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One of the few tales as old as time in the crypto world since 2013 (but that’s not the point) is the battle between custodial and self custody (non custodial) wallets.
What side you should pick is now what you are asking yourself. Let’s dive into this self-explanatory discussion and see whether you are a crypto Jedi or Sith. Yeah, I made that reference; no, I am not a huge Star Wars fan.
Self custody wallets are crypto wallets where you are the sole custodian of your digital assets,i.e., crypto.
Custodial wallets are crypto wallets, as well. However, instead of being the sole custodian, you renounce your private keys for safekeeping to the third-party crypto custodian.
Okay, Jedis are self custodians, and Siths are third-party custodians. You know you’ve picked your side by now, but let’s dive in and make a case for why self custody is essential.
Disclaimer: These are not only the benefits of self custody. These are also the foundations for safely owning your digital assets, so let’s take a closer look:
You have direct control over your private keys and access to your assets, reducing the risk of hacks or security breaches that can occur on centralized exchanges(CEX) or custodial services. Self custody wallet has enhanced security, and no one can take possession of your funds but you, so if a CEX gets hacked or compromised, you are not going down with it.
You want to stay anonymous? You got it.
Self custody can offer greater privacy because you don’t need to provide personal information to third-party service providers or go through KYC procedures. This can be important for those who prioritize anonymity and wish to keep their financial transactions private.
Self custody wallets are not tied to a specific location or jurisdiction. You can access and manage your crypto assets from anywhere and anytime, as long as you have an internet connection. Crypto custodians, on the other hand, have to follow certain KYC and AML procedures.
You can customize your security measures and storage solutions according to your preferences. You can use hardware wallets, paper wallets, or other secure methods that align with your risk tolerance and technical expertise. We will dive into the best types of non custodial wallets later.
Only four benefits? Ahh, I should have made it five, I know. BUT, self custody is as close to crypto asset freedom as you can get, and with the rise of blockchain technology, it keeps getting more advanced. Which is what we are thankful for.
Not a fan of Spiderman either; however, as the great Uncle Ben said: “With great power comes great responsibility”. Self custody also comes with its responsibilities and risks. You need to be diligent in managing your private keys, ensuring backups, and keeping your security practices up to date. Let’s check these out as well and prepare you for the journey.
The most significant risk in self custody is the loss of your private keys. If you lose access to your private keys, you lose access to your assets permanently. There is usually (remember that we said usually) no way to recover them, making private key management critical.
Self custody requires you to take on the responsibility of securing your assets. If your device is compromised or you engage with shady websites, you could lose your assets to hackers or scammers.
Mistakes in managing your assets or private keys can lead to irreversible losses. Accidental deletion, sending assets to the wrong address, or forgetting passwords are typical examples of human errors that can result in asset loss.
Luckily, we at Bizzllet created a few features to compensate for the risks and shortcomings associated with self custody wallets.
We are eliminating the need for you to worry about storing 12-word seed phrases instead, we will be using key shares.
Part of the key will be safely stored on your device, and part of the key will be stored on Bizzllet, so even if you lose your key share, Bizzllet will be your last resort.
This way, you will never be in a situation where you cannot access your wallet because you forgot the seed phrase or lost your private key.
Your key share is stored on your device and will be backed up using your chosen storage. You can choose from Google Drive, iCloud, or OneDrive to access your funds whenever and wherever you want.
MPC wallets, such as Bizzllet, provide increased security against attacks such as keyloggers, phishing, and malware, as the private key is never fully exposed to any device. Instead, the key shares are securely generated, stored, and computed locally—no single points of failure.
We advise you to set up Bizzllet across your devices if you have a more significant amount of funds. They can’t be compromised because a single key share has been lost.
Self custody wallets come in many forms, which is excellent given that your wallets should serve multiple purposes. We already wrote a blog about this. However, for the sake of this article, we will revisit them.
A hardware wallet is a small physical device that securely stores private keys to manage digital assets. This is usually in a USB form. They use advanced security features like encryption and secure element chips to protect private keys from cyber attacks.
To access the funds stored on the device, the user must enter a PIN or seed phrase and sign transactions using the device.
Hardware is considered one of the most secure ways to store cryptocurrency funds, and they should be used to store larger quantities of crypto assets—funds you don’t need to have on hand.
Software or hot wallets are connected to the internet and designed for frequent use in managing and accessing cryptocurrency. Unlike a cold wallet, a hot one provides instant access to a user’s crypto assets and allows easy transactions.
They are certainly more prone to hacks, but creating multiple addresses for different purposes should do the trick to keep you diversified and safe.
Wallets like Bizzllet use secure Multi-Party Computation to create safe and secure multisig wallets where Single Points of Failure are prevented. If one device or user is compromised, your assets stay safe.
MPC wallets are software wallets and are usually used by organizations. However, if you are dealing with more significant amounts of crypto, you can set up a multisig wallet across your devices and stay safe.
The great thing about them is that there are no seed phrases. They can be backed up using Google Drive or iCloud. So, to access your funds, you can use the password or the backed-up key share.
With MPC wallets, “Not Your Keys, Not Your Bitcoin?” = Outdated
It is essential to stay safe at all times, so there are five things you can do right away to keep you that way.
First of all, here is a list of the best non custodial wallets so that you can do your own research and choose the one that best suits your needs. We will continue using Bizzllet as an example since you can use it to manage business crypto payments, expenses, and invoices.
Sign up with your email and password or via Microsoft/Google, and verify your account.
Set the organization name and tell us about your business so we can tailor your experience.
Invite team members to your organization, and define roles and rules for each of them.
Create a highly secure multichain wallet to store and manage your crypto assets.
Send assets wherever and whenever, no limitations.
Scan the QR or copy the address and receive your funds in a couple of minutes.
There you have it!
A complete guide to Self Custody wallets. If you think Bizzllet is a solution that could benefit you or your organization create a free account.
