Every time there's a central exchange hack like the one that recently hit ByBit, the self-custody advocates emphasize that self-custody in crypto can prevent these devastating hacks from occurring. Self-custody puts the user in control of their digital assets and is central to the Bitcoin whitepaper. Self-custody means directly owning crypto by being the sole custodian of the private keys that unlock access to the coins and tokens.

Anyone looking to truly take control of their assets should consider self-custody. Arguably, it is this feature of crypto that sets it apart from the traditional centralized banking system. By holding private keys, the user becomes the only person who can control their assets, while giving away custody usually means that a centralized authority like a cryptocurrency exchange has access to private keys, which is a major vulnerability and often a crypto hacker's primary target.

The R0AR team and community aim to play a central role in making crypto mainstream, but for billions of new users to be onboarded, security will be paramount. Every time there's a hack that could have been prevented with self-custody, the industry suffers a major setback. 

This is why R0AR has launched its own crypto wallet, the R0AR Wallet, and plans to educate newcomers to the sector about self-custody, decentralization, and security.

What is Self-Custody in Crypto?

A self-custody crypto wallet gives users complete control over their private keys. This means that only the owner of the wallet can access the assets it contains and knows the private keys. Non-custodial wallets, such as those offered by centralized exchanges, allow third parties to control the private keys and therefore the access to the crypto.

Private keys are the unique cryptographic codes that allow the user to authorize transactions and access their cryptocurrency holdings. Managing these private keys securely is central to self-custody wallets. The user is responsible for storing and protecting these keys, typically through methods like writing them down or using offline hardware devices.

Some users prefer self-custody wallets because they offer greater control and security over their digital assets. However, others continue to use non-custodial wallets, particularly on centralized exchanges, due to their simplicity and the ease of trading within the exchange's ecosystem

How Does Self-Custody Work in Cryptocurrency?

In cryptocurrency, there are two main types of keys: public keys and private keys. A public key is like a bank account number; it's an address that can be shared with others to receive cryptocurrency. A private key, on the other hand, is like the PIN or password to that bank account; it's a secret code that allows the owner to access and control the funds associated with the public key.

Self-custody wallets are designed to give the user complete control over these private keys. Unlike custodial services, where a third party holds the private keys on the user's behalf, self-custody wallets store the private keys directly on the user's device or in a secure location known only to them. This direct control is what defines self-custody.

Storing private keys securely is central to maintaining control over cryptocurrency in a self-custody setup. One method involves writing down the seed phrase, a series of recovery words derived from the private key, and storing it in several secure and separate locations.

Transactions in self-custody wallets are initiated and confirmed directly by the user using their private key. When a user wants to send cryptocurrency, their wallet uses the private key to digitally sign the transaction, proving their ownership and authorizing the transfer. This signature is then broadcast to the network for verification, without the need for a third-party intermediary to approve the transaction.

The Risks of Self-Custody

There are some risks associated with self-custody. However, most of these risks can be mitigated through proper management, and most crypto users would argue that self-custody always trumps non-custodial alternatives in terms of security.

• Loss of Private Keys: This is arguably the biggest risk. If the private keys or seed phrase are lost or destroyed, access to the funds is permanently lost.

• Human Error: Mistakes such as sending cryptocurrency to the wrong address are irreversible on the blockchain. Falling victim to phishing scams or malware that steals private keys also falls under human error.

• No Customer Support: Unlike custodial services, self-custody wallets do not offer customer support to recover lost funds or reverse transactions. The user is solely responsible for managing their wallet and assets.

• Device Security: If the device where the self-custody wallet is stored (computer, phone, hardware wallet) is compromised, the private keys could be exposed.

Comparing Self-Custody vs Custodial Solutions

How to Secure Your Crypto with Self-Custody

The best way to manage the risks associated with self-custody crypto wallets is to take extra steps to make sure private keys are secure. Following best practices means that self-custody crypto storage can be one of the most secure digital asset storage solutions on the market.

Implementing Two-Factor Authentication (2FA) adds an extra layer of security to self-custody wallets, especially software wallets. By requiring a second verification step, often a code from a separate device, 2FA makes it significantly harder for unauthorized individuals to access a wallet even if they obtain the password.

Establishing a robust backup and recovery strategy is crucial. This involves creating encrypted backups of private keys and recovery phrases (seed phrases). Storing these backups in secure, offline locations ensures that access to funds can be restored even if the primary device is lost, stolen, or damaged.

For long-term holding of crypto assets, utilizing cold storage or offline wallets is highly recommended. This method involves keeping the private keys entirely disconnected from the internet, significantly reducing the risk of online attacks and unauthorized access. 

Taking these proactive steps can prevent hacks and breaches, providing the user with the maximum level of security and control over their digital assets when using self-custody wallets.

The Future of Self-Custody in Crypto

The future of crypto is exceptionally bright, but only if users feel that their assets are safe. Over the past decade, the industry has grown from a relatively unknown field to a multi-trillion-dollar ecosystem, with Bitcoin becoming one of the most capitalized assets in the world.

As the market grows, so do the threats from hackers and nefarious actors. Self-custody is the industry's best defensive measure. It gives users full control over their assets and massively reduces the capacity of bad actors to perform hacks and undermine the industry.

R0AR Wallet: Self-Custody Made Simple

The R0AR team is playing its role in the self-custodial future with the R0AR Wallet. The wallet has been designed to be accessible to everyone, regardless of how much time they've spent operating in the decentralized finance sector. The wallet will become a core part of the multi-chain R0AR ecosystem, allowing users to easily and securely shift assets across networks. The wallet is already available on Android and will soon launch on iOS.