An exchange balance can be an IOU, meaning “I owe you”: a promise by the exchange to provide assets, rather than Bitcoin controlled by your own keys. Self-custody reduces reliance on a custodian but adds responsibility for key security and recovery.
Related terms
- Custodian - A person or organisation entrusted to hold or control assets for someone else.
- Self-custody - Holding your own Bitcoin keys instead of leaving assets with an exchange.
- Non-custodial - A service that does not hold or control your Bitcoin keys.
Common questions
Counterparty risk: common questions
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