Here at LibertyX, we hold certain core values of bitcoin true to our hearts. We believe that people should have the option to be in complete control of their bitcoin. You may have heard the phrase “not your keys, not your bitcoin”. But what exactly does that mean?

What is a private key?

A private key is a secret number that enables spending your bitcoin. A “seed phrase” is a single phrase you can write down that allows you to re-generate all of the private keys in your wallet. Some names for this concept include “keys”, “backup”, “seed”, “phrase”, “words”. This is the method that provides access to your bitcoin. Anyone with this key can spend the bitcoin the key is associated with. Since anyone with access to your key can spend the bitcoin in the wallet, you can see why keeping your key secure is very important.

Just like being locked out of your car, its important to keep a spare key around for your bitcoin. Unlike your car, if you lose the keys to your bitcoin a new key cannot be made. Be sure to write down your seed words from your bitcoin wallet and store them in a safe place.

Noncustodial vs Custodial Wallets

As we just learned, anyone with your bitcoin private key (or with your seed phrase) can spend your bitcoin. So what exactly is the difference between noncustodial and custodial wallets? The difference is that with a noncustodial wallet you are in control of your keys. With a custodial wallet, such as an exchange, they are in control of your key, meaning only the exchange can spend your bitcoin. With a custodial wallet, you are also unable to backup your keys. If the exchange disappears then so do your bitcoins.

With a noncustodial wallet, you are in charge of your keys, not a 3rd party service or exchange. Being in control of your own wallet means your bitcoin is truly yours. No one can stop or reverse your translations. You are solely in control.

LibertyX Supports Key Ownership

LibertyX is not a wallet provider. We don’t hold customer funds in any type of account, whether its US dollar or Bitcoin. When you make a LibertyX transaction, we simply ask for your bitcoin wallet address. LibertyX lets you choose your wallet. Whether you choose to store your keys yourself or entrust them with a 3rd party exchange is up to you.

LibertyX highly recommends taking key ownership seriously. We want our customers to use noncustodial wallets whenever possible. You can read more about our wallet recommendations on our help desk.