A better term to use, when talking about "custodial" and "non-custodial" wallets \ stacker news ~bitcoin

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A better term to use, when talking about "custodial" and "non-custodial" wallets

1077 sats \ 17 comments \ @BitcoinHandsOn 19 Apr bitcoin

I've long been frustrated by the terminology related to custody and bitcoin/lightning wallets. Right now, the terminology is :

CURRENT TERMINOLOGY - BAD Custodial - somebody else has custody of your wallet. "Not your keys, not your coins". Non-Custodial - you have custody of your own wallet, i.e. self-custody

But that's really difficult, and also common to misunderstand. I have to think about it myself, whenever I use the term.

That's because it's so backwards. SOMEBODY always has custody of the bitcoin. It just doesn't make sense.

I just saw this alternative on Reddit, on the BitcoinBeginners forum (https://www.reddit.com/r/BitcoinBeginners/comments/1k0h7xa/are_aqua_lightning_wallets_retrievable_by_bip_39/). It seems like a MUCH better option.

"It's much clearer to speak about self-custody vs. delegated custody."

I thought - this is PERFECT! It makes 100% clear, and is easy to understand. So the improved terminology is:

IMPROVED TERMINOLOGY - GOOD Self Custody - you have custody of your bitcoin yourself Delegated Custody - you have delegated custody of your bitcoin to someone else

What do you all think?

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108 sats \ 1 reply \ @DarthCoin 19 Apr

I have another explanation: if is not self-custody is just an account. In order to retrieve the access to those sats you need to login with user/pwd or whatever other method for an account, provided by the owner of the keys.

Bitcoin in self-custody it doesn't use "login" or accounts, it just use wallets, with private keys.

Account = you depend of somebody else to provide the keys Wallet = you manage it yourself, with your own keys

Also there's no such thing as "bitcoin in custody of somebody else"... that is just an IOU. That's why I think is better to refer as "account".

10 sats \ 0 replies \ @Lazy_AMA 20 Apr

I agree with @DarthCoin 's explanation

81 sats \ 0 replies \ @standardcrypto 20 Apr

I agree that self custody is the better term, I always mention this when it comes up.

I usually say "bank custody" for the other one, but delegated custody works too.

The point is, someone always has custody. So "non custodial" is just stupid.

126 sats \ 0 replies \ @nerd2ninja 19 Apr

I think if we stopped calling bank apps "wallets" everything would be 100% much more clear.

37 sats \ 1 reply \ @LibertasBR 19 Apr

This makes it much easier to understand. Self custody is already used and remains the same while delegated custody speaks for itself. I will start using it and explaining in case anyone doesn't understand, the change begins with adoption.

I always get confused with non-custodial and self-custodial, thanks for sharing.

19 sats \ 0 replies \ @BitcoinHandsOn OP 19 Apr

You're welcome! I also always got confused on this issue.

I had actually tried to come up with some better names. Below are my notes from trying to come up with terms. I think the term I found on that forum post, of Delegated Custody, is much better than what I came up with.

hosted wallet (positive spin) on "not your keys" controlled wallet - negative spin custodian controlled wallet external-control wallet external-custody wallet vs self-custody wallet

32 sats \ 3 replies \ @Jon_Hodl 19 Apr

I use…

Self custody: You control your own keys.
Joint custody: You control at least one key in a multisig setup.
Third-party custody: Your Bitcoin is on an exchange or in a Bitcoin bank.

21 sats \ 2 replies \ @BitcoinHandsOn OP 20 Apr

If you use the term "third party custody", then who's the second party?

Say you're renting an apartment. You're the renter (first party), then there's the apartment owner (second party), and then the third party is the security deposit escrow service.

32 sats \ 0 replies \ @Jon_Hodl 20 Apr

I wrote some content on What Is Bitcoin Custody that basically reiterates all of this but I appreciate your input on the verbiage.

I need to find a way to integrate Stacker News posts like this into my content.

Maybe I can add a section about “Useful Resources” or “Continued Reading” at the end of the glossary pages.

I can link to posts like this to drive more users to SN while also providing more targeted and relevant value for my readers.

0 sats \ 0 replies \ @Jon_Hodl 20 Apr

Second party would be whoever you’re transacting with.

In language/linguistics 1st person is your own self and second person is who you’re talking to.

Singular 1st person - I/me 2nd Person - You 3rd person - He/She/It

Plural 1st person - We/us 2nd person - You all (y’all) 3rd person - they

In relation to bitcoin custody, with third party custody, the custodian would be a third party that sends Bitcoin to a second party on your behalf.

Even joint custody would be you as the 1st party and all of the other key holders would be third parties.

Does that make sense?

32 sats \ 0 replies \ @jakoyoh629 19 Apr

Right, I get the head-scratching, but the truth is, folks just don't know what 'custody' even means. 'Custody' on its own means someone else has the keys to your money. So 'self-custody' is just weird, you know?

Could just be 'your own wallet/self wallet' and 'custody wallet/account'

0 sats \ 0 replies \ @standardcrypto 8h

Another useful distinction is self infra versus delegated infra.

IE, a "bandaid wallet" like phoenix is self custody but delegated infra.

#382503 "How to Build the Ultimate Bandaid Wallet"

0 sats \ 0 replies \ @TNStacker 20 Apr

The graveyard is full of Bitcoin banks! 🤣🤣🤣

0 sats \ 0 replies \ @Coinsreporter 19 Apr

Self Custody = Ownership = Wallet (Self Managed/Secret Vault)

Custodial = Delegated = Account. (Same as we all have fiat money in an account not in a wallet)

0 sats \ 0 replies \ @zapsammy 19 Apr

relevant notes here: #698574

the way i see it: it is impossible for an individual or a group to own bitcoin, because it's a giant set of distributed bits all over the world, a collective ownership of sorts. what is possible is to possess the private keys or knowledge of where those keys are and how to get to them, or who holds them for u.

what one does with those keys is up to the holder - he can sign a message, move sats from one address to another, lock sats into an LN channel, etc.

0 sats \ 1 reply \ @ek 19 Apr

To make it even more confusing, let me tell you that non-custodial and self-custodial mean different things as @benthecarman explained in #395522

21 sats \ 0 replies \ @LibertasBR 19 Apr

It really confused me even more. LOL.

I'm going to adopt this change for the good of my head.