Wallets, Keys and Custody

Keys, not coins

A crypto wallet does not store coins. It stores the private keys that authorise transactions on the blockchain. Control of the keys is control of the assets.

Custodial versus self-custody

With a custodial account, an exchange or platform holds the keys for you. That is convenient, and it means you depend entirely on that company's solvency, security and honesty — several have failed and taken customer funds with them.

With self-custody, you hold the keys, so no platform can block you from signing a transaction. Nobody can help you if you lose your recovery phrase.

What holding the keys does not control

Native assets such as bitcoin or ether are governed only by their network's rules. Many other tokens are issued and administered by a company. Centrally issued stablecoins such as USDC and USDT, for example, include contract functions that let the issuer blocklist addresses and freeze or block tokens held there, as their published terms describe — even in a self-custodied wallet.

Tokens that live in smart contracts also carry the contract's own risks: bugs, upgradeable code controlled by an admin key, or a paused contract. Self-custody removes platform risk; it does not remove issuer, contract or network risk.

Non-negotiable rules

These are the basics that prevent most avoidable losses.

• Never share a recovery phrase with anyone, for any reason
• No legitimate support agent ever needs your recovery phrase
• Store recovery phrases offline, never in a screenshot, note app or email
• Check links and addresses yourself — phishing sites copy real wallets and exchanges
• Read what a transaction approval grants before signing; malicious approvals can drain a wallet
• Test small transfers before moving meaningful amounts
• Assume transactions cannot be reversed