Cryptocurrency Deep Dive
Crypto Custody Models
Ethereum, stablecoins, exchange mechanics, and self-custody.
In this lesson
- What self-custody means
- The trade-offs you accept
Key takeaways
- 1Self-custody means only you hold the keys
- 2It removes counterparty risk but adds responsibility
- 3Key security becomes entirely your job
Lesson summary
Self-custody means the user controls the keys that move assets.
Mental model
Crypto Custody Models in plain terms
Self-custody means the user controls the keys that move assets. It removes exchange custody risk, but it also removes many traditional recovery paths.
- What self-custody means
- The trade-offs you accept
Mechanics
How to reason about crypto custody models
Private keys or MPC shares authorize transactions.
Wallet policies, hardware devices, or recovery schemes can reduce single-point failure.
The user must verify what each signature allows.
- Self-custody means only you hold the keys
- It removes counterparty risk but adds responsibility
- Key security becomes entirely your job
Example
Crypto Custody Models in a real decision
A self-custody trader can keep funds in a wallet while interacting with trading infrastructure, instead of depositing assets into a centralized account.
Common mistakes
How crypto custody models trips learners up
Self-custody is not the same as safety by default. Bad backups, phishing, and blind approvals can be worse than using a reputable custodian for some users.
Risk notes
Risk checks for crypto custody models
Key loss, compromised devices, malicious approvals, social engineering, and inheritance gaps are practical self-custody risks.
- Know who controls the keys.
- Set a backup process.
- Review transaction intent before signing.
Practice
Make crypto custody models stick
- Know who controls the keys.
- Set a backup process.
- Review transaction intent before signing.
Review
Key terms
- Custody
- Who controls the private keys. Custodial = a third party holds them; non-custodial = you do.
- Ethereum (ETH)
- A programmable blockchain — a 'world computer' that runs smart contracts and dApps.
- Phishing
- A scam that tricks you into revealing keys or approving malicious transactions via fake sites/messages.
- Wallet
- Software or hardware that stores the private keys controlling your on-chain assets.
- Self-Custody
- Holding your own keys instead of trusting a custodian.
Source notes
Editorial references
These references are starting points for verifying the mechanisms, risk checks, and product context behind this lesson.
Before you continue
Can you do these?
- Know who controls the keys.
- Set a backup process.
- Review transaction intent before signing.
Related learning
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Checkpoint
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Answer every question correctly to complete the lesson.
Self-custody means…