Keeping money safe: custody, simply

Custody is the question of who holds the keys to your money. Crypto argues about it ideologically; you just need the practical map — what each option protects against, and what it does not.

Exchange custody

Your USDC sits in your account at Coinbase, Kraken and the like. Protects against your own mistakes — lost phrases, malware — because there is a password reset and a support desk. Does not protect against the exchange itself failing, freezing withdrawals or being hacked; you hold an IOU, not money. History has punished it is a big exchange, it is fine more than once.

Self-custody

The wallet you built in lesson three: you hold the keys. Protects against every institutional failure — nobody can freeze, lose or misuse what only you control. Does not protect against you: a leaked recovery phrase or a malicious signature has no undo, and no support desk exists.

Hardware wallets

Self-custody where the key lives in a small offline device — Ledger is in the Arc ecosystem — that must physically confirm every transaction. Protects against malware on your computer and remote theft of keys, the practical ceiling for individual security. Does not protect against signing something bad on purpose because a scam convinced you, or losing both device and written phrase.

A sane setup for a normal person on Arc

• Spending money — a software wallet, with amounts you would carry in a physical wallet.
• Savings — a hardware wallet, funds you touch rarely.
• On exchanges — money actively being converted, and briefly.
• The recovery phrase lives on paper, never anywhere digital.
• Anything unusual gets slowed down, because every scam needs you to hurry.

The quiet good news: on Arc, moving between these tiers costs a fraction of a cent, so organising your custody properly is free in practice. There is no fee excuse for keeping everything in one vulnerable place.

You have finished Money on Arc. Next stage: Using Arc.