The Custody Spectrum
Bitcoin custody exists on a spectrum from convenient but risky (exchange custody) to secure but complex (advanced multi-sig). Your ideal solution depends on your holdings, technical comfort, and personal circumstances.
Exchange Custody
Not Recommended Long-TermLeaving Bitcoin on an exchange like Coinbase, Kraken, or Gemini. The exchange holds your private keys—you trust them not to be hacked, go bankrupt, or freeze your account.
Hot Wallets (Mobile/Desktop)
Small Amounts OnlySoftware wallets on your phone or computer. You control the keys, but they're connected to the internet and vulnerable to malware.
Hardware Wallets
Recommended StandardDedicated devices that store your private keys offline. Keys never touch an internet-connected device, dramatically reducing attack surface.
Collaborative Custody
Guided SecurityServices like Unchained or Casa that help you set up multi-sig while holding one key themselves. You maintain control, but have professional support for recovery.
DIY Multi-Signature
AdvancedSelf-managed multi-sig requiring multiple keys (e.g., 2-of-3) to move funds. Maximum security and sovereignty, but requires technical knowledge.
Institutional Custody
Large HoldingsProfessional custody services for significant holdings. Insurance, compliance, and enterprise-grade security—at a cost.
Self-Custody Best Practices
If you're holding any meaningful amount of Bitcoin, self-custody with a hardware wallet is the minimum standard. Here's how to do it right:
🔑 Seed Phrase Security
Your 12 or 24-word seed phrase IS your Bitcoin. Anyone with these words can steal everything. Protect it accordingly:
- ✓ Never store digitally: No photos, no cloud storage, no password managers
- ✓ Use metal backup: Paper degrades; steel plates survive fire and flood
- ✓ Geographic distribution: Store copies in different physical locations
- ✓ Don't share: Nobody legitimate will ever ask for your seed phrase
- ✓ Test your backup: Restore to a new device to verify it works
Metal Seed Storage Options
- • Cryptosteel Capsule - Stainless steel, fire/water proof
- • Billfodl - Popular, affordable option
- • Blockplate - Simple stamping solution
- • SeedSigner + Steel - DIY approach
Passphrase Protection (25th Word)
Add an additional passphrase to your seed for extra security. Even if someone finds your seed phrase, they can't access funds without the passphrase. Warning: if you forget the passphrase, funds are lost forever.
Hardware Wallet Recommendations
For most users, a single hardware wallet with proper seed backup is sufficient. Our top picks:
- • Ledger Nano X/S Plus: Most popular, Bluetooth option, good app ecosystem
- • Trezor Model T/Safe 3: Open-source firmware, touch screen
- • Coldcard Mk4: Bitcoin-only, air-gapped, advanced features
- • Foundation Passport: Open-source, beautiful design, air-gapped
Multi-Signature Solutions
Multi-signature (multi-sig) wallets require multiple keys to authorise transactions. A "2-of-3" setup, for example, needs any 2 of 3 keys to move funds—eliminating single points of failure.
Why Multi-Sig?
- • No single point of failure: Lose one key? Others still work.
- • Theft resistance: Attacker needs multiple keys from different locations
- • Inheritance: Family members can hold keys without solo access
- • Business use: Require multiple approvals for company funds
Multi-Sig Providers Compared
Unchained Capital
Collaborative Custody Pioneer
2-of-3 multi-sig where you hold 2 keys and Unchained holds 1. They can't move your funds alone, but can assist with recovery. Bitcoin-only, USA-based, strong reputation.
Casa
Premium Multi-Sig + Inheritance
Multi-sig with various tiers (2-of-3 up to 3-of-5). Excellent mobile app, dedicated support, and a well-designed inheritance protocol. Premium pricing but high-quality experience.
Nunchuk
Open-Source Multi-Sig
Open-source multi-sig wallet with collaborative features. Can be fully self-custodied or use their assisted custody. Good balance of sovereignty and usability.
DIY Multi-Sig
For Technical Users
Set up your own multi-sig without third parties using open-source software:
- • Sparrow Wallet: Excellent desktop multi-sig, free
- • Electrum: Long-standing, multi-sig capable
- • Specter Desktop: Node-connected, privacy-focused
Institutional Custody
For holdings above ~$1 million AUD, or for businesses and funds, institutional custody provides insurance, compliance, and enterprise-grade security that DIY solutions can't match.
When to Consider Institutional Custody
- • Holdings exceed $1M AUD and growing
- • Business/corporate treasury
- • SMSF (Self-Managed Super Fund) with Bitcoin
- • Need for insurance coverage
- • Regulatory/compliance requirements
- • Family office or multi-generational wealth
Leading Institutional Custodians
Gemini Custody
SOC-certified, insurance coverage, integrates with Gemini trading.
gemini.com/custody →Inheritance Planning
🚨 The Uncomfortable Truth
If you die without a plan, your Bitcoin likely dies with you. Unlike bank accounts, there's no institution to help your heirs. This isn't morbid—it's responsible. Every Bitcoin holder should have an inheritance plan.
Bitcoin inheritance is uniquely challenging: you need to give heirs enough information to recover funds, but not so much that they (or an attacker) can access them while you're alive.
Inheritance Solutions
📝 Letter of Instruction
A sealed letter stored with your will explaining where to find your Bitcoin (hardware wallet, seed phrase backup locations). Simple but relies on physical security.
🔐 Multi-Sig with Family
Set up a 2-of-3 or 3-of-5 multi-sig where family members hold keys. They can only access funds by collaborating—preventing unilateral theft while enabling recovery.
Example: You hold 2 keys, spouse holds 1. Together you can transact. If you pass, spouse works with your estate executor (who has location of your backup key) to recover.
🏛️ Casa Inheritance Protocol
Casa offers a structured inheritance solution with their multi-sig product. Your heirs contact Casa, provide death certificate, and Casa assists with the multi-sig recovery process.
Learn about Casa Inheritance →⏰ Dead Man's Switch
Services that require you to "check in" periodically. If you fail to respond after a set period, information is automatically released to designated recipients.
⚖️ Legal Trust Structure
Work with a lawyer to establish a trust that holds instructions for Bitcoin access. The trustee manages distribution according to your wishes.
🇦🇺 Australian Considerations
- • Legal status: Bitcoin is recognised as property in Australia and can be included in wills
- • CGT on death: Generally no CGT triggered at death, but heirs inherit your cost base
- • Find a crypto-savvy lawyer: Not all estate lawyers understand Bitcoin— find one who does
- • SMSF considerations: Special rules apply for super fund Bitcoin
❌ What NOT to Do
- • Don't leave seed phrase in a safety deposit box (banks can freeze/delay access)
- • Don't give your seed phrase to a single person (single point of failure)
- • Don't assume your heirs will "figure it out" (they probably won't)
- • Don't store recovery info only digitally (accounts can be locked)
- • Don't forget to update your plan as holdings or circumstances change
Choosing Your Custody Strategy
The right custody solution depends on your specific situation. Here's a decision framework:
| Situation | Recommended Custody | Priority |
|---|---|---|
| Just starting, <$1,000 AUD | Hot wallet (BlueWallet, Muun) | Convenience |
| $1,000 - $50,000 AUD | Hardware wallet (Ledger, Trezor) | Security basics |
| $50,000 - $500,000 AUD | Hardware + metal backup OR collaborative multi-sig | Redundancy + inheritance |
| $500,000+ AUD | Multi-sig (Unchained/Casa) OR institutional | Maximum security + professional support |
| Business/SMSF | Multi-sig OR institutional custody | Compliance + insurance |
Key Principle
Your custody security should scale with your holdings. A $500 hardware wallet to protect $50,000 is sensible. Using exchange custody for $500,000 is reckless. As your stack grows, upgrade your security.
