Self-custody to Keep Crypto Safe

“Not your keys, not your crypto.”

A quick guide on keeping your crypto safe with a “self-custody” wallet:

1. Wallets consist of two parts:

- A public key (used to generate your wallet address)
- A private key (the 'password' for your crypto wallet)

2. “not your keys, not your crypto.”

on centralized exchanges, you have usernames and passwords.
but not your private keys/seed phrase.
so it’s a custodial account.
You need the platform’s approval to access your assets.

3. How the cryptography works

Your public key is created via a one-way process.
So that private key maps onto the public one.
You can prove ownership of the public key without actually revealing the private key.

4. How to protect them?

first level: protect your keys.
public key + wallet address: used for interaction
seed phrase + private key: hide them

5. Seed phrase protection

store the private key on fireproof cards.
And then put them in the safe deposit box.

6. second level: Hardware wallet

If you want to use DeFi or exchange your crypto,
get a hardware wallet.
Read @withsmoothie’s article on cold wallets:
https://twitter.com/withsmoothie/status/1562103905609457667?s=20&t=gBFIEBA5P-ItidKRKXWe4Q

7. What hardware wallet does

It isolates your private key from the rest of the world.
You download your keys onto the device and only plug it in when you need to trade.

8. Third level: the multi-signature wallet

It’s like a safety deposit box with multiple keys.
The wallet requires multiple signatures to approve a single transaction.

9. The tricky part is to set up.

You need to find trusted people for your multi-sig.
even if you lost your private key, a thief still can’t trade your money.
@VitalikButerin prefers this way.

10. Fourth level: The Horcrux Method

It includes all the levels above.
Spread your funds over many types of wallets to protect funds.
Like what Voldemort did to protect his soul.

11. No 100% security

Self-custody also entails risks.
You might send crypto to wrong address or lose your seed phrase.

12. Other ways you can try:

Trusted Custodians like @BitGo and @Gemini offer custody services.
They specialize in crypto security.
And they got insurance if something bad happens.

13. Find your account back

If you lose your seed phrase/ private key,
social recovery needs signers to give you back access to your assets.
@loopringorg and @argentHQ offer the tool.

14. The thread is inspired by @JackNiewold and read his original tweet here:

https://twitter.com/jackniewold/status/1593721076298776592?s=46&t=JKWoCs91mb6D95aepDzxCw

15. Post-FTX trust issues

Many feel disappointed about web3 post-FTX.
Many initiatives are essentially centralized platforms built on decentralized foundations.
But finances are vital parts of web3 economy too.

16. Heading to decentralization

I love the reminder of @TPan_Web3:
The beauty of Web3 is that the foundational technology of blockchain has a multitude of applications.
Web3 adoption and development are still on the way, to a better future.

17. web3 self-custody ecosystem landscape:

mobile and desktop wallets:

@MetaMask
@exodus_io
@bluewalletio
@TrustWallet
@InfinityWallet
@GetLinen
@GuardaWallet

hardware wallets

@thisisarculus
@Ledger
@SecuXwallet
@Trezor
@cryptokeepkey

smart-contract based

@UniPassID
@AmbireWallet
@pillarwallet
@authereum
@argentHQ

MPC wallets

“multi-party computation” requires more than one participant to authorize transactions.
@QredoNetwork
@OpenBlockWallet
@SepiorKMaaS
@ZenGo
@Safeheron
@FireblocksHQ

Browser

@PocketUniverseZ
@wallet_guard
@brave

DeFi tools

@LiquityProtocol
@AaveAave
@neptunemutual

Defi dashboards and wallet trackers

@zerion‍
@tokenpad
@Fi_Zapper

multisig technology

@safe
@BitGo
@CasaHODL

B2B

@FordefiHQ
@bitpowrhq

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