Do You Self-Custody Your Bitcoin?
My Experience So Far .....
Wow. Did I ever strike a nerve on Tuesday.
With all of the crypto exchanges blowing up, and people having their coins stuck in limbo, I wanted to see who does self-custody of their Bitcoin, and to hear about their experiences.
So…..I admitted on Twitter that most of my Bitcoin was on the Gemini exchange. Gemini is consistently rated tops for safety and security. I trust them more than I trust myself to remember a set of private keys.
After all, when you buy stocks through Merrill Lynch, you own them, they keep custody of them, and you don’t worry about it, right?
And Gemini is run by Tyler and Cameron Winklevoss, not some 22-year old who’s fresh out of college.
I thought it was a reasonable admission, and I wanted some feedback. I know people struggle with this issue. Self-custody of crypto is not easy or natural to many people.
Here’s what I said:
“I'll admit it.
My Bitcoin is on Gemini. They seem to be top-notch for safety and security.
Bottom line: I trust them more than I trust myself.”
The Twitter Firestorm
I received hundreds of comments. Some were understanding and respectful. Most, however, were critical at best. Here’s a sample:
“Dude, WTF?”
“YNGMI”
“Dummy”
“HFSP”
“Clown”
“Terrible”
“Satire, right?”
And some that I can’t really share on this platform.
Some Bitcoiners Were Supportive
One responder thought I should use this experience for an article. Thanks for that idea.
Another chimed in that holding custody of your Bitcoin can be stressful. And many people agreed. We all know people who lost their private keys, and with them all of their coins.
Someone contributed, “Not many have the balls to admit this.” Truth. And millions of investors have, or had, their Bitcoin on exchanges. We are not alone.
And Udi Wertheimer offered support, saying this is consistent with the majority of Bitcoiners:
Exchanges Have Been Imploding
It’s been a rough couple of weeks. Millions of crypto investors have lost their coins, as many seemingly reputable exchanges have gone belly up. Most were taking the customers’ coins, making risky investments with them, and you know how it played out. Prices dropped, sell orders came in, liquidity dried up, withdrawals were halted. Sam Bankman-Fried of FTX ran off to the Bahamas, and investors got wrecked.
Celsius, BlockFi, and FTX were thought to be some of the largest, safest exchanges in the world. Up until very recently. Until they weren’t. I’ve read countless stories about investors having their coins tied up on these platforms, or lost forever.
Even Gemini, on their Earn platform, has slowed up withdrawals. This happened on Wednesday, and it originated with their partner, Genesis Capital.
I am not alone in keeping coins on an exchange. Bitcoin maxis would have you think everyone keeps their own personal hardware wallet.
My First Foray Into Self-Custody
At the Bitcoin Conference 2022 in Miami Beach, my goodie bag included a free Arculus hardware wallet. Looks like a regular credit card. When I got back home, I tried it out and it was pretty easy to use. I transferred some sats off of my Lolli app onto the Arculus wallet, a couple of times. It’s an easy process, but Lolli takes up to ten days to make the transfer. So, there’s the wait time. (Lolli is a shopping app that pays Bitcoin rewards.)
(This is not an endorsement for the Arculus wallet; I used it because I received it for free.)
There are a lot of hardware wallets out there. Here is a list of top-rated wallets, according to Investopedia. Again, not my recommendations. The Ledger and the Trezor models seem to be very popular.
The Best Bitcoin Wallets of 2022
Best for Beginners: Exodus
Best for Advanced Bitcoin Users: Electrum
Best for Mobile Users: Mycelium
Best Hardware Wallet: Ledger Nano X
Best for Security: Trezor Model T
Bottom Line - The Process Has to be Easier
The general public is not yet comfortable holding custody of their investments. And as one Twitter commenter pointed out, it’s a fiat mindset. The banks hold your money, sort of. The brokerages hold your stocks. We trust, we rely on a central point of authority, which can also be a central point of failure. Bitcoin represents a paradigm shift in this thinking. As Satoshi said, it’s a trustless system. You don’t need to trust anyone else. You can verify.
Rest assured that one factor that’s keeping institutions on the sidelines of cryptocurrencies is the safety and security. They need great custody solutions before they invest millions, or billions, of their clients’ funds.
Here’s a Bitcoiner who agrees, the custody process needs to get easier:
I’ve started my journey into self-custody. Not early enough, apparently, for the Bitcoin Twitter crowd. The reactions were really harsh, and tough to absorb.
The Tweet, however, has generated 120,000 impressions, 480 likes, and 700 comments. Oh, and about 100 new followers. And one article. So there’s that.
Thanks for reading.
Recommended Bitcoin Tools, Platforms, Podcasts:
Gemini - My choice for buying and HODLing Bitcoin, rated tops for safety and security. User-friendly platform and phone app. Earn Bitcoin rewards as well with the Gemini Credit Card.
Lolli - The Lolli shopping app lets you earn great Bitcoin rewards on practically everything you buy, whether you’re shopping on your phone, computer, or in-person.
Twitter - Follow The Bitcoin Files on Twitter at @BitcoinNewslet1 for all of my articles, commentary and links to my contributions to Bitcoin Magazine.
Medium - Check out my writings on Medium, including articles not featured in the newsletter. Join my 550 other followers who read and write about crypto. medium.com/@rickmulvey
Podcasts - To hear the top names in Bitcoin, and learn more than you could imagine, check out The Pomp Podcast with Anthony Pompliano, What Bitcoin Did with Peter McCormack, and The Wolf of All Streets Podcast with Scott Melker.
Issue No. 83, November 18, 2022
Rick Mulvey is a CPA, crypto consultant, and frequent contributor to Bitcoin Magazine. He writes about all things Bitcoin, and yells at the Yankees and Giants. He also runs marathons and makes wine, neither professionally.