Custody
Choosing a crypto wallet
Buying crypto is the easy part. Deciding where it lives — and making sure somebody could recover it if you could not — is the decision that determines whether you still have it in ten years. Most permanent losses are not hacks. They are recovery phrases nobody could find.
What a wallet actually is
The name is misleading. A crypto wallet does not hold coins. Coins exist on a blockchain, and they always have. What a wallet holds is a private key — a secret that authorises moving them.
That reframing resolves most confusion. "Sending crypto to a wallet" means recording on the blockchain that a particular key now controls those coins. "Losing a wallet" means losing the key. And "someone drained my wallet" means someone obtained the key.
From there, the entire subject reduces to one question: who controls the key?
If an exchange controls it, you have a claim against a company. If you control it, you have a bearer asset and complete responsibility. Both are legitimate positions and each has a failure mode — the first is company failure, the second is human error.
The four models
| Model | Who holds the key | Main risk | Suits |
|---|---|---|---|
| Exchange (custodial) | The platform | Company failure, account compromise | Trading balances |
| Mobile / software wallet | You, on a connected device | Malware, device loss, phishing | Spending money, small amounts |
| Hardware wallet | You, on an offline device | Lost device with no backup, user error | Long-term holdings |
| Multi-signature | Split across devices or people | Complexity, coordination | Large holdings, shared assets |
Exchange custody is what you have by default after buying. Convenient, instantly tradeable, recoverable if you lose your password. And a claim on a company rather than an asset you hold — digital assets on any US platform are outside FDIC and SIPC coverage entirely. Structure varies: Gemini's custody arm operates under a New York trust charter, which is a stronger position in an insolvency than a plain money transmitter relationship.
Software wallets put the key on your phone or computer. Genuinely useful for small amounts and for actually spending crypto. The device is connected to the internet, which is the whole risk.
Hardware wallets keep the key on a dedicated offline device that signs transactions without ever exposing the key to a connected computer. This is the right default for anything you intend to keep.
Multi-signature requires several keys to authorise a transaction — typically two of three, held in different places or by different people. It removes the single point of failure entirely and adds real complexity. Worth considering above roughly six figures, and for assets shared between people.
Choosing by situation
Rather than a general recommendation, here is what we would actually suggest to different readers.
You bought $200 to try it. Leave it on the exchange or use a mobile wallet. Setting up hardware for two hundred dollars is not proportionate. Do learn how to withdraw, though — the test purchase and withdrawal in our buying guide is worth doing at any size.
You are accumulating a few hundred dollars a month. Buy a hardware wallet once the balance passes roughly a thousand dollars, and move holdings across quarterly. Keeping small recent purchases on the exchange between transfers is fine.
You hold five figures long term. Hardware wallet, metal backup of the recovery phrase, and a written record so somebody else could recover it. This is the majority case and the one where people most often do half the job.
You hold six figures or more. Multi-signature, or a hardware wallet with a properly documented recovery plan reviewed by an estate attorney. Consider qualified custody if there are fiduciary obligations involved. Our Summerlin and Incline Village pages discuss this in local terms because it is what readers there ask about.
You trade actively. Keep working capital on the exchange and everything else in self-custody. The mistake is not having a trading balance — it is letting the trading balance quietly become the entire position.
Buy on a platform you can leave Self-custody only works if the exchange lets you withdraw. Confirm that before you fund an account, not after.
Compare platformsSetting up a hardware wallet
Buy direct from the manufacturer
Never from a marketplace reseller and never second-hand. Supply-chain tampering is a real attack and a pre-configured device with a pre-printed recovery phrase is a theft waiting to complete.
Generate the recovery phrase on the device
The device produces it. If a phrase arrives in the box, on a card, or in an email, the device is compromised — return it.
Write the phrase on paper, by hand
Not a screenshot, not a photo, not a password manager, not cloud notes, not an email to yourself. Each of those has produced real losses.
Test the recovery before funding it
Wipe the device and restore it from the phrase you wrote down. If that works, your backup is real. If it does not, you have just learned that with nothing at stake.
Send a small test amount first
Twenty dollars, confirm it arrives, then move the rest. Address errors are unrecoverable and this is the only way to check.
Store the backup properly
A safe, a deposit box, or a metal backup plate. Somewhere fire and water would not destroy it, and somewhere a trusted person could find it if necessary.
The recovery phrase, in detail
Twelve or twenty-four words, generated by your device, from which every key it holds can be regenerated. Anyone with those words has your coins. Nobody without them can help you.
Do
- Write it by hand on paper, or stamp it into metal
- Store it somewhere fire and flood would not reach
- Consider two copies in two locations
- Test recovery before you fund the device
- Tell one trusted person that it exists and where
Never
- Photograph it or screenshot it
- Type it into any computer or phone
- Store it in a password manager or cloud note
- Email or message it, including to yourself
- Enter it into a website, ever, for any reason
- Give it to "support" — no legitimate support asks
That last point is worth expanding. A recurring scam involves someone posing as wallet or exchange support and asking you to "validate" or "sync" your wallet by entering the recovery phrase on a site. There is no legitimate reason this would ever be required. Entering a recovery phrase anywhere other than into a hardware wallet you are restoring is the single most catastrophic action available in this space. Our scam guide covers the variants.
Estate planning: the step almost everyone skips
A hardware wallet with no recovery plan is a permanent loss with a future date attached. This is the most likely way for a substantial crypto position to disappear, and it is entirely preventable.
If you die, are hospitalised, or develop cognitive decline, and nobody else knows the device exists or where the recovery phrase is held, the assets are unrecoverable. There is no institution to petition and no process that helps. That is the point of self-custody, and it cuts both ways.
Nevada makes this more pressing than most states. Our older communities — Sun City Summerlin, Sun City Anthem, Mesquite, Boulder City, the Carson Valley — concentrate exactly the demographic where this goes wrong.
Write an inventory, without keys
What exists, roughly how much, which platforms, which wallets. No private keys or recovery phrases in this document. Review it annually.
Record where the recovery material is
The inventory says a phrase exists and where it physically lives. The phrase itself stays in the safe, the deposit box or the metal plate.
Tell somebody the inventory exists
A spouse, an executor, an attorney. Not the contents — the existence and the location. This single step prevents most estate losses.
Get it into the estate documents
Nevada attorneys handle digital asset provisions routinely now. Without them an executor may have neither authority nor information.
Consider multi-signature for large holdings
A 2-of-3 arrangement with keys in different places, potentially including a professional co-signer, removes the single-point-of-failure problem entirely.
How people actually lose coins
In rough order of frequency, based on the questions we receive.
No usable backup. The device is lost, damaged or forgotten and the phrase was never written down properly, or was written down and then lost. Overwhelmingly the most common permanent loss.
Phishing the recovery phrase. Entered into a fake support site, a fake wallet app, or a "validation" page. Instant and total.
Sending to the wrong address. A mistyped or wrongly pasted address, or sending an asset on the wrong network. Unrecoverable. Always send a small test first.
Clipboard malware. Software that silently replaces a copied wallet address with the attacker's. Check the first four and last four characters of every address after pasting.
Leaving everything on an exchange that failed. Less common than it was, and it still happens. Bitcoin Depot's May 2026 Chapter 11 and Coin Cloud's 2023 collapse are Nevada- adjacent reminders that regulated companies fail too.
Death without a plan. Discussed above, and the one that generates the saddest correspondence we receive.
Wallet and custody questions
Do I need a crypto wallet in Nevada?
What is the safest crypto wallet?
What happens if I lose my recovery phrase?
Should I keep crypto on an exchange or in a wallet?
How do I include a crypto wallet in a Nevada estate plan?
Is a Robinhood account a crypto wallet?
Buy on a platform you can leave, then leave
Self-custody starts with an exchange that permits withdrawals — which is most of them, but not all, and Robinhood historically has not for Nevada accounts. Confirm that before funding, run a small test withdrawal, and set the hardware wallet up while the stakes are still small.
Partner link. Digital assets are volatile and are not FDIC- or SIPC-insured. Nevada Crypto does not give investment advice.