Key Takeaways
- Custodial vs. Self-Custodial: Custodial wallets let a third party hold your crypto. Self-custodial wallets give you the keys and full control.
- Private Keys & Seed Phrases Matter: These secrets unlock your funds. Lose them and you lose access; share them and someone else gains control.
- Security Is Habit-Based: Use strong passwords, two-factor authentication, offline backups, and beware of phishing.
- No Safety Net: Crypto transactions are usually irreversible. Take precautions before you act.
Custodial vs. Self-Custodial Wallets
Custodial wallets store your crypto on a platform’s servers. The platform controls the private keys, and you trust it to stay solvent and secure.
Self-custodial wallets put you in charge. You hold the keys on a local app or hardware device. The phrase “not your keys, not your coins” sums it up.
Analogy: A custodial wallet is like a bank vault holding your cash. A self-custodial wallet is a home safe where you keep the cash and the key.
Private Keys, Seed Phrases, and Addresses
Private key = secret password. Whoever knows it can spend your crypto.
Seed phrase = backup. A 12–24-word list that can recreate your private keys. Keep it offline.
Address = public account number. Share it freely to receive funds.
Analogy: Your address is the mailbox location, the private key is the mailbox key, and the seed phrase is a master copy of that key.
Basic Security Best Practices
- Never share your seed phrase or keys.
- Use strong passwords and enable 2-factor authentication (2FA).
- Store backups offline (paper or metal) in a safe place.
- Beware of phishing links and fake support requests.
- Treat your crypto like cash or jewelry—protect it from theft and prying eyes.
Scam scenario: You get an email claiming to be your wallet provider asking for your seed phrase. Stop. It’s a scam. No legitimate service needs your private secrets.
Risks & Important Considerations
- Total responsibility: Lose your keys and your funds are gone—no reset button.
- Custodial risk: Exchanges can be hacked or freeze withdrawals. You hold only an IOU.
- Scams & malware: Phishing websites, clipboard hijackers, and impersonators target crypto users.
- Education, not endorsement: Examples here (Ledger, MetaMask, etc.) are for context only—do your own research.
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