Self-Custody and True Ownership of Your Crypto
Let's Talk About Ownership.
Most often when you purchase goods with US dollars, you take possession of those goods, meaning you own whatever it is that you just bought.
You might assume the same for cryptocurrency. After all, you can see the bitcoin that you bought with fiat US currency sitting in your wallet (ie, account) on the crypto exchange. By using the currency in that account, you can buy, sell or swap other cryptocurrencies as you wish.
But here's the thing: the bitcoin isn't actually stored in your account on the exchange, it's stored on the blockchain. And when you make a transaction, the crypto exchange is facilitating that transaction for you on your behalf as an intermediary. It's these two factors - access to blockchain-based assets and the use of a financial intermediary - that call your ownership of your currency into question.
In the world of cryptocurrency, true ownership is defined by access and control.
Cryptocurrency Custody Explained: Why Self-Custody Matters
What does it mean to truly own cryptocurrency?
Let’s Start with Access
The unique combination of your private keys and your public wallet address is what gives you access and therefore the ability to manage and trade coins.
Your private keys are the equivalent of your password. Private keys can be generated and stored in two ways: either on a device separate from the wallet provider's server system or stored on a wallet provider's server so that the provider can transact on the blockchain on your behalf.
These two types of storage wallets are called non-custodial (or self-custody) wallets and custodial (or hosted) wallets.
What is self-custody?
Self-custody is all about control.
When your private keys are generated and stored away from the wallet provider's system, those private keys are known to and accessible only by you.
Self-custody wallets are designed to keep you in control of your private keys without the need for an institutional intermediary. You are in control.
True cryptocurrency ownership means maintaining self custody so that you have constant access to your funds and control of your private keys.
Without self-custody, you risk losing everything
The dangers of partial-custody through crypto exchanges.
Unlike self-custody, where your private keys are known and accessible only by you, partial-custody offers a degree of third-party assistance in securing your private keys. The exact amount of control either party has in the event of bankruptcy or insolvency depends solely on the legal agreement between both parties.
Extreme market conditions in 2022 resulted in billions worth of frozen assets stuck in insolvent cryptocurrency platforms In its most recent quarterly SEC filing, Coinbase gave name to this specific risk, dubbing customers "unsecured creditors" in the event of the company's bankruptcy.
There's little recourse or mechanism for getting your assets back once they're frozen or taken possession of by a crypto platform. That's why self-custody, over partial-custody, gives you ownership, access, and control over your crypto, free from the volatile exchanges.
The risk of regulation and centralization.
The nascent digital asset market is also now a major target for government regulation - a move toward the centralization and control of a decentralized industry.
Crypto platforms face scrutiny and oversight, which has the potential to affect the assets that you keep on those platforms.
The everyday fear of hacks & data breaches.
$ 1.2 billion worth of digital assets were stolen or lost to data breaches and hacks in the first quarter of 2022 alone.
Only by keeping your private keys offline in a custodial cold storage wallet , out of reach of hackers , are your assets truly safe.
Secure your crypto. Secure your future.
Arculus makes digital asset protection and ownership secure, simple, and convenient. It’s our mission with the Arculus Key™ Card and Arculus Wallet™ App to transform you into a powerful guardian of your digital assets.