Last week, the financial world witnessed a significant event that sent shockwaves through the markets. The Japan carry-trade situation led to a substantial decline in the price of bitcoin, highlighting the risks of relying on traditional markets. When the markets closed, investors were left scrambling to find liquidity, and bitcoin was the only asset that provided it 24/7/365. This incident underscores the importance of self-custodying your bitcoin, as it allows you to tap into the liquidity that bitcoin provides, regardless of market hours or conditions. But what exactly does self-custodying mean, and why is it so crucial for Bitcoin investors?

What is Self-Custodying?

Self-custodying refers to the act of taking control of your own Bitcoin holdings, rather than relying on a third-party service to manage them. This means that you are responsible for securing your own wallet, managing your private keys, and making transactions. By doing so, you gain complete control over your assets and are not exposed to the risks associated with custodial wallets.

The Volatility of Bitcoin

Bitcoin's high volatility can be both a blessing and a curse. While it offers the potential for massive gains, it also poses the risk of significant losses. When you hold a Bitcoin ETF or store your bitcoin in a custodial wallet, you're at the mercy of the market's whims. You can't control the price, and you can't even access your funds when the markets are closed. For example, during the 2020 market crash, many investors were unable to access their Bitcoin holdings due to custodial wallet restrictions, resulting in significant losses.

Understanding Bitcoin as a Bearer Asset

It's essential to understand that Bitcoin is a bearer asset, meaning that whoever has the private keys is the owner. This fundamental concept in the world of cryptocurrency is crucial to grasp to truly appreciate the importance of self-custody. When you store your bitcoin in a custodial wallet, you're essentially trusting a third-party service to manage your funds.

The Risks of Custodial Wallets

When you store your bitcoin in a custodial wallet, you're essentially trusting a third-party service to manage your funds. This may seem convenient, but it comes with significant risks. What if the service provider is hacked, or goes bankrupt? What if they freeze your account, or restrict your access to your funds? These are not hypothetical scenarios; they have happened before, and they can happen again.

Mt. Gox and FTX

The infamous Mt. Gox hack in 2014 and the recent FTX collapse serve as stark reminders of the risks associated with custodial wallets. Over 850,000 Bitcoins were stolen from Mt. Gox, resulting in a loss of over $450 million. Similarly, the FTX collapse resulted in billions of dollars in losses for investors who had stored their assets on the exchange. These incidents highlight the importance of having control over your assets and being able to make decisions in real-time.

The Benefits of Self-Custody

Self-custodying your bitcoin, on the other hand, gives you complete control over your assets. You're not reliant on a third-party service, which means you're not exposed to the risks associated with custodial wallets. With self-custody, you have:

• Full Control: You can make transactions, manage your wallet, and access your funds at any time, without having to rely on a third-party service.

• Security: You're responsible for securing your own wallet, which can be done using various security measures such as encryption and multi-signature wallets.

• Private Keys: Having access to your private keys allows you to verify transactions, sign transactions to authorize the movement of your Bitcoin, and recover your wallet and access your funds if your device is lost or damaged.

• No Counterparty Risk: You're not exposed to the risk of a third-party service defaulting or freezing your funds.

• Sovereignty: You have complete sovereignty over your funds, which means you can use them as you see fit, without having to worry about restrictions or regulations.

Protecting Your Privacy

When buying and storing bitcoin, it's essential to prioritize your privacy and anonymity. Using Know-Your-Customer (KYC) exchanges can put you at risk of having your bitcoin holdings and physical address exposed in the event of a hack. This can increase the chance of coercion by organized criminal groups, who may use this information to target you and your assets. To protect yourself, it's crucial to use secure, private methods to purchase bitcoin and avoid KYC requirements.

A New Era of Financial Freedom

By self-custodying your bitcoin, you're not only protecting yourself from potential risks, but also gaining the freedom to manage your assets on your own terms. However, it's essential to note that taking the responsibility of self-custodying your bitcoin can also have disadvantages if it is not done correctly. Having the right guidance and the right strategy is crucial to avoid potential pitfalls.

If you're interested in learning more about self-custodying your bitcoin and how to do it correctly, reach out to Inedit BTC. Our team of experts has a proven methodology that has helped over a hundred satisfied customers in Spain over the last 2 years. We're now excited to offer our services in the US, and we're here to guide you through the process and help you take control of your financial freedom.

It's also important to note that having a team that you can reach out to in the future in case of an emergency is crucial. Our team is committed to providing ongoing support and guidance to ensure that you're always in control of your assets. Don't wait any longer, take the first step towards securing your financial future. Contact Inedit BTC today.