Self-Custody & Recovery: Wallet Hygiene, Backups, and Safer Setups
Last updated: Aug 2025 • Education only, not financial advice.
Self-custody means you control your keys. Done right, it removes exchange risk and reduces attack surface. Done poorly, it concentrates risk in a single point of failure (you). This guide shows a practical setup that’s safer for everyday users.
Hot vs. cold (separate roles)
- Hot wallet: Small, daily-use funds. Connected to apps. Treat like cash in your pocket.
- Cold wallet (hardware): Long-term funds. Keys stay offline. Treat like a vault.
Separation is the #1 habit that prevents big losses.
Hardware wallet setup (safe flow)
- Buy from the official store, not a marketplace.
- Initialize the device offline; generate the seed phrase on the device.
- Write seed by hand on paper or metal—no photos, cloud, or printers.
- Verify firmware; set a strong PIN; consider an optional passphrase.
- Install the companion app; receive a small test transaction.
Backup strategies (so recovery actually works)
- Redundancy: Keep at least two copies of the seed in separate physical locations.
- Metal backup: Fire/water resistant; avoid single-point storage.
- Label smartly: Do not label with coin names or “seed”. Use a code only you understand.
- Recovery test: On a spare device or test wallet, restore using the seed to confirm legibility.
Passphrases & plausible deniability
A passphrase is an extra word added to the seed that creates a different wallet. It protects against someone finding your seed alone. Use only if you can store it separately and remember it—lost passphrases mean lost funds.
Multi-sig basics (when stakes are higher)
Multi-signature wallets require, say, 2-of-3 keys to move funds (e.g., your device + your spouse’s + a backup key in a safe). This reduces single-device failure and theft risk, but adds complexity. Start small and document recovery steps clearly.
Common mistakes to avoid
- Typing seed phrases into any website or app
- Taking photos/screenshots of seeds
- Storing seeds in email, notes, cloud, or password managers
- Blind-signing transactions without reading prompts
Ongoing hygiene
- Keep firmware/software up to date—on your schedule, not immediately at prompts
- Revoke old token allowances every few months
- Maintain a small “decoy” hot wallet for risky apps
- Document recovery: who to contact, where backups are, and how to restore
Last updated: Aug 2025 • Education only, not financial advice.