BLOG
Taking control of your Bitcoin through self-custody allows for financial sovereignty, security, and privacy, but requires a deep understanding of wallets, private keys, and security measures to avoid risks and losses.
This is one of Bitcoin’s more powerful promises: be your own bank. For the first time in history, there’s a possibility to fully control your money. To be financially sovereign. To completely pass by custodians and third-party institutions that play the middleman role. However, as comic fans say, with great power comes great responsibility. To be your own bank, you will have to assume all the risks. In case of loss or theft, there will be no one to call.
Of course, absolute personal responsibility sounds scary, but remember: one of the reasons Bitcoin is so valuable is because it allows you to self-custody your assets. Only cash offers transactions without trust in a third party, and guess what? In cash’s case, there’s also no one to call in the case of loss or theft. You can handle cash, and Bitcoin is a thousand times more secure.
There’s an inherent risk in trusting a third party with your money, so, it would be a mistake not to take this opportunity to be your own bank. Exchanges and custodians can take care of your Bitcoin, but if you go that route they’ll have complete control over it. Their internal system can say you own X amount of Bitcoin all it wants, but, how can you be sure? Go self-custody and you won’t have to worry about that.
History is full of horror stories about custodians doing a horrible job at keeping your Bitcoin safe. From Mt. Gox to FTX, to Celsius; when those businesses went down, their clients learned a costly lesson in Bitcoin self-custody. Be your own bank and you won’t have to trust any third party.
Let’s address the elephant in the room: Blink is a custodial wallet. We can’t offer you self-custody. Our slogan is “The everyday Bitcoin wallet” because Blink is engineered for day-to-day spending. If you have any doubts, check “A Guide to Understand Bitcoin Wallets” and “Choosing The Right Bitcoin Wallet: Payments vs. Savings.” In that one, we say:
“If you possess a fair understanding of Bitcoin, prioritize privacy, and wish to maintain your keys while leveraging low cost and instant bitcoin payments enabled by Lightning Network, self custodial Lightning is for you.”
So, if you want to be your own bank and protect your savings in a sovereign way, custodial wallets and exchanges are out of the question.
To be your own bank, you need a non-custodial wallet with cold storage. It will store your private keys offline and only use them when you’re about to make a transaction. For extra details, let’s quote Nunchuk:
“Cold storage refers to physical devices that store private keys offline. It could be a dedicated hardware device ‒ like a Trezor, Ledger or COLDCARD, or simply a laptop repurposed to be completely disconnected from the Internet.”
In the case of your savings, no one - and we mean NO ONE but you - should have access to your private key. To receive transactions, you just need a public key:
“The public key, on the other hand, is derived from the private key calculated using an elliptical curve, a one-way cryptographic function that allows obtaining the public key from the private key but makes it impossible to guess the private key from the public key.”
Remember, “Not your keys, not your coins.” To have full control over your Bitcoin you will have to take full responsibility over your private keys. As The Bitcoin Way’s “You Should Be Your Own Bank” article says, “This is a real and critical departure from normal for most, but it is also essential to the promise of Bitcoin: permissionless, self-custodied, secure, immutable money wherever you are in time and space.”
Again, If you’re committed to self-custody, study THIS and THIS before going any further.
To recap, the benefits of using Bitcoin to be your own bank according to Strike are:
That fourth point refers to custodians' and third parties’ ability to monitor ALL your transactions if you use their internal software. By going self-custody, only you will have access to a record of your activities.
According to Nunchuk, “4 million bitcoin ‒ approximately 20% of the current supply ‒ have been lost forever due to the loss of private keys, forgotten passwords, theft or fraud.” That’s scary, but logical if you consider that losing control of your private keys means the Bitcoin is gone forever. Nowadays, the infrastructure is more developed and there are hundreds of products, but when Bitcoin came into the picture none of that existed.
Maybe it is as Nunchuk wrote, “The burden of key management is too big for any individual to bear alone, especially for an asset class that is intended to be passed down from generation to generation.” That’s where multisig - short for “multisignatures” - comes in.
The most common configuration is three private keys, where you only need two to access the account. By using it, you could leave one of the keys with a custodian like Nunchuk or Unchained Capital and they WOULDN’T have access to your Bitcoin. Of course, the other two keys are your absolute responsibility, and you should store them in different locations for multisig to make sense. What are the odds of losing both at the same time?
As always, do your own research and pick the option that suits you best. That’s the burden that comes with using Bitcoin to be your own bank.
