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Market Analysis

At the time of writing, Bitcoin is trading just below $30k USD, and its market cap is approximately $580 billion. Less than 12% of BTC is held on known exchange addresses, the lowest since 2017. This follows a turbulent year for cryptocurrency in 2022 which saw the implosion of crypto exchange FTX, which went from being valued at $18 billion to filing for Chapter 11 bankruptcy after losing an estimated $8 billion in customer funds. This caused many to question the safety of investing in cryptocurrencies and led to a renewed focus on self-custody, or holding one's private keys. The concept of self-custody reflects the belief in Bitcoin's innovation of individuals being their own bank, without third-party risk.

Self-custodying Bitcoin is not without challenges, including the ease of losing access to private keys without any central authority to retrieve them or "print" new Bitcoin. This risk leads many to outsource custody to third parties, which, as we have seen, can result in the loss or theft of Bitcoin.

Bitcoin keys can be self-custodied through various means such as hot-wallets, cold storage, or seed phrases, each with unique issues. Hot wallets are considered insecure due to their internet connectivity, and even air-gapped cold-storage systems have experienced breaches, exposing customer wallet information and home addresses or suffering intrusive software upgrades from the cold-wallet provider.

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