Do you truly own your coins

[OsaiEmma]

Hello my country people, happy Sunday, hope you'll are doing well.

This post is made basically to bring to your knowledge on how to properly hodl your coins(BTC), to know if you are truly hodling or if someone is just hodling it for you.  

Here we'll be talking about;

• Different ways to hodl your coins
• Non-Custodial wallets
• Pros and Cons of a Non-Custodial wallet
• Custodial wallet
• Pros and Cons of a Custodial wallet
• Major difference
• Major similarities
• Conclusion

Different ways to hodl your coin:  
In this beautiful world of cryptography, and cryptocurrency, owning and hodling your coins (alt and BTC alike) is very important and vital. Bitcoin, the first coin was made basically to eliminate trust and create a peer-to-peer transaction where you have full control over your assets, unlike the traditional banking system where transactions is done through the bank without really hodling your money, and have no control over the process, Bitcoin is somewhat different cause you have full ownership and control (I know we all know this).

Nowadays, we have so many ways of hodling our coins, some entrust it to people, organizations, CEXs, wallets, e.t.c, but basically, they can be grouped into 2: custodial and non-custodial.


NON-CUSTODIAL WALLETS:  
These are wallets in which we have full control over the private keys, we own and control the wallet directly without the interference of any other third party, person, organization, or group, e.g Trustwallet, Metamask, Coinbase Wallet, TON Keeper, hardware wallets e.t.c.

These wallets often come with dApps (decentralized applications), which help access the web directly, DeFi (decentralized finance), on-chain interactions, swaps/DEXs (decentralized exchanges, e.g PancakeSwap), e.t.c.


Pros and Cons of a Non-Custodial wallet:

PROS:

• No KYC required
• Full privacy
• Full control and ownership
• Aligns with Bitcoin philosophy

CONS:

• Responsible for everything
• Once private key or phrase is lost, no recovery

CUSTODIAL WALLET:  
These are wallets that we do not directly own the private key; we are basically entrusting our coins to a different individual, organization, or group to control and hodl our coin for us, e.g CEXs (centralized exchanges) like Binance, KuCoin, Crypto.com, Coinbase Exchange e.t.c.

These services often come with trading options (features, margin, and spot), trading bots, charts and indicators, swaps, staking, ICOs/launchpads, e.t.c.


Pros and Cons of Custodial wallets:

PROS:

• Tools for analysis of the coin
• Can recover account easily when lost
• Relieved of responsibility
• Customer support
• P2P (person to person) trade

CONS:

• Defeats the purpose of Bitcoin invention, which is full control and ownership
• Operates on trusting a third party
• No full control over your coin
• At the mercies of the trusted third party
• No privacy, seeing you can be easily doxed

Major Differences:

• Non-custodial provides full ownership and control to owner, Custodial gives control to a third party
• Non-custodial provides ownership privacy, Custodial can dox owner using KYC
• Non-custodial does not provide trading with leverage, Custodial provides trading with leverage
• Non-custodial has dApps and on-chain interactions with wallet, Custodial does not provide on-chain interactions with your wallet

Major Similarities:

• They both support swapping of coins
• They both are used in hodling coins
• They both are used in sending and receiving coins

Conclusion:  
Well, the above has given an overview of what a custodial and a non-custodial wallet is. In addition, one of the main differences is that you can manage more than one account in a non-custodial wallet, meanwhile in a custodial wallet, one KYC for one account – you as an individual cannot manage more than one account which has been KYCed in a single platform or exchanger.

You know, in the differences, everything that is different in terms of their looks, tools e.t.c is not the main issue. The main hardcore difference is the right and level of control or autonomy over your assets/coin, and level of privacy. These are the main purpose why Bitcoin was created and is being defeated by using custodial wallets. Using a non-custodial wallet aligns with Bitcoin's philosophy; it's like being your own bank. You know as the saying goes: not my keys, not my coins. Being the sole custodian of your keys makes your coin truly yours, and not being makes it not truly yours just like the banking system.

So my advice (although NFA) is: store, accumulate, and hodl your coins in a non-custodial wallet, then if you want to trade, or sell, transfer to a custodial wallet and carry out your activities.

So what are your thoughts, opinions, counters on this?  

[Emjay24]

CONS:

• Once private key or phrase is lost, no recovery

If you still have the old device used in creating the wallet working, chances are that you can still remember the password to the wallet and retrieve back the key/phrase pair. Even if the device isn't really working properly, if you've access to the storage and successfully copies out the wallet.dat file, you can load it into a working wallet and unlock with the password and retrieve the seed phrases. It is technically lost forever when you also don't have any backups of the wallet file.

[OsaiEmma]

CONS:

• Once private key or phrase is lost, no recovery

If you still have the old device used in creating the wallet working, chances are that you can still remember the password to the wallet and retrieve back the key/phrase pair. Even if the device isn't really working properly, if you've access to the storage and successfully copies out the wallet.dat file, you can load it into a working wallet and unlock with the password and retrieve the seed phrases. It is technically lost forever when you also don't have any backups of the wallet file.

You're absolutely right, but in this case, the phares or private key is not exactly lost lost, you just lost access to the device, but if you can retrieve and access the device with the wallet, certainly you can retrieve the phrase key, but in a situation where as you mentioned you don't have any backup of the wallet data, pass phrase, or private key at all anywhere and it is lost without being able to access the device, then yes it is lost forever.

Although this is under how responsible you are with your wallet that you're managing, that's why it is always advised to write it out somewhere.

Anyways, thanks for pointing that out, this will bring to the consciousness of people to always be responsible with their non-custodial wallet seeing they have full control and ownership of it

[Judith87403]

Your key message is strong: control of the private key is the real ownership, with Bitcoin. Non-custodial wallets align much more closely with such principle.

That said, it is not usually black and white. Custodial platforms such like Binance or Coinbase provides convenience, liquidity and recovery that is easier, which may matter for starters or traders that are active.

On a personal view, I see a hybrid method as practical: long-term holdings in a protected non-custodial wallet(more of hardware), and just trading capital on exchanges. The saying "not your keys, not your coins" is true, yet self custody equally demands discipline and proper backup. Freedom come with responsibility.

[OsaiEmma]

Your key message is strong: control of the private key is the real ownership, with Bitcoin. Non-custodial wallets align much more closely with such principle.

That said, it is not usually black and white. Custodial platforms such like Binance or Coinbase provides convenience, liquidity and recovery that is easier, which may matter for starters or traders that are active.

On a personal view, I see a hybrid method as practical: long-term holdings in a protected non-custodial wallet(more of hardware), and just trading capital on exchanges. The saying "not your keys, not your coins" is true, yet self custody equally demands discipline and proper backup. Freedom come with responsibility.

Yes u are right, it is not always black and white no doubt, the points you said where also mentioned in the pros of custodial wallets, the help, and I agree with you, your view also coincide with my conclusion too, but thanks for throwing more light.

As I said earlier, custodial wallet will relieve you of all the responsibilities of safety, full ownership and control giving you the bear minimum to do in terms of these, which is a good thing to some degree, but it defeats the main purpose of what the system was made for.

Using a hybrid system (i.e combining the both) is the most logical way forward so as to have the best of both worlds, having full control over your coin as well as being able to utilize the good incentives custodial wallet provides, so yeah ur point is very valid and accepted at least by me.

[Olotu20]

From what I have come to understand in crypto currency is that you don't own your coins so it's not advisable to store your coins on an exchange that, is why crypto experts always says not your coins this is because your coins are not totally safe on an exchange no matter how popular such an exchange is. I will advise that the only coins that should be left on an exchange should be the once that are ment for trading for those who into crypto trading and the once you wants to sell shortly. Other wise always store your crypto assets on a cold wallet and secure your keys safely.

[I_Anime]

Ofc I own my coins there ain’t no third party . I don’t hold on exchange (remember not your key not your coin I prefer holding with noncustodial wallet  . It makes things less complex and also is more secure than it just sitting down in some CEX account .

Many still hold some of their good assets there , not something I encouraged though . Normally the CEX meant for purchasing coins without any stress while you hold with your wallet keeping your key safe .

[Cryptomultiplier]

Your key message is strong: control of the private key is the real ownership, with Bitcoin. Non-custodial wallets align much more closely with such principle.

That said, it is not usually black and white. Custodial platforms such like Binance or Coinbase provides convenience, liquidity and recovery that is easier, which may matter for starters or traders that are active.

On a personal view, I see a hybrid method as practical: long-term holdings in a protected non-custodial wallet(more of hardware), and just trading capital on exchanges. The saying "not your keys, not your coins" is true, yet self custody equally demands discipline and proper backup. Freedom come with responsibility.

The responsibility of freedom might bear the burden of proper security of which means a cold wallet could also be hacked since it gets connected to the Internet for a brief period before completing your transactions.
I prefer an air gapped wallet of which ensure better safety from hackers who are just waiting to steal access to your funds.
True responsibility of course demand good financial knowledge and applications, emotional control and discipline and ultimately consistent effort with proper research and reasoning skills to help prevent loss of any kind.