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Exchange or self-custody? The safest choice depends on you
Ask most people in crypto where to keep it and you'll hear the same answer: off the exchange and into a hardware wallet. A better question may be what's safest for you.
8 min watch · Investing & Strategy · Always free
For years the rule has been not your keys, not your crypto, and the collapse of FTX showed why. Hardware wallets became the standard answer, with your private keys offline and nobody else holding your assets. Then a major security incident at Coldcard, one of the most respected hardware wallets in the industry, showed that self-custody carries risks of its own. Every storage option has strengths and weaknesses, and none of them carries zero risk.
This entry starts from a different question: what's the safest solution for you? The answer probably depends on two things, how much you've invested and how technically confident you are, and together they put most people in one of four broad groups, each with a different place to start.
For education only, not financial advice. Crypto assets are volatile and you can lose all the money you invest.
Transcriptlightly edited
Off the exchange and into a hardware wallet
Hi, I'm Viv, and welcome to my notebook. Here's something I've noticed when asked this question. What is the safest way to store your cryptocurrency? This is something I have formed a different opinion than most over the last few years.
If I asked 100 people in crypto where the safest place is to store their Bitcoin or cryptocurrency, most of them would probably give the same answer. Get it off the exchanges and into a hardware wallet.
Not your keys, not your crypto
For years, one phrase has been repeated throughout the crypto industry: not your keys, not your crypto. The thinking behind that is simple. If you don't control your private keys, then you don't truly control your cryptocurrency. If your assets are sitting on a centralized exchange, you're trusting that company to keep them safe. If something goes wrong, whether it's poor management, fraud, or even bankruptcy, you could lose access to your funds.
Unfortunately, we've seen exactly that happen before. The collapse of FTX is probably the best-known example. Overnight, one of the world's largest exchanges failed, and countless investors, many of them experienced, lost access to their assets. It was a stark reminder that trusting a third party always comes with risk.
That's why so many people turn to self-custody. Hardware wallets, often called cold wallets, became the golden standard. Your private keys stay offline. You're in complete control of your assets, and you're no longer relying on anyone else to safeguard your investments.
No such thing as zero risk
For years, I would have agreed that this was the best advice. But over the last couple of years, and I guess in particular with recent events, my thinking has evolved.
Just this week, one of the most respected hardware wallets in the industry, Coldcard, was at the center of a major security incident. Reports suggest that attackers were able to exploit a vulnerability affecting certain wallets, resulting in the theft of a significant amount of Bitcoin, some say over 2,000 Bitcoin.
Whether you're leaving your assets on an exchange or taking full responsibility through self-custody, one thing has become very clear. There is no such thing as zero risk. Every storage solution has strengths, and every storage solution has weaknesses.
So instead of asking what's the safest wallet, I think the better question is, what's the safest solution for you?
Two questions to ask yourself
In my opinion, the answer depends on two things. The first is how much money you're investing. Now, that's completely relative. For one person, $1,000 could represent years of hard work and savings. For someone else, $1,000 might be an amount they wouldn't lose any sleep over. So when I talk about a small investment or a large investment, it's entirely personal.
The second question is even more important. How technically confident are you? Do you genuinely understand wallets, private keys, recovery phrases, and the responsibility that comes with self-custody? Are you just starting out your crypto journey? Because self-custody doesn't just give you control, it also gives you full responsibility. If you lose your recovery phrase, if you make a mistake sending funds, or if your security practices aren't good enough, there isn't a customer support team that can simply reverse the transaction.
When you combine those two questions, investment size and technical knowledge, I think most people fall into one of four broad categories. Let's look at each of them.
Small amounts, new to crypto
The first investor has a relatively small amount invested and is new to crypto. They're not particularly technical, and they don't really want the responsibility of managing private keys just yet. For this investor, I actually think using a reputable centralized exchange is a perfectly sensible place to start. After all, most of us have trusted banks and financial institutions our entire lives, rightly or wrongly.
The important thing is choosing an exchange with a strong reputation and a proven track record. If you choose this route, there are three things I'd strongly recommend. First, complete the identity verification process before depositing any money. Second, create a strong, unique password. And third, enable two-factor authentication to add another layer of protection.
Start with small amounts. Learn how deposits work. Learn how buying and selling works. Learn how withdrawals work. There's no need to rush this process.
Small amounts, technically confident
The second investor also has a relatively small investment, but they're technically confident. They're interested in learning. They're comfortable taking responsibility for their own assets. For this investor, I'd still recommend having accounts with one or two reputable exchanges, because they're convenient for buying and selling assets. But I'd also encourage them to begin learning how to use a hardware wallet.
Transfer small amounts first. Practice backing it up correctly. Understand how recovery works. Make your mistakes while the amounts involved are small, so that if and when your portfolio grows, you already have the knowledge and confidence to manage larger amounts safely.
Large amounts, less technical knowledge
And so to the third investor, someone making a large investment but without much technical knowledge. This is probably the group I'd worry about most. Having a significant amount of money at risk without fully understanding how to secure it can be a dangerous place to be.
If this sounds like you, my advice is simple enough. Slow down and start small. Learn how exchanges work. Then learn how wallets work. And if you're considering self-custody, probably best to seek guidance from someone you genuinely trust and who has experience securing digital assets. Don't let the size of your investment pressure you into making security decisions before you're ready for them.
Large amounts, technically confident
Finally, we have the fourth investor, someone who's investing larger amounts, who has a solid understanding of wallets and private keys, recovery phrases, and the responsibilities that come with self-custody. For this person, self-custody will often be the preferred option. They'll still use centralized exchanges, because they're the easiest way to access the market. But once they've purchased the assets they want, they usually transfer those assets off the exchange as soon as practical, reducing their exposure to third-party risk. Ultimately, they're in control of their own security because they understand exactly what's involved.
No one perfect answer
So, what's the conclusion? I don't think there's one perfect answer anymore. The old saying, not your keys, not your crypto, still contains an important lesson. But it's not the whole story. Self-custody removes one type of risk while introducing another. Centralized exchanges provide convenience but require trust. Hardware wallets provide control but require knowledge and responsibility.
The safest place to store your cryptocurrency isn't necessarily the same for everyone. It depends on your experience. It depends on your confidence in what you're doing. And it depends on your willingness to take responsibility for securing your own assets. Security isn't a product you can buy. It's a process that you continue to improve over time.
So, whether you are on your crypto journey, keep learning, keep asking questions, and never stop improving your own security practices.
I hope you found this video useful. I'd genuinely love to hear your thoughts, so if this notebook sparked something for you, leave a comment below and let's continue the conversation. Thanks for watching, and I'll see you in the next notebook.
Supporting notesdrawn from the transcript
The case for self-custody is simple. If your crypto sits on a centralized exchange, you're trusting that company to keep it safe, and poor management, fraud or bankruptcy can cost you access, as FTX's customers found. A hardware wallet keeps your private keys offline and puts you in complete control. It also makes you responsible for all of it: lose the recovery phrase or make a mistake sending funds, and there's no customer support team to reverse it. The major security incident at Coldcard, one of the most respected hardware wallets, showed that self-custody carries risks of its own. Every option has strengths and weaknesses, and none is risk-free.
The video quotes reports of over 2,000 Bitcoin stolen in the Coldcard attacks. That was an early estimate, and Galaxy Research's later count put the losses at about 1,790 BTC.
Two questions help decide where to start: how much you've invested, which only you can judge, and how technically confident you are. Someone new with a small amount may find a reputable exchange a sensible place to begin, with identity verification done before any deposit, a strong unique password and two-factor authentication switched on. Someone with a small amount who is technically confident can keep an exchange account or two and practice on a hardware wallet with small transfers, making mistakes while the amounts are small. A large amount without the technical knowledge is probably the group to worry about most, and the advice there is to slow down, start small and get guidance from someone you genuinely trust. Experienced holders with larger amounts often prefer self-custody, buying on an exchange and moving the assets off it as soon as practical. In every case, security is a process you keep improving over time.
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Join the conversation
Where you keep your crypto, and why, is a different answer for different people. If your own setup has changed, or you think the four groups leave someone out, the comments are the place for it. Those replies are where a lot of the next entries start.