What is Self-Custody and Why It Matters

If you've only used crypto exchanges, you've been trusting someone else to hold your assets. Self-custody changes that. Here's what it means.

The Simple Definition

Self-custody means you (and only you) control your cryptocurrency. No company, no exchange, no third party can access your funds.

Think of it like cash: A bank holds your money and can freeze your account. Cash in your wallet is yours to control. Self-custody is the "cash in your wallet" version for crypto.

How Exchanges Work (Custodial Storage)

When you buy crypto on an exchange:

1. The exchange creates an account for you
2. They hold your crypto in their wallets
3. You see a balance, but the crypto isn't actually "yours" until you withdraw it
4. You trust them to return it when you ask

This is called custodial storage - the exchange has custody of your assets.

How Self-Custody Works

With a self-custody wallet like KriptoK:

1. You create a wallet using a seed phrase
2. The seed phrase generates private keys that control your crypto
3. Only you have access to these keys
4. No one (including KriptoK) can access, freeze, or take your funds

Your crypto lives on the blockchain. Your wallet is the tool that lets you access it.

Why Self-Custody Matters

1. True Ownership

On an exchange, you see a balance but don't directly control the underlying crypto. With self-custody, you own the actual crypto on the blockchain.

2. No One Can Freeze Your Funds

Exchanges can freeze accounts for regulatory reasons, suspected fraud, technical issues, or bankruptcy. Self-custody eliminates this risk.

3. No Withdrawal Limits

Exchanges impose daily limits. Self-custody wallets don't.

4. No Middleman Risk

When exchanges fail, users lose funds. FTX, Mt. Gox, and others collapsed. Self-custody removes this single point of failure.

5. Privacy

Exchanges collect your identity and track your transactions. Self-custody wallets don't require personal information.

Understanding the Responsibility

Self-custody gives you control, but it also means you're responsible for security.

What this means:

• Protecting your seed phrase is essential. If you lose it, there's no recovery option.
• You manage transaction fees and verify addresses
• You need to stay aware of scams and phishing attempts

This isn't meant to be discouraging. It simply means that with ownership comes accountability. Many people find this trade-off worthwhile for the freedom and security it provides.