Holding your own private keys is always described as the most secure method. Yet history shows that most Bitcoin lost forever wasn’t seized by governments or stolen by hackers—it was lost due to forgotten passphrases, damaged hardware wallets, or poorly executed self-custody setups (often overcomplicated by their owners). How is it possible that the best security solution we love and pray is actually the most dangerous.
What should I pick, self-custodial or third-party custudial?
Self-Custody is not a binary option
Is not an all-or-nothing milestone. It’s a spectrum—sometimes even an utopian aspiration.
Every good old bitcoiner will work his way to acquire the knowledge needed to manage that responsibility, and even then, he may choose to sacrifice a degree of control for greater security.
Some popular self-custody choices:
- Backup Copies: Sometimes the “Bitcoiner of the family” creates a recovery plan where other family members hold key shares or copies. This ensures redundancy via peer recovery.
It’s no longer pure self-custody. More like shared custody: “our keys, our coins.” - Multisig: Requires multiple parties or devices to move funds. It’s not absolute “self-custody,” but conditional shared custody: “splitted keys, your coins.”
- Trusted Software/Hardware: Many treat self-custody as if it were an ISO-certified guarantee of safety. Some consider that the self-custody badge is enough to blindly trust that is irrefutably 100% true. Few consider that software can have bugs, exploits, or OS vulnerabilities. At best, it’s “your probably-safe keys, your coins.”
What’s Worse?
A custodial wallet (still hold your funds)
or
Forgetting your passphrase? (no funds)
You may answer that you rather lose your coins than still having them available to withdraw it from the exchange, that you'll die for your values and you will always hold your funds in self-custody and lose them in your own resposibiliy.
You prefer to die with your boots on, instead of still holding that coins in that dirty wallet/exchange, even when you still can transfer them out. Not your keys, not your coins.
Self-custody or nothing! I'm proud of you. But.
What about your mom?
Would you prefer your non-tech-savvy mom lose her keys while “self-custodying”?
Can she really handle backups, passphrases, and device security on her own?
What if she starts sharing her custody with her friend DEMENTIA?
If you hold her keys for her, or have a backup to access her funds in case she loses anything, is that truly self-custody?
Maybe she trusts your skills more than she trusts herself, and her choice might be to rely on someone else to provide that security. Just as she does with security guards who watch over her while she sleeps, nurses who care for her daily, restaurants she trusts not to poison her food, or professionals like electricians, gas installers, and engineers who ensure her home doesn’t catch fire, explode, or collapse.
What if she decides to store her seed phrase or hardware wallet in a trusted security box out there?
Custodial or Non Custodial is a false dicotomy. The real risk is losing the Bitcoin altogether. You'll customize and tailor your setup to reduce that risk.
If self-custody were truly more important than the risk of losing Bitcoin, why do so many Bitcoiners limit their own access to funds through multisigs and conditions that contradict this principle?
Design Your Risk, according to your needs
The goal is survival over decades. Not everyone is as nerd as you are. Bitcoin requires a security strategy that matches your abilities and evolves over time. Whether you use a hardware wallet, a multisig vault, a family recovery plan, a hybrid approach, or even a trusted custodian that you already hold a relationship with:
The point isn’t to be “pure” in self-custody. The point is not to lose your Bitcoin.