July 16, 2023

Crypto Self-Custody Best Practices

Crypto Self-Custody Best Practices

Understand How to Secure Your Cryptocurrency

Of all the mistakes most newbie crypto investors make, not choosing a secure wallet is the most common.

In this article, you’ll learn about crypto self-custody. This form of crypto storage puts the power in your hands. However, with that power comes the responsibility of taking steps to protect your assets as best you can.

Read on to find out some simple and complex best practices that empower you to self-custody your cryptowithout ever worrying about hacks or loss.

What Is a Self-Custody Crypto Wallet?

A self-custody crypto wallet is a type of cryptocurrency storage that gives users full ownership and complete control of their crypto assets.

The majority of new investors will be using a crypto wallet provided by an exchange. These are called custodial crypto wallets. The exchange (or custodian) owns and secures these wallets, meaning investors do not have access to the private keys. And, as the saying goes, “Not your keys, not your crypto.”

A self-custody wallet enables investors to enact their own security measures, reducing the risk of beingtargeted by hacks and allowing them to use their crypto without restrictions.

Here’s a full comparison of custodial vs. non-custodial crypto wallets.

How to Self-Custody Crypto

Before getting started on the best way to use a self-custody wallet, you need to find one to use. A few things to look out for in your search:

●               Ensure the wallet provider has no access to your private keys.

●               Check that the wallet is available on your chosen device.

●               Be sure the wallet supports the cryptocurrencies you hold.

●               Take a look at reviews and social media chatter about the developers.

Once you’ve found your preferred wallet and signed up, here are some best practices to follow to keep your crypto self-custody wallet secure.

Only Ever Share Your Public Keys

The only information anyone will ever need from you is your public keys. Essentially, this is your wallet address.

When someone wants to send you crypto, they won’t need anything else.

If any wallet provider or person asks for the following details, do not give the information to them:

●               Wallet backups

●               Private keys

●               Passwords

●               Two-factor authentication codes

●               Seed or recovery phrase

Only you, the owner of the self-custody crypto wallet, will ever need this information. Should any of those detailsget into someone else's hands, they’ll easily be able to access your wallet and your crypto.

Keep Private Keys Offline

All information related to your crypto portfolio is more vulnerable when it’s stored online. At the earliestopportunity, you should write down your private keys and seed phrase and store them offline.

Once you’ve done this, instantly delete them and permanently delete them from any internet-enabled devices.

Some people get incredibly creative with their offline storage. For example, they engrave the information onmetal, so it never fades and isn’t easily lost. Alternatively, they put them in a safe or bank safety deposit box.

Remember, if you lose this information, your crypto is gone forever. So, do what you can to ensure you alwayshave a copy that you’ll be able to find and can access easily.

Prepare Multiple Backups of Your Private Keys

OK, you’ve got one backup of the private keys for your non-custodial crypto wallet. Now, it’s time to ramp up yourprotection by creating multiple backups and storing them in different locations.

Because there’s no chance of getting back into your wallet if you don’t have the seed phrase or private keys, thisstep gives you extra reassurance.

Imagine if you kept just one copy and you lost it—you’d be screwed.

You can do this in a number of ways—you could just use the multiple suggestions mentioned above.

It’s suggested to keep one close at hand—in your home. Then use locations such as safes, storage units, safe deposit boxes, buried capsules, or with someone you trust.

Separate Your Seed Phrase

A seed phrase is a selection of 12 words that are randomly generated. You will need these to recover your self-custody crypto wallet.

One of the most efficient ways to store these and ensure nobody else can access your wallet is to separate itinto three or four groups and keep them separate.

For example, you could write three words on four different pieces of paper and then store them in different locations.Nobody but you will know who has all four pieces, and only you will know in what order they go.

Use More Than One Wallet

Many investors make the choice to use multiple wallets. They’ll use a browser or app-based self-custody wallet for day-to-day trading while keeping most of their portfolio offline in cold crypto storage.

Doing this ensures all your assets aren’t at risk from a single malicious attack or loss.

In Summary

Being your own crypto custodian might sound stressful, and it can be. However, the pros of being in complete control of your crypto and not relying on someone else to keep it safe outweigh any initial stress.

Additionally, once you’ve got a handle on the technology and your own security protocols, it will become secondnature, and you won’t need to worry about anything.

Take your time to find the best crypto self-custody wallet, assess the potential security protocols you can put inplace, and decide what suits your lifestyle best.

For the most secure crypto custody storage options, check out Escrypto. Retail investors get all the samebenefits and security that institutions get at an affordable cost.

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