Self-Custody: Why Your Assets Should Be Yours
The importance of direct control over digital assets and how Liqora enables it.
The Case for Self-Custody
In traditional finance, your money is never truly "yours." It sits in a bank's database, governed by the bank's rules, subject to the bank's solvency, and accessible only at the bank's discretion. We've seen this model fail spectacularly — from bank runs in Argentina to frozen accounts in Canada, from the collapse of Silicon Valley Bank to widespread debanking of crypto companies.
In the crypto world, centralized exchanges initially replicated this model. Users deposited assets and trusted the exchange to hold them safely. Then came Mt. Gox. Then QuadrigaCX. Then FTX. Each collapse reinforced the same lesson: if you don't hold your keys, you don't hold your assets.
Self-custody — the practice of directly controlling the private keys to your digital assets — is not just a technical preference. It's a fundamental shift in the relationship between individuals and their financial assets.
What Self-Custody Actually Means
When you self-custody digital assets, you hold the private keys that control those assets. No intermediary can freeze, seize, or lose your funds. No company bankruptcy can wipe out your savings. No terms of service update can restrict your access.
In practice, self-custody means using a wallet where you — and only you — control the private keys. This can be:
Hardware wallets like Ledger or Trezor, which store keys on a dedicated device.
Software wallets like Blockstream Green or Aqua, which store keys on your phone or computer.
Multi-signature setups where multiple keys are required to authorize a transaction, providing an extra layer of security.
The key principle is simple: your keys, your coins. Not your keys, not your coins.
The Risks of Custodial Services
When you leave assets with a custodian — whether it's an exchange, a bank, or any third party — you're exposed to several risks:
Counterparty Risk
If the custodian becomes insolvent, your assets may be locked up in bankruptcy proceedings. FTX users learned this the hard way, with billions in customer funds lost or frozen.
Censorship Risk
Custodians can freeze your account for any reason — regulatory pressure, compliance flags, or even system errors. In 2022, Canadian authorities ordered banks and exchanges to freeze accounts of individuals associated with the trucker protests. Whether you agree with the cause or not, the precedent is concerning.
Operational Risk
Custodians can be hacked. Mt. Gox lost 850,000 BTC to hackers. Smaller exchanges have been breached countless times. Even well-run custodians face the risk of internal fraud or operational failures.
Privacy Risk
Custodians know everything about your financial activity. They share this data with regulators, compliance partners, and potentially with data breaches.
How Liqora Enables Self-Custody
At Liqora, we designed our infrastructure to be self-custody first. Here's what that means in practice:
No Custodial Wallets
Liqora does not hold user funds. When a partner mints L-BRL, the tokens are sent directly to the partner's own Liquid wallet — a wallet they control with their own private keys. We never have custody of partner assets.
Direct Settlement
When settlements are processed, L-BRL moves directly from Liqora's issuance wallet to the partner's self-custodied wallet. There's no intermediary holding period, no "pending balance" sitting in our systems.
Compatible with Any Liquid Wallet
L-BRL works with any wallet that supports Liquid assets. Partners can use Blockstream Green, Aqua, SideSwap, or any other Liquid-compatible wallet. They're not locked into a proprietary Liqora wallet.
Multi-Signature Support
For institutional partners who need additional security, Liquid supports multi-signature wallets. This means organizations can require multiple authorized signers to move funds — providing enterprise-grade security while maintaining self-custody.
Best Practices for Self-Custody
If you're new to self-custody, here are the fundamentals:
Back up your seed phrase. When you create a wallet, you'll receive a 12 or 24-word seed phrase. Write it down on paper (not digitally) and store it in a secure location. This is your ultimate backup — if your device is lost or damaged, the seed phrase can recover your wallet.
Never share your private keys or seed phrase. No legitimate service will ever ask for them. Anyone who asks is trying to steal your funds.
Use a hardware wallet for large amounts. Software wallets are convenient for daily use, but for significant holdings, a hardware wallet provides better security by keeping your keys offline.
Test with small amounts first. Before sending large amounts to a new wallet, send a small test transaction to verify everything works correctly.
Keep your wallet software updated. Updates often include security patches and new features.
Consider multi-sig for large holdings. Multi-signature setups distribute risk across multiple keys, reducing the impact of any single key being compromised.
The Philosophical Argument
Self-custody isn't just about reducing risk — it's about financial sovereignty. Throughout history, the ability to transact freely and hold property securely has been a cornerstone of individual freedom. Self-custodied digital assets extend this principle into the digital age.
When you self-custody, you opt out of a system where your financial participation is a privilege granted by institutions. Instead, you operate in a system where your ownership is a mathematical certainty, enforced by cryptography rather than corporate policy.
Conclusion
The crypto industry learned its self-custody lessons through painful and expensive failures. At Liqora, we don't want our partners to learn the same lessons. That's why self-custody isn't an afterthought in our platform — it's the foundation.
Every L-BRL token is designed to be held in your own wallet, controlled by your own keys, and accessible on your own terms. Because in a truly decentralized financial system, your assets should always be yours.