3 Ways to Custody Your Bitcoin 🔐
Bitcoiners,
If you are investing money in bitcoin, you ideally want your investment to be safe and secure.
Here are the 3 custodial options bitcoin owners should consider when evaluating which level of safety and security is appropriate for their bitcoin holdings:
Self Custody
Partial Custody
Third-Party Custody
Self Custody
Self custody allows you to have complete control and ownership of your Bitcoin by personally managing a wallet and private keys.
Self custodying bitcoin in a wallet is like keeping cash in your personal wallet. It gives you complete control and ownership of your money because you do not need to ask permission from another party in order to spend your money. To self custody your bitcoin, you will need a wallet with a set of public and private keys used to send and receive bitcoin.
If you lose access to your wallet and private keys, your bitcoin will be lost forever.
Partial Custody
Partial custody is a self-managed wallet that offers a degree of third-party assistance in securing your bitcoin.
Partial custody is like keeping your money in your bank account. When you want to wire money to someone, you tell your bank you would like to initiate a wire transfer. A partial custody setup in bitcoin means the private keys are split up between you and a 3rd party which are needed if you want to send bitcoin you own elsewhere.
If you lose access to your set of private keys, your bitcoin will not be lost forever as the 3rd party can still send it on your behalf.
Third-Party Custody
Third-party custody means another party manages your wallet and private keys to secure your bitcoin.
This option provides you the benefit of help from a 3rd party, insurance for your assets, and institutional level protection. The trade off is having no control of your Bitcoin. Giving up control of your bitcoin is a very easy way for non-technical people to own bitcoin and continue on with their daily lives without having to worry about personally losing it.
The downside is the amount of trust you put into a third party to ensure they will not steal your bitcoin.
If you are looking for a reputable 3rd party custodial solution, check out Unchained Capital or Casa.
Happy Saturday,
-Pod
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Eric Podwojski
Founder, Bitcoin EDU
Twitter: @epodrulz
Disclaimer: This should go without saying: This is not financial advice. This is not investment advice. I write this newsletter for education and entertainment. Act accordingly.
