Forum Topics Bitcoin Custody Preferences
Stannis
Added 2 months ago

Cheers @Strawman and @occy

The rabbit-hole certainly gets deeper. Have recently reached the stage where apparently everything I own is vulnerable to attack and and I need something called Electrum because a public server is a total no-go…

Anyway, an original Trezor, aye? Would’ve loved to be buying back in those days. Alas, pretty sure I was in middle school when those things started coming out :)

Ultimately, went with a coldcard. But setting it up got me introduced to the whole multi/single-sig custody approaches and got me thinking about the multi-sig nature of custody. Like, I wasn’t actually aware that you can pretty much pay a company to hold one of your signatures on your behalf (effectively, if you ever stuff up/someone steals yours, there’s another being held for you to prevent unauthorised wallet access). I am still on the fence about this.

Doesn’t giving another party (basically half, arguably total) influence over your keys almost defeat the purpose of self custody anyway? Although I think you’re right, Andrew, if the value of the wallet ever got large enough, would probably consider the further multi-sig approach.

Makes me think of some weird future, where, although you might self custody with your own wallet, you might also pay fees to a Commonwealth Bank, for example, to hold a signature - requiring both the institution and your approval to spend, maybe even make investments, using the BTC. This kind of puts one foot in the self custody camp, but also the other goes into the “trusted” third party camp. Scenario that might alleviate the general opposition toward being in complete control (and completely responsible) for your money.

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GazD
Added 2 months ago

Another quick post on custody.


i took the plunge and purchased a ledger crypto wallet to take my bitcoin off the exchange. Just an FYI for those considering the same, turns out the one I bought is not compatible with iPhone (inconceivable to me but there you go)

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Stannis
Added 2 months ago

A quick post considering the ever-increasing interest in Bitcoin.

I have been a small but steady on-loader of Bitcoin now for a couple of years - I treat it like a savings technology and slowly DCA a small part of my income into it. Irrespective, I had recently myself (long overdue) decided to move my holdings off an exchange and onto a hardware wallet.

Additionally, I have been begging my partner to put the tiniest amount of spare capital she can afford to lose into BTC and she has finally agreed to put a negligible amount aside. However, when she asked me how, I kind of didn’t really know what to say. Ultimately, I have, generally, told her to simply buy some shares in a Bitcoin tracking ETF to avoid the mind-@uc$ of self-custody (because I have found self-custody intimidates a lot of people).

But, it made me wonder what are the methods of custody that people on Strawman use? I do understand that this topic is somewhat sensitive, given that I’m basically asking “what model of bank vault are you currently using to store your money?” Even general, non-specific, answers would be appreciated, as, annoyingly, I am now receiving an uptick in interest from friends and family (the same friends and family that have endured my bitcoin nagging for ages) as the price/attention surges.

My simple question - how would you tell a “layperson” to invest in Bitcoin?

I could not ever give the recommendation to long-term hold on an exchange for anything over a couple grand worth (despite my own shameful decision to custody with an exchange for ages and ages, it’s just too risky to suggest).

The notion of self custody seems to make a lot of people (perhaps understandably) very anxious and switch off quite quickly.

Is, therefore, the best answer just to direct them to something like VBTC? I wouldn’t personally own this, unless the option to directly hold BTC was unavailable, so I feel weird about recommending it to anyone, but it’s better than scaring them off by placing the sole responsibility on them, no?

Overall, I guess I’m envisioning my dreaded future where, in about 5 days, the whole family is gathered around the BBQ and they’re asking me about that “silly bitcoin thing” and maybe now they’re actually interested but “I don’t understand how it all works…”

So I start trying to explain about seed phrases, proof of work, mnemonics, blockchain- and bam! -I’ve already lost you…

Unless you’re already interested in this kind of stuff, most people sort of disengage and end up not getting involved at all because it all sounds so scary, at least from my experience. To be honest, it was pretty scary for me when I was first learning it, I can only imagine a (more mature, shall we say) person trying to get their head around this stuff.

side-note,

Forgive my ignorance, but I was wondering how exactly these ETFs work, security-wise.

Does the ETF provider actually have to maintain a certain amount of BTC or does it simply track the BTC price and, really, the guarantee here is the CHESS-ASX system, as opposed to anything that the ETF provider does explicitly?

Perhaps I’m being stupid, just wondering if the cryptocurrency element altered any of the obligations, as opposed to, say, a regular ASX200 ETF - considering the actual asset cannot be controlled by government, has relatively strict supply and is “different” compared to regular equities.

This may really throw me under the bus as a complete moron - but I was under the impression that an ETF provider basically creates a portfolio of assets (based off an index, for example) and allows you then to essentially buy a share in a holding that is comprised of many companies. Does this then mean that the ETF provider actually holds BTC or is it CHESS sponsorship that provides security? Or am I completely wrong?

Cheers for any feedback.

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Strawman
Added 2 months ago

haha, very much an experience I am familiar with @Stannis

I use a hardware wallet at present, with the pneumonic split and stored separately in two locations. It requires some added care, but it's really not that hard. I'm probably going to start using a custodial solution that uses a 2 of 3 multi-sig (eg Casa) as the balance is becoming pretty material. I know Bitaroo (the exchange I use) have some cool custody options too.

All that said, the ETFs are a good gateway drug. Especially for those that are just dipping their toes in.

As for "how do you explain it to a layperson?" -- I've long struggled with that. I dont think you can understand it until you understand money. Which is something we don't ever consider, in the same way we all use electricity without most of us every really understanding Maxwell's equations. There are no short cuts, so you just need to "do the work", as they say.

As for the ETFs, they are spot products the hold the underlying BTC with a custodian (eg Coinbase). You'll find details in their PDSs, but the key thing is that it's matched one for one, and is audited regularly. Just as with other types of ETF. There are risks, but they are very small IMO.

Good luck at the xmas dinner table :)

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occy
Added 2 months ago

Bloody hell @Stannis you're hard on yourself. These are definitely not stupid questions. And I think the vast majority of people playing in this space will tell you that it is overwhelming and there is a vast amount of knowledge to take in particuarly when starting out. I'm far from an expert now honestly and still don't possess the confidence to attempt to articulate the world of Bitcoin to any friends who ask me about it.

And fwiw, I have the original Trezor that I store my coins on (I also hold a small amount of Ethereum). I have been contemplating upgrading to one of their latest products but it has done the job for me and has been rather straightforward regarding ease of use. However recently I actually placed some money in an ETF not long after the listed on the ASX as it was just a quicker process. Either way you can't go wrong but dipping yours toes in with an ETF and will likely send you down the rabbit hole.

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topowl
Added 2 months ago

I've been using Bitkey as a multi sig solution for 9 months and am enjoying it.

Very easy.

Haven't had my finger on the pulse, but hope they're still considered a sound solution.

Dear lord someone tell me if they're not....lol.

The balance is getting a bit more significant.

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lyndonator
Added 2 months ago

I previously used Ellipal and now use Ledger to store my keys. The ledger is much easier to use.

However, I'm seriously considering using an ETF going forward (I generally buy a bit each month when I add cash to my portfolio).

I found it really beneficial to use a hardware wallet and feel how the blockchain actually works - All the theory didn't quite give me the same level of understanding as experiencing it for myself.

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RhinoInvestor
Added 2 months ago

@Stannis great questions. I haven’t gone super deep on the custody arrangements of the major bitcoin ETFs but managed to find the following and the majority of them seem to be custodied at Coinbase (i.e. sort of “on an exchange”). https://heyapollo.com/bitcoin-tracker/overview

Not sure if the Aussie ETFs actually custody the coins or whether they just pass through to the US ETFs.

I think that is mainly a symptom of everyone rushing to get to market I understand from some BTC podcasts I listen to that some of the big US banks are starting to get their own custody arrangements approved now so I’d expect this is an evolving field.

I personally use Ledger hardware key, but the process of transferring BTC from the exchange to the wallet freaks me out every time. I only sweep the coins periodically so generally have forgotten the process each time as my HODL rate is pretty low and I had stopped buying in the last down cycle (much to my regret). But at least I didn’t sell.

I recently bought some of one of the ETFs (hence the fall in BTC price over the last few days) … felt emotionally quite different to buying the BTC and psychologically, the ETF felt more like something I would hold for a while and then sell where as the Self Custodied BTC is something I intend to just hold (I think I’m one of those people hoping BTC goes to $1m). It’s kind of stupid logic but its weird how different things impact your psychology.

I bought the US IBIT ETF as it has Options trading. Subsequently sold a LEAP Covered Call for January 2026 with 2x the bitcoin price which yielded about 10% of today’s price (less the short term capital gains tax).

In terms of explaining bitcoin to others …

  • find 10 people that generally don’t trust government
  • tell them that BTC is their salvation from the Government money printing machine and inflation (they have all been suffering from so is relevant to most)
  • tell them to tell 10 of their friends …
  • Long live the Ponzi scheme.


Alternatively turn on BTC as the benchmark in Sharesight (if you use it) and compare your portfolio performance to BTC. I guarantee everyone on Strawman that is the first step to getting onto the bitcoin standard as it makes even our best stock market returns look terrible in comparison. I’ve recently done that which has given me food for thought about my very low portfolio allocation to bitcoin.

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