What is Bitcoin Custody? — SFOX

Why is custody important?

Three categories of bitcoin custody

  • Hardware wallets: Hardware wallets allow investors to perform their own custody with a third-party device that manages their private keys.
  • Multisignature wallets: Multisignature wallets require the use of multiple private keys to authorize transactions. This helps to distribute risk and eliminate single points of failure for investors.
  • Third-party custodial services: Custodial services for Bitcoin allow investors to outsource the risk of safeguarding their funds to a third party. These often use a combination of hot wallets, cold wallets, and multisignature wallets.

Self-Custody: Hardware Wallets

  • Coldcard: This fully-offline bitcoin wallet features a “duress” mode that allows users to call up a secret, secondary wallet containing a small amount of BTC in the event that someone forces them to unlock their wallet.
  • Ledger: Ledger is a manufacturer of hardware wallets. Their flagship product, the Ledger Nano S, supports over 1000 different cryptocurrencies and tokens.
  • Trezor: Trezor, another manufacturer of hardware wallets, also supports over 1000 different cryptocurrencies and tokens.

Multi-signature wallets

Third-party custodial services

The Maturing Market for Custody

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