do not control.
The seed phrase is everything
A wallet is created from a seed phrase, usually 12 or 24 words. Anyone with those words can take your coins. Lose them and you lose access forever.
- Write it on paper or metal, never in a photo, a note app, an email or a cloud drive.
- Store it somewhere safe and private, and consider a second copy in another place.
- Never type it into a website. No real support team will ever ask for it.
Hot and cold wallets
- Hot wallets run on your phone or computer. Convenient for small amounts and everyday swaps.
- Hardware wallets keep the keys on a separate device that never touches the internet. Better for savings.
A simple setup that works for most people: a phone wallet for spending money, and a hardware wallet for everything else.
An extra layer: the passphrase
Many wallets support an optional passphrase, sometimes called the 25th word. It creates a completely separate wallet from the same seed. Even if someone finds your seed phrase, they cannot reach the funds without the passphrase.
Privacy and your wallet
Your wallet can leak information too. Many light wallets ask a company's server about your addresses, which tells that server what you own. For better privacy, choose wallets that support Tor, or connect them to your own node. We explain why in running your own node.
When you swap on an instant exchange, always send the coins straight to your own wallet, never to another exchange.
