Take Control of Your Crypto
On this episode of The Wiser Crypto Investor Podcast, Casey Smith and Robert Swarthout talk about how to take control of your crypto and self-custody. They also touch on the aftermath of the FTX downfall.
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The fallout of FTX is still very prevalent in the crypto space, and the fallout is affecting many companies. BlockFi officially filed for bankruptcy and BlockTower owes FTX.us $275M. It doesn’t stop there, DCG, Genesis, and Grayscale are all in trouble at the moment and there is a very somber mood over crypto in general right now. This is just the beginning of the fallout, and we’re sure there will be more to come. Along with this, congress is planning many hearings about the whole mess and some could even start in December. A lot of this happened internationally, so it might take a while to track the whole case.
This shows the lack of regulation around crypto right now. Hopefully, this will put weight on regulators so that crypto can really unleash its potential. There are a lot of innovators in the crypto space, but without regulations, it will be really hard for them to grow.
The way you know if you own something or not is to self-custody. It’s comparable to buying physical gold and storing it in a safe at home. Since it’s crypto, it may seem more complicated, but essentially it is the same thing. You control the ‘keys’ or passwords to your crypto wallet. You control all the in-goings and outgoings of that wallet. The password you hold for it isn’t a normal password that you choose. They are complicated passwords that need to be stored in multiple secure places. You need to have backups to reduce the risk.
There are Two Types of Self-Custody Wallets:
A software wallet is chain specific and usually presents itself in the form of an app. There is no physical device and it usually interacts with the specified blockchain. Don’t google these wallets to get them, always go to the specific blockchain you want and get it there. For example, Ethereum has software wallets so you would go directly to Ethereum. The password for your software wallet needs to be stored somewhere secure within your computer. Some of the concerns with software wallets have to do with security and privacy. One of the issues is that tracking could take place with some of these wallets and people aren’t happy about that.
A hardware wallet could be thought of as a thumb drive that could connect to your computer through Bluetooth or USB. The point of a hardware wallet is that it can store your passwords for you in a way that you wouldn’t even be exposed to them. This also means that an attacker couldn’t compromise your wallet. Ledger, Trezor, and Exodus are all companies that have these hardware wallets. Again, don’t get these off of any website, go directly to a secure seller so that you don’t get compromised.
When to Self-Custody
When should you self-custody? These devices aren’t usually too expensive, usually around $100 or so. If you have enough crypto, let’s say at least $1000, it may be a good idea to buy one of these wallets. Whenever you get to a point of owning enough crypto where you wouldn’t want to lose it, you should get a wallet. This may be something you want to get in advance because you never know what could happen.
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1:18 FTX Downfall
27:40 When to Self-Custody
Learn more about Casey Smith and connect with him on Twitter.
Learn more about Robert Swarthout.