Bitcoin self-custody is a big deal.
While there’s a lot of debate about whether Bitcoin is a good investment, I’m here to tell you that Bitcoin has more to offer than a way to become wealthy.
The real revolution behind Bitcoin is that it allows for self-custody, meaning you’re in full control of your funds. There’s no bank or a third party between you and your money.
Why is Bitcoin Self-Custody Important?
Traditionally, when you want to invest in something—whether it’s stocks, bonds, or even gold—you have to put your trust in a third party.
You have to trust that they will keep your investment safe and secure. But what if the third party goes out of business?
Counterparty risk is a real thing! There is a number of exchanges that have failed in the past, such as Mt. Gox, Celsius, and FTX, and this is just a small sampling of the exchanges that have ceased operations due to insolvency.
Enter Bitcoin Self-Custody
But with Bitcoin, you can be your own custodian.
You can hold your own private keys, which are essentially your master passwords for accessing your Bitcoin, and no one can tell you what to do with it.
That’s why self-custody is such a big deal; it gives you total control over your money.
There are a lot of advantages that come with being your own custodian.
Freedom and Sovereignty
Perhaps the most important advantage of Bitcoin self-custody is that it gives you freedom and sovereignty over your own money.
With traditional financial institutions, you are at their mercy and have to trust that they will not abuse their power.
PayPal has been known to freeze people’s accounts and confiscate their funds without any notice or due process.
Also, in some countries, there have been cases where people couldn’t get their money out of the ATM because the bank had imposed restrictions.
With self-custody, you don’t have to worry about things like that because you are in full control of your funds.
No one can tell you what to do with your money, and no one can freeze or confiscate your funds.
Lower Fees
You can send and receive Bitcoin anytime, anywhere, without having to ask permission from anyone.
With Bitcoin self-custody, because there are no middlemen involved, fees are significantly lower.
When dealing with traditional financial institutions, you have to pay fees for things like transactions, withdrawals, and sometimes even just for holding your money!
However, with Bitcoin self-custody, you only have to pay the network fee when making a transaction.
Greater Privacy
Another benefit of Bitcoin self-custody is that it provides greater privacy. There’s no need to share your personal information with a third party.
Traditional financial institutions require you to share sensitive information like your name, address, and date of birth.
With that said, having enhanced privacy doesn’t mean you don’t have to pay taxes.
Every country has its own regulations, and you should definitely consult with a certified accountant to ensure you don’t get yourself in trouble!
What’s Next?
Self-custody is the real revolution behind Bitcoin.
But one thing to keep in mind is that with great freedom comes great responsibility.
Holding your own private keys requires you to be diligent in safeguarding them as if they were cash.
If you lose your private keys, your Bitcoin is gone forever.
Bitcoin is not a company. There is no CEO, and there is certainly no customer service you can call to help you recover your funds.
So, if you’re thinking about self-custody, make sure you do your research and only entrust your Bitcoin to wallets that allow self-custody.
So if you’re thinking about investing in Bitcoin, make sure you take self-custody into consideration.
It could be the difference between generational wealth and losing all your life savings.