Custodial vs Self-Custody
Who holds your keys, and the trade-offs of each.
You’ll cover
Lesson map
Two models
With a custodial wallet - typically an exchange account - a company holds the keys for you. It feels like online banking: reset your password, call support. But you're trusting them not to freeze, lose, or misuse your funds.
With self-custody, you hold the keys yourself. Nobody can freeze your account, but nobody can bail you out either. Lose the seed phrase and the funds are gone.
Hot vs cold
A 'hot' wallet is connected to the internet - convenient for daily use but exposed to online attacks. A 'cold' wallet keeps keys offline, on a hardware device or paper, out of reach of remote hackers.
A common pattern: keep a small spending balance in a hot wallet and the bulk in cold storage.
Remember
Rule of thumb: only keep in a hot wallet what you'd be comfortable carrying as cash.
Concept map · schematic
From balance to an evidence trail
A public balance and transaction list answer different questions.
- 01
Address
Read an account without connecting a wallet
- 02
Balances
Observe the current native and token account state
- 03
Transactions
Inspect signatures and instructions for historical context
Important: Signatures alone do not prove a trade or identify a counterparty.
Self-check
Check your understanding
Choose an answer for each question, then check the results and explanations.
Primary references
Documentation and standards
References added
Official technical references for further verification. A source link is not a guarantee that every earlier editorial sentence has been reverified; provider specifications may also change over time.
The curriculum predates this reference index. These sources are offered to check technical details; no original publication date has been inferred.
- Solana RPC HTTP referenceSolanaRead source ↗
- ERC-20 token and allowance specificationEthereum Improvement ProposalsRead source ↗
Apply what you learned
Related practical guides
Continue learning