Because cryptocurrencies are digital assets, they are highly targeted by hackers. Protecting your assets requires understanding the security architecture of exchanges and hardware wallets. We share our guide to self-custody.

The Risks of Keeping Assets on Exchanges (Hot Wallets)

Leaving your crypto inside your exchange account means the exchange controls your private keys (the signature authorizing withdrawals).

• Risks: If the exchange gets hacked or faces insolvency, your funds may be frozen or stolen.

What is a Hardware Wallet? (Cold Custody)

A physical USB-like device that manages your private keys completely isolated from the internet (e.g. Ledger, Trezor).

• Pros: Because it is disconnected from the internet, the risk of remote malware or online hacking is virtually zero.

How to Segregate Your Assets

• Short-Term/Trading Balances: Keep on secure, reputable exchanges with active Two-Factor Verification (2FA).
• Long-Term Holdings (HODL): Always move to a personal hardware wallet, storing your backup recovery phrase safely offline.