Chapter · Master Bitcoin
Custody and security
You can hold bitcoin on an exchange, where the company keeps the keys for you, or in self-custody, where you hold the keys yourself. Self-custody removes the middleman but puts all the responsibility on you. Wallets also split into hot, meaning connected to the internet, and cold, meaning kept offline. Small spending money can live in a hot wallet, while larger long-term savings are safest in cold storage.
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What you get asked
Match each storage choice to its meaning
Custody is about who holds the keys, and hot versus cold is about whether the wallet is online. Both choices shape your risk.
A wallet kept completely offline for long-term savings is called a ___ wallet.
Cold wallets stay offline, so remote hackers cannot reach the keys. That makes them well suited to storing larger amounts.
What is the main tradeoff of holding your own keys?
Self-custody means no middleman can freeze or lose your coins, but there is also no one to call if you lose your keys or seed phrase.
Which habit best protects your seed phrase?
Keeping the seed phrase offline on paper, away from cameras and the internet, keeps it out of reach of remote thieves.
Why is 'not your keys, not your coins' a useful reminder?
On an exchange, the company holds the keys, so you are trusting it. Holding your own keys is what truly makes the coins yours.
The rest of this chapter
Learn what Bitcoin is, how it works, and how ordinary people buy, hold, and secure it safely.