Crypto custody.
In plain English
Crypto custody is the arrangement for storing and controlling the private keys that move coins on a blockchain. With custodial storage, a platform holds the keys, tracks your balance on its own books, and can reset your login. With self-custody, the keys live in your wallet or on a hardware device and nobody else can move the coins or restore them. Custody also decides what happens in a bankruptcy: coins held by a platform may become a claim against that company rather than property you can simply withdraw. The trade is convenience and recovery on one side, control and counterparty exposure on the other.
01Why it matters
Custody decides who can lose your coins and whether anyone can help you get them back, which is a different question from whether the coin itself goes up or down.
02The math, step by step
Say a person splits 6,000 dollars of crypto: 4,000 dollars on a platform for easy trading and 2,000 dollars on a hardware wallet. If the platform freezes withdrawals, two thirds of the position, 4,000 dollars, is stuck behind that company. If the hardware wallet seed phrase is lost, the other 2,000 dollars is gone permanently.
Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.
03What this is NOT
The app is not the custody arrangement. Two apps can look identical and differ completely: one shows a balance a company owes you, the other holds keys only you control. The question is not which app it is, it is who can sign a transaction without your permission.
04Receipts
Every figure on this page is sourced to a primary document. Tap to open the original.
Plain-English answers from our glossary. Receipts included. Never advice.
Educational tool. Answers come only from ClearMoneySchool's published glossary and are not advice. Why we never give advice