Crypto executives are divided over whether self-custody was ever designed for beginners, while approaches such as multisignature wallets and seedless backups come with their own security and usability trade-offs.
“We don‘t expect every driver to be a mechanic, and we shouldn’t expect everyone who wants to own their assets to become a security expert,” Safe Labs CEO Rahul Rumalla told Cointelegraph.
Making self-custody easier to use could be critical to Bitcoins broader adoption, as the ability to “be your own bank” remains one of its defining features.
Recent incidents involving Ledger and Coldcard have exposed weaknesses in hardware wallets, widely recommended as one of the safest ways to hold crypto because they keep private keys offline.
Implants in some Ledger devices stole recovery phrases, while a Coldcard firmware bug allowed attackers to recreate private keys and steal funds.
Related: Ledgers early implant warnings deserved more action, Karpelès says
Michael Tanguma, CEO of Bitcoin custody provider Onramp, compared Bitcoin custody to personal computers in the 1970s, when users needed technical skills to assemble and operate them.
“Self-custody was never designed with newcomers in mind,” he told Cointelegraph.
He said simpler designs helped computers reach a wider audience and that Bitcoin custody now faces a similar challenge.
Trezor Model One, the worlds first hardware wallet, was released in 2014. Source: Trezor
Rumalla disagreed, saying self-custody was “always meant for everyone” and that “being able to own and control your assets is the whole point of crypto.”
He added that self-custody “does not mean doing everything yourself.”
Multisig improves security, but not without a cost
Multisignature, or multisig, wallets require multiple keys to authorize transactions, but managing them can be difficult for beginners.
“Traditional multisig implementations can introduce additional complexity involving signer coordination, key backups, recovery procedures, and transaction approvals,” Justin Hutzler, chief technology officer of Synergy Network, said.
Single signature versus multisig. Source: BitGo
Multiple approvals also cannot prevent every attack.
Safe Labs Rumalla said several signers could still authorize a malicious transaction if they were all deceived by the same compromised interface.
Related: Can crypto users trust the supply chain behind hardware wallets？
Seedless wallets remove one risk, introduce others
Tangem says its seedless design simplifies self-custody by removing the need to manage a recovery phrase. Users must instead safeguard the physical devices that provide access to their funds.
A private key is generated on one card, with backup copies stored on up to two additional devices. Tangem confirmed to Cointelegraph that losing every device would permanently lock users out of their funds.
The company said it had received no reports of users losing all their cards.
Keeping the cards safe also does not protect users from approving a malicious transaction. Zach Herbert, CEO of rival hardware wallet maker Foundation, said seedless backups can preserve self-custody, but criticized Tangems lack of a built-in screen, which leaves users relying on their smartphones to verify transaction details.
“An attacker does not need to extract your private key if they can trick you into authorizing a transaction that empties your wallet,” he said.
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