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The Very Basics of Bitcoin Self Custody — 11 Comments

  1. Great article – easy to understand

    First bullet point has a typo. The Gold Standard – Using a form or cold storage like a hardware wallet and doing it with your own node.

  2. Quick tax question. I have in my Exodus a certain amount of BTC that I started to DCA last year when BTC was $40k and climbing. I now am considering moving that money into an Unchained IRA. Unfortunately, I can’t just move BTC into the IRA. I must first concert to Dollars, then they can convert my Dollars into BTC inside the Roth IRA.

    If I read this article correctly, now would be a good time to do that, as BTC has dropped significantly since I bought in, and I could get a decent tax break, yes?

    • Yes, you will declare a basis on what you sell, take a capital loss, then move it in convert back to BTC.

      This is BEAUTIFUL to me. You take a loss then guarantee you never pay tax on a gain ever again.

  3. Thanks Jack! Would it be even safer (and save some cash) to use Exodus to create the software wallet, get the 12 words and an address, delete Exodus from your laptop, and then use the address to send BTC to? The BTC would be stored on the address, you have your 12 words, and if you ever need to move it, just restore the wallet and go from there. Or is it still better to have a Trezor as the interface you are plugging into the laptop?

    • There are many reasons I wouldn’t do this. MANY. Here is the biggest, you’d be sending to ONE address over and over. So that lets anyone sending know how much you have on that one address. I create a new address for every transaction.

      Problem two you don’t check on your wallet on occasion that way. You would not know if something is wrong.

      Problem three now you only have the one back up, the hardware wallet is a second back up.

      The cheap way is say to take an old phone that only works on wifi and is no longer being used as a phone. Install a softwallet, passcode protect it and then only connect it to wifi when you are using it. Old phones have a way of dying totally though.

      I’d use a 79 dollar leger nano before either of these.

  4. Greetings,

    I don’t believe in the system. I never looked into crypto because I felt like it was just another scam by “smart” people to prey on their peers (they probably don’t think of them like that).

    After listening to Jack going on and on and on with bitcoin, he got me thinking it may be a way to hurt the system. So, I followed the steps on this page. I will share my feelings about the experience. Keep in mind I am totally new to crypto.

    I am in Canada, so strike didn’t like me. I proceeded to Coinbase. Brought 2k CAD worth of bitcoin. I was lazy and left at coin base, then FTX failed, and I realized I didn’t really have any bitcoin until I did the self-custody thing. Then I got Exodus and transferred all from Coinbase to Exodus.

    That done I still felt I didn’t possess anything, so I went looking for keys. Found out I needed to create a backup in Exodus and got the following 12 word seed phrase: “Hopefully realize myself some smarts also hope fellows good sport with joke”

    At that point things got suspicious to me. I tried to use the phrase in other wallets until I realized it only works with exodus wallet. That kind of nullifies the supposed promise of bitcoin right?

    Bitcoin source code is visible to everyone, but if I need 3rd parties software like wallets, then we get back to the problem of trusting someone proprietary software.

    Bitcoin is decentralized, well, where does those wallet software run from? Can I trust they are not logging my bitcoins?

    Bitcoin is not an entity that can be bullied by government. Can we say the same of those wallet companies? What if system says no more exodus? How will I get my bitcoins if there is no Exodus wallet software to download or exodus servers?

    This Satochi guy being so smart, why didn’t he made a native wallet in bitcoin?

    I welcome comments on my maiden bitcoin experience. I hope I missed something, because I got excited with the idea of giving the middle finger to banks.

    Positive regards,
    Antonio

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