PSA: Self custody is the only way you are actually holding bitcoin.

I've seen a lot of shade being thrown around this sub recently about self custody. Lots of people saying the ETF is easier for most to hold and more secure than an exchange. They are wrong.

I'm here to remind everyone that bitcoin on an exchange, with a custodian, or in an ETF is not bitcoin. It is an IOU for price exposure to bitcoin. Unless you have the keys to your own coins in self custody, you don't own anything, you simply have a voucher for the asset and most ETFs can only be redeemed in USD anyway.

Self custody is pretty much the entire value proposition of bitcoin. Without coins in self custody, your node is irrelevant and your coins can be confiscated just as easy as gold was with executive order 6102.

If you really want an easy way for your grandma to hold bitcoin, look into collaborative custody solutions.

Not your keys, not your coins. Trusted 3rd parties are security holes. Don't say we didn't warn you.

38 thoughts on “PSA: Self custody is the only way you are actually holding bitcoin.”

  1. It really depends on if you see see Bitcoin as a investment vehicle or a doomsday currency. There are a bunch of people here who with both mindsets, but I think for the vast majority of people who view Bitcoin as an investment vehicle and have brokerage accounts already then the EFT route is the easiest way for them to get the price exposure they want.

    There are many benefits to self custody, and for those people who are able to do so they should, but for your grandma (for example) some ETF exposure is your best bet.

  2. Very true. It would not surprise me if these ETFs just end the Bitcoin train. Hopefully common sense prevails and people understand the true nature and need to self custody.

  3. Imagine someone told us that we could own a house outright, except without having to worry about maintaining it.

    In fact, they declared us prohibited from maintaining it. Or even living in it, for that matter. We can be the sole owner of a house that we’ll never get to touch, or even see.

    It sounds ridiculous, until you realize that the one benefit carried over from our standard levels of home ownership is that when we do decide to sell, we get to keep just as much of the profits as we would’ve if we had spent all that time and money maintaining it.

    For the people looking to realize the utility of Bitcoin, an ETF would indeed sound ridiculous. Am I allowed to ask about the issue you raise with people who are simply looking for price exposure?

    I don’t understand what the problem with price exposure is, so maybe you can help clarify!

  4. your bank account is technically multisig between you, the bank, and the government!

  5. The entire value proposition of Bitcoin is that there will only ever be 21 million in existence and each one of those can be tracked to a UTXO on the public blockchain. These ETFs change nothing about that.

    The only difference with someone using an ETF over self custody is the counterparty risk. And that risk comes more from the custodian of those coins most ETFs are using, Coinbase. It’s more likely that they screw up or get hacked than the government trying to confiscate everyone’s BTC.

    The government is not even close to being in the same position to pull a 6102 like they did back in the day. Technology and the way our current financial system is set up just won’t allow it. Also, if they did try to do that, the price would be astronomical.

  6. PSA: Nobody cares about your opinion or your 0.004 bitcoin. It is none of your business what people do with their own property.

  7. These posts are so boring and the people making those points about the ETFs already acknowledge what you’re saying. Self custody is not for everyone. Some people just want to invest and sell later for fiat.

  8. If there’s a normal, boomer-age investor, they aren’t going to want to learn enough to self-custody. They have enough money that they don’t need to take any big risks, and don’t want to learn new technology. Just let them own a little BITB or equivalent in peace. Even if they only each bought a tiny percentage of their portfolio, we would make a lot of money instantly, because all the ETFs would have to get their custodians to buy.

    Not your keys, not your coins is a huge concern with unregulated exchanges. It’s a much smaller concern with Blackrock. The US Government protects boomers who invest in things through exchanges, and people don’t usually want to cross the US government, or they end up like CZ

  9. >It is an IOU for price exposure to bitcoin.

    Unless you’re using a Bitcoin ETF with yield. ETF’s with yield actually bet against the price of Bitcoin going up.

    “Obviously, selling covered calls is a way to generate interest (also known as income or yield) on bitcoin ETF holdings. However, if the price of bitcoin increases quickly — as it often has throughout its history — the call option owners will call the bitcoin from the fund. This means that the ETF will not benefit from any further price increase.” (source:

  10. Oh. More internet people bashing other internet people for how they handle their own money.

    What a time to be alive.

  11. Your personal keys are also little more than an IOU for Bitcoin. Every custodial option that exists comes with risk. I prefer to pay someone for custody that carries insurance, invests in security, and that I can take to arbitration if they screw up. I don’t have just a little Bitcoin. YMMV.

  12. Not everyone is capable to custody his/her BTC. Is better to have some skin on BTC via ETF and then opt in to self custody with hardware wallet when they are ready at later time.

  13. P2p electronic cash without the need for institutional middle men? Sounds scary I should pay an institution to do it for me.

    I’m so confused why this sub loves the etf. The utility of self custody offsets any tax benefit so the only ones benefitting are the speculators

  14. I thought it was common knowledge that any investment made through a brokerage is a custodial service…

    If someone purchases AAPL stock through a brokerage, the brokerage is acting as an agent on their behalf. Technically that person doesn’t have physical access to “their” stock certificates. They can always choose to hold their own stock certificates in their home, but it’s easier for a brokerage to hold it. The upside is that agreement with the brokerage means it is insured. If they lose “your Bitcoin” it will be covered.

    While the phrase “not your key, not your coins” is technically true, I think it’s better to diversify. I don’t stow all my fiat in a safe at home, why should I do the same with all my BTC?

    I think best practice would be to store some BTC across many platforms. Some in a cold wallet, some in a hot wallet, some on an exchange, and now some in an ETF retirement account. There’s not only safety in diversifying what you hold, but also how you hold it.

  15. OP, I bought into bitcoin simply hoping to profit from it. I paid X USD to buy, and I hope to someday sell for 3-4X USD. For that purpose, holding in an ETF that tracks the price movement of BTC is good enough for me.
    You do you and I will do me. Peace

  16. With ETFs we are just slowly reinventing fractional reserve banking, because you will never know if they hold the bitcoin they say they do.

  17. you should do both.

    1. store bitcoin in cold wallet so you actually own bitcoin.

    2. secure your seed phrase

    3. utilize the tax free benefit in your retirement account to hold either bitcoin ETF’s I would only recommend $ HODL or $FBTC as they have separate custodians that are not coinbase

    4. hold

    5. tell everyone else to do this

  18. If you’re one step removed from ownership via exchanges, you’re at least two steps removed via ETF.

  19. All true but how will most people self-custody when on-chain transaction fees get to 1,000 sats/vB?

  20. 40k to 6 million in 5 months off crypto investments…BS or Not?

    I am a lowly contractor. I understand people and numbers, yet have no real experience in investing other than buying property and selling it, etc… I have a long time friend who is selling his home on 48 acres for $1.3 million to an absolute scumbag, which is neither here nor there. This scumbag, who 3 years ago borrowed 6k and took 1 1/2 years to repay via work, not in money, claims he started investing in crypto and turned 40k into 6 million since late October, 2023. That number now he claims is closer to $15 million.

    Point being, is that even a possibility at 6 million, and if so could 15 million be possible??

  21. If you wanna be serious about this, memorize the words, or write them down and put them somewhere safe.

    Don’t fall for the stamped steel shit, or whatever, just write it down.

  22. Yeah, people dont realize how bad that IOU is too. All it takes is one slip up, and the exchange has more liabilities than assets. If the price moons, no one is getting their Bitcoin out. Until it moons, you wont know whether or not your exchange is solvent.

  23. > It is an IOU for price exposure to bitcoin

    For many people who are not tech savvy and just want “investment exposure” they are getting just that

  24. You’re missing all the benefits of having ETF. Tax-free gains Roth Ira and free employee contributions, and leveraging the ETF for buying other assets like real estate or businesses.

    Yes being your own bank is great but it actually removes you from a lot of benefits provided by institutions.

    Edit: also forgot to mention the ETFs are insured so in essence they cannot be stolen.

  25. I self custody myself because I actually believe in Bitcoin for the long haul.

    But if the ETFs and exchanges continue to give people exposure to Bitcoin. The overall message we all know and believe will get out even more.

    In turn, our Bitcoin in self custody will become more valuable.

    So let them keep thinking they own Bitcoin. I hope others do as well.

    And if they come looking for my Bitcoin or a piece of my Bitcoin for some BS taxes..Well I lost it in a boating accident as well.

  26. Weird. Feel like I’m seeing the opposite- hate towards people advocating buying the etfs. People on either side tend to be talking past one another – likely those buying etfs are either a) those who already hold btc in self custody and want exposure in retirement tax advantaged accounts or b) those who see bitcoins “value proposition” as simply the type of return in could add to their investment portfolio and don’t perhaps buy into the regulatory risk enough to self custody. Both forms of exposure are legitimate based on one’s use case for the asset and how they view it.

  27. Whoopsie! Sorry there bud, looks like we’re gonna hafta’ approproemate them there bitcorns for ah national security porpoises. But don’t worry we’ve got you covered. Those ETF shares you hold…ermm, I mean those umm ETF security entitlements that your now bankrupt broker held on your behalf are going to be turned into gen-yoo-wine FedNow cash credits at par! Yessir, you betcha! Deposited right away to your digital ID account at the NY Fed. Aren’tcha glad we’re lookin out for ya?

  28. ETF’s are much safer for 90% of the population that do not and will not have the time to understand crypto. The SEC requires dollar for dollar possession of all bitcoin purchased, so the bitcoin is there. ETF’s have worked and kept track within .05% of other commodities such as oil, gold, silver, etc. There’s more risk in non-computer literate people getting phished or hacked than in investing in ETFs.

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