Executives in the crypto industry are divided on whether self-custody was designed from the start for beginners, and solutions such as multisignature wallets and non-mnemonic backups each involve trade-offs between security and usability.
Rahul Rumalla, CEO of Safe Labs, told Cointelegraph: “We shouldn’t expect every driver to become a mechanic, just as we shouldn’t expect everyone who wants to own their own assets to become a security expert.”
He believes that making self-custody easier to use could be crucial for broader Bitcoin adoption, as "being your own bank" remains one of Bitcoin's most iconic features.
However, malware in some Ledger devices has stolen recovery phrases, and a firmware vulnerability in Coldcard once allowed attackers to reconstruct private keys and steal funds.
Michael Tanguma, CEO of Bitcoin custodian Onramp, compares Bitcoin custody to personal computers in the 1970s: back then, users needed technical expertise to assemble and operate these devices.
He told Cointelegraph: "Self-custody was never designed for beginners."
He said that simpler design helped computers reach a broader user base, and Bitcoin custody now faces similar challenges.
The Trezor Model One is the world's first hardware wallet, released in 2014. Source: Trezor
Rumalla disagrees with this statement, saying that self-custody has "always been for everyone" and that "being able to own and control your own assets is precisely the entire point of cryptocurrency."
He added that self-custody "does not mean you have to do everything yourself."
Multisignature enhances security, but it's not without cost.
Multisignature, or multisig wallets, require multiple keys to authorize a transaction, but managing them can be challenging for beginners.
Justin Hutzler, Chief Technology Officer of Synergy Network, said: "Traditional multi-signature implementations introduce additional complexity, including coordination among signers, key backup, recovery processes, and transaction approval."
Single Signature vs. Multi-Signature. Source: BitGo
Multi-signature approval cannot prevent all attacks.
Rumalla from Safe Labs said that if multiple signers are deceived by the same compromised interface, they may still authorize a malicious transaction.
A non-mnemonic wallet eliminates one risk but introduces new ones.
Tangem states that its no-mnemonic design simplifies self-custody by eliminating the need to manage a recovery phrase. Instead, users must securely safeguard the physical device that provides access to their funds.
The private key is generated on a card, and backup copies can be stored on up to two additional devices. Tangem confirmed to Cointelegraph that if all devices are lost, users will permanently lose access to their funds.
The company stated that it has not received any reports of users losing all their cards.
Properly safeguarding the card also cannot protect users from approving malicious transactions. Zach Herbert, CEO of Foundation, a competitor in hardware wallet manufacturing, said that a mnemonic-free backup can preserve self-custody properties, but he criticized Tangem for lacking a built-in screen, meaning users must rely solely on their smartphones to verify transaction details.
He said, "If an attacker can trick you into authorizing a transaction that empties your wallet, they don't need to extract your private key."
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