Bitcoin (BTC) is more accessible than ever. You can now buy Bitcoin, keep it in a wallet provided to you by the platform you’re trading on, and move along. This is fine if you’re just starting and trading in small amounts but as your Bitcoin starts to accumulate, there’s nothing safer than moving your money into your personal wallet—one that you have complete control over—which is commonly referred to as “self-custody.”

To take custody of your own Bitcoin, you’ll need a non-custodial wallet. 

What are custodial and non-custodial wallets? 

All available Bitcoin wallets can be categorized into two groups: custodial and non-custodial wallets. 

To understand the difference between the two, you need to know what private keys are. Private keys are what give you, and only you, access to your wallet and the funds inside of it. Here are a few ways you keep your private keys safe: 

• Store them offline – Although it may be convenient to store your private keys online, leaving your wallets connected to the Internet leaves them susceptible to threats like viruses and malware. 
• Don’t share them with anyone – Whoever has access to your private keys has access to your money—so make sure to keep your keys to yourself.
• Use secure passwords for your accounts – Using random letters, numbers, and special characters is a great way to keep your passwords secure. Also, be sure to use different passwords for each platform. 
• Enable two-factor authentication (2FA) – 2FA is an extra layer of security for your account, so enabling it can go a long way in protecting your money. 
• Keep your devices updated with the latest software – Software updates often come with added security measures that protect you more from any possible threats. 

Custodial wallets are storage solutions wherein a third party (e.g. not you) holds onto your private keys, such as the ones exchanges give you when you sign up for an account on their platform. Non-custodial wallets, on the other hand, allow you to hold your own private keys, meaning that you have complete control over your money. 

Your keys, your coins

Being in complete control over your money means any transaction done on the wallet will have to be authorized by you. 

Not only does this allow for more security for your money, but it also allows for more accessibility. It’s more secure because only you have access to the money and even more accessible since non-custodial wallets can be used offline (most custodial wallets require an Internet connection), allowing you to manage your funds anywhere at any time. 

Being the custodian of your Bitcoin reinforces the common concept of “not your keys, not your coins.” With a custodial wallet, the Bitcoin inside technically isn’t yours. Instead, they’re a representation of what the custodian (e.g. the platform you’re buying Bitcoin on) owes you. Using a non-custodial wallet means being your own bank, managing your own money, and controlling the future of your finances. 

Safekeeping your non-custodial wallet

One of the most important things when it comes to the security of your non-custodial wallet is your seed phrase. 

A seed phrase is a string of random words generated by your wallet which can be used as an emergency backup in case you ever lose access to your money. Although they sound similar to the idea of private keys, you can think of your seed phrase as the key you hide under the mat when you lose your main set of house keys (your private keys)—this way, you still have access to what’s yours and a failsafe in case something happens. 

It’s important to note that with non-custodial wallets, you are responsible for your private keys and seed phrase. This means that you should be backing them up and taking extra precautions to keep them safe. To ensure that you’re keeping your seed phrase secure, make sure the location passes these three criteria:

• Physical security – Keep your seed phrase in a place only accessible to you—somewhere you won’t lose it or forget where you put it.
  
• The “test of time” – Keep your seed phrase somewhere it’ll be protected from natural decay or disasters like fire or flooding.
  
• Data security – Make sure your seed phrases are kept somewhere that’s locked or encrypted. Doing so will keep it safe from bad actors and add an extra layer of security for your money. 

Choosing a non-custodial wallet to self-custody

There are a ton of options when it comes to where you want to store your Bitcoin. If you’re looking to keep it in a hot wallet, where wallets are always connected to the Internet. To help get you started, here are our favorite non-custodial hot wallets:

• Muun
• Blue Wallet
• Breez
• Zap
• Tippin.me
• Bitcoin Lightning Wallet (Android only)
• Eclair Mobile (Android only)

If you’re holding a significant amount of Bitcoin and want more security, we’d recommend purchasing a hardware wallet. Ledger Nano X, Trezor Model T, or the BitBox02 are popular options.

For an in-depth look at some of the best hardware wallet options on the market, check out this blog from Paxful University or this video from BTC sessions.

If you’re willing to pay a little extra for more security, you can transfer all the Bitcoin you aren’t actively trading to your hardware wallet and rest easy knowing that your money is safe. 

You should never need permission to spend your own money

While custodial wallets are beginner-friendly, non-custodial wallets allow you to enjoy the full spectrum of Bitcoin’s benefits. It was always meant to be for the people, so it only makes sense that you would hold your own Bitcoin—not only to have complete control over your funds but also because you should ever need permission to store and spend your own money.