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In 2022, I came dangerously close to losing all my Bitcoin.

At the time, I was storing my holdings on BlockFi, a platform I thought was safe. They were attracting lots of customers with a tempting offer: monthly interest on Bitcoin deposits. The promise of free money was hard to resist for many people.

What I didn’t understand back then, was that platforms like these operate on fractional reserves. They lend out your Bitcoin while pretending your coins are still available. It’s a risky setup that relies on trust—trust that, like many others, I didn’t think to question.

I wasn’t alone. Thousands of people were keeping their Bitcoin on BlockFi. But when the company went bankrupt, billions of dollars in user funds disappeared overnight.

By pure coincidence, I had moved my Bitcoin to another exchange just weeks before the collapse. This stroke of luck saved me, but it also opened my eyes.

In that moment, I understood how close I’d come to losing everything—and how foolish it was to trust anyone else with my wealth.

The whole point of Bitcoin is to take control of your money and not rely on anyone else. Yet, I had handed over 90% of my wealth to a third party.

BlockFi wasn’t the first platform to collapse, and it won’t be the last. Celsius, FTX, and others have followed the same path, taking billions of dollars with them.

Here's the truth:

Most people only wake up to a problem when they feel the pain of its consequences.

Don’t touch the stove.

Step up and take control of your Bitcoin—before it's too late.

A Starting Point, Not a Strategy

This is one of the most important lessons in Bitcoin. If you don’t control the private keys, you don’t control the Bitcoin.

Keeping your funds on an exchange or with a custodial wallet may feel convenient, but it's very risky.

It's like buying a safe and giving someone else the combination.

History shows how this can end. Think of BlockFi, Celsius, or FTX—platforms that seemed safe until they weren’t. Billions of dollars disappeared overnight, and people who thought their Bitcoin was secure realized too late it wasn’t really theirs.

Taking your Bitcoin off exchanges and into self-custody is the most important step you can take.

When you control your private keys, you’re no longer relying on a third party.

But here’s the reality: owning your keys is only the first step.

• What if you lose your seed phrase?

• What if your hardware wallet malfunctions?

• What if someone finds your hardware wallet or backups?

Controlling the private keys is the most important step, but it's not the whole story.

To achieve confidence and peace of mind, you need to address every possible risk.

To help you identify the weak points in your setup, I've created a very simple test. It's designed to show you where you stand and what steps you can take to strengthen your strategy.

Take the test and uncover gaps in your strategy—before it's too late.

Evaluate Your Strategy

This is a simple 10-point test to evaluate your current Bitcoin self-custody strategy. Add up your points to see where your setup stands.

1. Are you in control of your private keys? (2 points)

2. Do you use a hardware wallet? (2 points)

3. Is your seed phrase securely backed up offline? (2 points)

4. Have you set up a unique passphrase for added security? (1 point)

5. Do you maintain multiple backups of your seed phrase in different locations? (1 point)

6. Do you use metal backups for your seed phrase? (0,5 point)

7. Have you memorized your seed phrase? (0,5 point)

8. Can your family access your Bitcoin if something happens to you? (1 point)

What’s your score?

• 9–10 points: Excellent—you’ve taken strong steps to secure your Bitcoin. Your setup is solid, but there’s always room to improve and refine.

• 6–8 points: You’re on the right track, but there are still some gaps that need attention. Improving these areas will significantly strengthen your security.

• Below 6 points: Your Bitcoin is at significant risk. You need to act immediately. Move your Bitcoin into self-custody using my free 7-Step Bitcoin Self-Custody Checklist. This guide will walk you through the process step-by-step.

For those with a higher score, let’s explore the most impactful upgrades you can make to strengthen your setup. Even small upgrades can make a big difference in creating a more robust and secure strategy.

Add a Passphrase

A passphrase is one of the most powerful upgrades you can add to your Bitcoin self-custody strategy.

Essentially, it acts as a 25th word to your seed phrase—but it’s not limited to being a word. It can be any combination of characters, making it highly flexible and unique to you.

What makes a passphrase especially valuable is that it creates a second, hidden wallet.

Your original wallet, based solely on the seed phrase, remains accessible. You can use it as a decoy wallet. If someone were to find your seed phrase, they might find $500 worth of Bitcoin, believing they found your entire holdings.

Meanwhile, your actual wealth is safely stored in the hidden wallet, accessible only with the seed phrase plus the passphrase.

Key considerations:

• Choose a strong passphrase: Use something unique and memorable but not easily guessable.

• Back it up securely: Treat your passphrase with the same care as your seed phrase—if you lose it, your Bitcoin will be lost forever.

By using a passphrase, you ensure your Bitcoin remains safe even if your seed phrase is compromised.

Geographically Distributed Backups

If you keep your hardware wallet and seed phrase backups in one single location, that place is a single point of failure.

Keeping all your backups in a single place leaves you vulnerable to physical threats like fire, flooding, theft, or even accidents.

By spreading out multiple seed phrase backups geographically, you add a layer of resilience to your strategy.

For example:

• Store one copy in a home safe.

• Place another in a trusted relative's safe.

• Keep one copy in a safety deposit box at a bank.

By diversifying storage locations, you reduce the risk of losing access due to fire, theft, or other disasters.

Metal Backups

If you’re using written seed phrase backups, your setup is at risk to fire, water, and physical wear over time.

Upgrading to a metal backup provides a far more durable and reliable solution. These specially designed plates or capsules are built to resist heat, corrosion, and physical damage, ensuring long-term protection.

Popular options include:

• Billfodl

• Cryptosteel

• Blockplate

Memorize Your Seed Phrase

For those seeking ultimate peace of mind, consider memorizing your seed phrase. While it takes a little effort and practice, this method ensures that even if all physcial copies are lost, you'll still be able to recover your Bitcoin.

Caution: Use this strategy only as an extra backup, not your primary one. Memory can fade over time, and relying solely on your memory introduces significant risks. However, when combined with physical backups, it provides an additional safeguard and peace of mind.

It's just 12 or 24 words and your passphrase, you can do it.

Bitcoin Legacy Planning

Can your loved ones access your Bitcoin if something unexpected happens?

Unlike traditional assets, Bitcoin has no recovery service—if no one knows how to access your funds, they’ll be lost forever.

Here's how to upgrade your strategy:

• Write out clear instructions to access your Bitcoin.

• Inform one or two trusted family members.

• Store the instructions in a safe place.

By taking these steps, you ensure peace of mind for yourself and your loved ones, making sure that access to your generational wealth is never lost.

That’s it—these are the most impactful upgrades you can make to your Bitcoin self-custody strategy.

Owning your private keys is the most important part of a safe strategy, but it's only the first step.

Self-custody is not a one-time decision, it's a process.

You should start simple and build complexity over time. Along the way, make sure to address gaps in your understanding, as these can lead to costly mistakes.

Bitcoin represents freedom, and a proper self-custody strategy is the way to claim that freedom.

I hope this helped you discover at least one way to improve your Bitcoin setup.

— Robin